The U.S. Attorney in Manhattan announced yesterday that a cooling-off agreement had been reached with the giant Swiss commodities trading firm that has been resisting a federal grand jury probe examining whether it shifted profits from its New York subsidiary to Swiss headquarters to avoid paying U.S. taxes.
Sources close to the case said the U.S. government may enter into direct negotiations with Switzerland to obtain the Marc Rich & Co. AG documents that the grand jury has been seeking for more than 16 months.
U.S. Attorney Ralph Giuliani declined to say whether federal prosecutors would formally request the Rich documents from the Swiss government.
"All I can say is that every effort will be made" to obtain the documents during the next four weeks, he said.
Jurg Leutert, the legal adviser at the Swiss embassy, declined to comment. But the Swiss government has urged the United States several times to ask for the documents using Swiss laws that require that government to cooperate with countries investigating tax fraud.
The Swiss government formally entered the case last Friday night when it seized documents Rich & Co. had finally agreed to supply to the New York grand jury. The Swiss cited that nation's laws prohibiting Swiss companies from revealing business secrets to foreign governments.
Last Monday, U.S. District Judge Leonard Sand ordered a hearing to determine what the court should do. Sand said he would consider prohibiting Marc Rich from doing business in the United States.
That hearing was postponed until Sept. 19 after the agreement was reached with Rich & Co. yesterday.
Rich, which had appealed its case all the way to the Supreme Court, finally responded to the U.S. subpoenas after Sand slapped a $50,000-a-day fine on the giant commodities trader June 29. The fine totals $2.45 million today.
Under the terms of the agreement, Rich will continue to pay $50,000 a day until the documents are released.
Sources close to the case think Rich & Co. anticipated that the Swiss would prevent the subpoenaed documents from being sent to the United States.
Last week, federal agents intercepted documents of the former Rich subsidiary that were being shipped to Switzerland. Federal prosecutors contend those documents were being sent out of the country in anticipation of last Friday's Swiss action.
Attorneys for the former subsidiary said that the New York lawyer in charge of producing documents was in Switzerland and the papers were being shipped there merely for his convenience.
Also contributing to this story was special correspondent John Kennedy.