An angry federal judge in New York said yesterday that he is willing to consider actions to stop the giant Swiss trading firm Marc Rich & Co., AG, and its former subsidiary from ever doing business again in the United States.
U.S. District Judge Leonard B. Sand also said he wants to investigate whether the former subsidiary--which was quietly sold by Rich on June 30 to three of its five stockholders--tried to fly documents to Switzerland last week knowing that the Swiss government planned to use its secrecy laws to prevent documents subpoenaed by the U.S. Court from being sent to New York.
Federal agents acting on a tip intercepted two steamer trunks full of the former subsidiary's documents and took them off a Switzerland-bound plane.
For 18 months, Rich had resisted subpoenas from a federal grand jury investigating whether the commodities firm had shifted more than $100 million from its New York subsidiary to the Swiss parent to avoid paying U.S. taxes.
But on Aug. 5, Rich finally agreed to supply the subpoena--after Sand levied a $50,000-a-day fine and ordered more than 30 companies with which Rich does business to attach any of the Swiss firm's assets they might have in their possession.
Mortimer Maneker, who represented Rich at the hearing yesterday, said the Swiss trading firm, which has revenues in excess of $10 billion, has made a good-faith attempt to comply with Sand's subpoena.
Maneker said 200,000 documents had been shipped from Switzerland before the Swiss authorities moved and that those documents would be supplied to the court. Maneker said he did not know how many or which documents were seized by the Swiss. He also said he could not say whether or not those documents could be supplied to the court.
Sand--citing the quiet sale of the subsidiary, "the steamer trunk caper," and Rich's long resistance of the subpoenaes--said the "episodes that have happened . . . would be called ludicrous if they were not so serious."
The Swiss government, which has taken a strong interest in the case, said that once it learned Rich & Co. had agreed to honor the subpoena, Swiss prosecutors were forced to act because Swiss laws prohibit companies from divulging "business secrets" to foreign governments.
The Swiss said that if U.S. prosecutors want the documents they can use either the tax treaty between the two nations or a new Swiss law that requires Switzerland to cooperate and produce documents in cases where tax fraud is suspected.
But lawyers here said it is doubtful the Rich case could qualify under the strict Swiss definition of tax fraud.
The Rich subsidiary--which was sold quietly June 30 to three of its original five shareholders--is alleged to have purchased oil at an excessive price from the Swiss parent in order to shift $100 million of its profits to Switzerland.
Several lawyers said that Switzerland has to protect its time-honored secrecy laws, a major reason that many companies do business in the European country.
Sand said he wanted to investigate not only whether the former subsidiary, now called Clarendon Ltd., tried to ship documents to Switzerland in the hopes that they would be seized by Swiss authorities, but also whether the sale of the subsidiary itself was a "sham and subterfuge."
Swiss officials said they did not act to help Rich & Co. by seizing the documents, but only because a Swiss law might be violated if Rich complied with the New York court.