A federal district judge today demanded that some documents subpoenaed by a grand jury probing possible tax evasion by the Swiss commodity trading firm Marc Rich & Co., AG, be produced by next Monday.
On Tuesday, Judge Leonard B. Sand, angered after learning that two steamer trunks full of subpoenaed documents were seized by federal agents Monday night just before they were to be flown to Switzerland, had ordered the papers to be delivered to the court by noon today.
Sand agreed to extend the deadline after attorneys for Clarendon Ltd., AG, until recently a subsidiary of Marc Rich, said they could not physically produce the documents in time.
Sand, who fined the parent Swiss company $50,000-a-day because it refused to comply with grand jury subpoenaes, told attorneys for the former subsidiary that he was mystified by the length of time it has taken Clarendon to supply the documents.
"We are not dealing with a mom-and-pop grocery store. We are dealing with a worldwide commodity trader which, from all I have been told, engages in financial transactions involving literally billions of dollars, using telexes, telephones, all of the modern devices for communications," Sand said.
"I really do not understand why such an organization could not cause to be brought here to the one central location every document called for by subpoena," even if those documents are in Paris or Germany, Sand continued.
For the last 18 months, federal prosecutors have jousted with Marc Rich over documents that reportedly will show whether its former subsidiary, now called Clarendon, sold oil at a big loss to its Swiss parent to hide $100 million or more in profits from U.S. tax authorities.
After the daily fines passed the $1 million total and customers became wary of orders to attach Marc Rich assets, the Swiss company backed off last week and agreed to supply the documents no later than Aug. 19. By that time the company's fine will have reached $2.6 million.
Marc Rich International Ltd., which was Clarendon's name when it was a subsidiary of the Swiss firm, had agreed to comply with the subpoenas issued to it by the grand jury and has supplied about 200,000 documents so far. But there are many more thousands of documents, which Clarendon's lawyers said included telexs, correspondence and trading records, due from Clarendon, as well untold numbers to be supplied by the Swiss firm.
The Swiss trading firm was founded nine years ago by Marc Rich, who left the big British firm Philipp Brothers (now part of Phibro/Salomon Brothers Inc.) after a salary dispute. Marc Rich & Co. reportedly does more than $10 billion of business each year--most of it trading petroleum, tin and gold.
Rich, and his associate Pincus Green, once directed the trading empire from New York, but both reportedly have relocated to Switzerland.
Little is known about the secretive Rich who is also co-owner of the company that owns Twentieth Century-Fox Film Production Co.