The Marc Rich pardon: some background

When Eric Holder was nominated to become Obama's new Attorney General, the question of his involvement in President Clinton's last minute pardon of the fugitive financier Marc Rich was raised by the Republicans in the Senate. This post is about Marc Rich and the alleged crime for which he was pardoned, and does not consider Eric Holder's involvement.

Marc Rich was an extremely successful (according to Forbes magazine he was the 242d richest man in America in 2006) commodities trader who, with his partner Pincus Green bought and sold international commodities, including Iranian oil. Rich and Green were indicted for tax evasion and illegal trading with Iran in 1983 by then U.S. Attorney Rudolph Giuliani. At the time of the indictment both Rich and Green were located in Switzerland, and they never returned to America to answer the charges. The charges were brought under the RICO statutes. The Justice Department stopped using the RICO statutes for tax cases of this type in 1989.

Interestingly, "Scooter" Libby, the aide to Vice President Dick Cheney who was convicted of giving the CIA undercover Officer Valerie Plame's name and affiliation with the CIA to the media for political purposes. Libby told Congress during hearings after the pardon that in his legal opinion, Marc Rich had not violated U.S. tax law, but could be criticized for trading with Iran even while the Iranians were holding the American hostages.

So Rich's guilt was never tested in court before the Clinton pardon, the RICO law under which the charges were made have ceased to be a basis for such charges, and a case can be made for his innocence even if it had gone to court.

But why did Clinton make the pardon at all? Bill Clinton wrote a New York Times OpEd published 02/18/2001in which he explained his reasoning.

(1) I understood that the other oil companies that had structured transactions like those on which Mr. Rich and Mr. Green were indicted were instead sued civilly by the government; (2) I was informed that, in 1985, in a related case against a trading partner of Mr. Rich and Mr. Green, the Energy Department, which was responsible for enforcing the governing law, found that the manner in which the Rich/Green companies had accounted for these transactions was proper; (3) two highly regarded tax experts, Bernard Wolfman of Harvard Law School and Martin Ginsburg of Georgetown University Law Center, reviewed the transactions in question and concluded that the companies "were correct in their U.S. income tax treatment of all the items in question, and [that] there was no unreported federal income or additional tax liability attributable to any of the [challenged] transactions"; (4) in order to settle the government's case against them, the two men's companies had paid approximately $200 million in fines, penalties and taxes, most of which might not even have been warranted under the Wolfman/Ginsburg analysis that the companies had followed the law and correctly reported their income; (5) the Justice Department in 1989 rejected the use of racketeering statutes in tax cases like this one, a position that The Wall Street Journal editorial page, among others, agreed with at the time; (6) it was my understanding that Deputy Attorney General Eric Holder's position on the pardon application was "neutral, leaning for"; (7) the case for the pardons was reviewed and advocated not only by my former White House counsel Jack Quinn but also by three distinguished Republican attorneys: Leonard Garment, a former Nixon White House official; William Bradford Reynolds, a former high-ranking official in the Reagan Justice Department; and Lewis Libby, now Vice President Cheney's chief of staff; (8) finally, and importantly, many present and former high-ranking Israeli officials of both major political parties and leaders of Jewish communities in America and Europe urged the pardon of Mr. Rich because of his contributions and services to Israeli charitable causes, to the Mossad's efforts to rescue and evacuate Jews from hostile countries, and to the peace process through sponsorship of education and health programs in Gaza and the West Bank.

Later in 1981 Bush 43 released transcripts of a phone call between Bill Clinton and then Israeli Prime Minister Ehud Barak that demonstrates a lot of the pressure that Clinton was receiving. Remember that Bill Clinton ended his Presidency with an all-out push to achieve Peace in the Israeli - Palestinian conflict. On August 18, 2001 Josh Marshall discussed the transcripts in his then very new Talking Points Memo blog. This timing is interesting. The Rich pardon was big news at the time, and totally disappeared from the news less than a month later when it was eclipsed by 9/11. There is no working link I have found to the original Newsweek article by Isikoff which Marshall quotes.

Isikoff editorializes thus:

The transcripts offer no “smoking gun” showing that the former president was motivated by large donations to his presidential library or by generous campaign contributions. But the conversations do show that, in sharp contrast to the picture painted by some of his former aides, Clinton was keenly aware of details of the Rich case, and appeared determined to grant the highly questionable pardon even though, as he admitted to Barak, there was “almost no precedent in American history.”

No smoking gun? I'll say. The transcripts don't seem to contain anything even touching on this point.

Say whatever you will about the wisdom of the Marc Rich pardon, but the transcripts themselves seem to confirm a key component of Clinton's story -- that Ehud Barak, then Prime Minister of Israel, was lobbying heavily on Rich's behalf because, as he says in the transcripts, the fugitive financier had “[made] a lot of philanthropic contributions to Israeli institutions and activities like education" and because "it could be important (gap) not just financially, but [because] he helped Mossad [the Israeli intelligence agency] on more than one case."

As I look at this history two things jump out at me. First, the pardon itself had many factors that could easily justify it. Second, it is extremely doubtful with all the high level outside pressures on Clinton that anything that Eric Holder might have done except perhaps the criminal act of destroying the paperwork at the last minute might have changed Clinton's decision to pardon Marc Rich. Today this is nothing but a Senate Republican ploy to throw red meat to the extreme Clinton-hating elements in the Republican right-wing and to tar the Obama administration with elements of that irrational Clinton-hate that remains so active the much of the extremist elements of the Republican party. I doubt we'll be hearing more about it from now on. It's now just yesterday's news.