Marc Rich inquiry highlights strange bedfellows

On apartheid South Africa, the financier And congressional inquisitors were on the same side

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Buried in the furor over former President Clinton's pardon of Marc Rich is the role the fugitive commodities trader played in supplying oil to South Africa's apartheid government, in violation of international sanctions against the racist regime.

Ironically, two leading congressional inquisitors into Clinton’s last-minute pardon Jan. 20 — Republicans Representative Dan Burton of Indiana and Senator Orrin Hatch of Utah — also worked against U.S. sanctions imposed on the white minority-ruled country in the mid- to late 1980s.

A twist to this tale of strange bedfellows is that Burton, chairman of the House Government Reform Committee, cited Rich’s South Africa sanction-busting activities in the litany of charges against Rich. Burton asked former White House counsel Beth Nolan at a March 1 hearing: Was Clinton “aware that Mr. Rich was violating the embargo of South Africa or that he was trading with Cuba during the Cuban embargo? Did you tell the president any of that?”

Burton then counted those sanction-busting activities among six known violations by Rich of the Trading with the Enemies Act.

In the late 1980s and early 1990s, Burton and Senator Jesse Helms, R-N.C., worked with the International Freedom Foundation, a Washington-based organization in part clandestinely funded by the South African military to prop up overseas support for apartheid.

The goal of the anti-communist group was to gather intelligence on, and discredit, the then-banned African National Congress. (The ANC’s long-imprisoned leader, Nelson Mandela, eventually was elected president with the end of white-minority rule in 1994.) Burton and Hatch voted against key 1986 legislation banning trade and investment with South Africa, even when most of their party sided with Democrats. Burton is also a well-known supporter of Miami-based, anti-Castro Cubans, from whom he has received significant campaign contributions.

Meanwhile, the billionaire Rich, who fled to Switzerland in 1983 to escape tax evasion and other U.S. criminal charges, was South Africa’s biggest supplier of oil (and traded other commodities with the pariah country), contravening U.S., European Community and OPEC embargoes and amassing millions of dollars in profit in the process.

Both Burton and Hatch, who is Senate Judiciary chairman, have railed against Clinton for his eleventh-hour pardon of Rich. Their hearings sought information on a possible quid pro quo for million-dollar-plus donations to Democrats by Rich’s former wife, New York songwriter and socialite Denise Rich. Additional hearings have not been scheduled, but committee staff members say their investigations are ongoing.

“How ironic,” Representative Maxine Waters, a Democrat from California, told The Public i, when informed of Burton’s record on South Africa. “I do think that since he investigates everybody, he should be looked into.”

Height of hypocrisy

“It is the height of hypocrisy that Orrin Hatch or Dan Burton would be opposed to anyone breaking sanctions against South Africa,” said Salih Booker, who was the Democratic professional staff member of the House Foreign Affairs subcommittee on Africa in the mid-1980s. He is now executive director of the Africa Policy Information Center, a nonprofit advocacy organization in Washington.

“Dan Burton called the freedom movement of the African National Congress a terrorist organization and spent most of the time attacking their leadership, notably Nelson Mandela,” Booker said, noting that Burton was the ranking Republican on the Africa subcommittee at the time. “He never had a word against the white supremacists who ruled; he never met with those fighting for freedom, unlike others on the committee, Republicans and Democrats alike.”

Calls seeking comment from the offices of Burton and Hatch, and from the House Government Reform Committee, were not returned.

Even after many of his Republican peers decided to support U.S. trade and investment sanctions against the South African system of racial separation, Burton remained a stalwart against the Comprehensive Anti-Apartheid Act of 1986. So did Hatch. That bill — which became law by garnering a two-thirds majority to override President Ronald Reagan’s veto — outlawed petroleum product exports and imports of South African coal, uranium, iron, steel, textiles, sugar and other agricultural products, and prohibited new investment in the ostracized country.

Foundation funded by Pretoria

The role of apartheid military intelligence in the International Freedom Foundation surfaced in 1995 when Craig Williamson, a notorious South African spy who later became a post-apartheid government informant, revealed that the former Pretoria regime spent up to $1.5 million a year through 1992 to underwrite “Operation Babushka,” as the foundation was known. Its Washington headquarters passed on information about the ANC to a British-based company created by Williamson that was a front for the apartheid government.

A member of the foundations international board of directors disclosed that at least half of the foundations money came from projects undertaken on behalf of South Africa’s military intelligence, New York’s Newsday reported in 1995 after a three-month investigation. And Col. John Rolt, a South African army spokesman, confirmed that “The International Freedom Foundation was a former SA Defence Force Project.”

Burton, Helms and other foundation participants, such as former Republican presidential candidate Alan Keyes, denied knowledge of the South African funding link. But Burton was an active participant. In 1987, for example, when Senator Edward Kennedy, D-Mass., chaired a study of children in apartheid prisons, the foundation retaliated by having the Indiana congressman head an investigation into the ANC’s treatment of children, The Observer of London reported.

“We participated in forums they sponsored,” a Burton aide told Newsday. “They were anti-Communist, and we were happy to work with them to that extent.”

The International Freedom Foundation was created in 1985 by Jack Abramoff, a conservative lobbyist who once represented the late Zairean dictator Mobutu Sese Seko. Abramoff and Duncan Sellars, who served as the foundations chairman, were both Burton campaign contributors but denied knowing about the South African funding, according to media reports in 1995. Abramoff said the foundation had been funded by hundreds of contributors in the United States, Europe and Israel. Apartheid South Africa’s last president, F.W. de Klerk, cut off funding for covert “political” operations in 1992, and the foundation folded in 1994.

While Hatch was not known to be a foundation participant, he was a Reagan loyalist who insisted that harsh sanctions would hurt black workers as much as the white rulers the international community was targeting.

“Let’s do positive economic things, instead of punitive economic things,” he said on CBS Face the Nation in July 1986. Hatch voted for a weaker Senate sanctions bill that failed, and also offered a successful amendment providing $40 million to train black South Africans for leadership positions in a future majority government.

Rich was no. 1 embargo buster

Meanwhile, Rich headed the list of oil suppliers to South Africa, according to the Shipping Research Bureau, an Amsterdam-based watchdog that monitored sanctions-busting commodities trading from 1980 to 1993. (South Africa, while abundant in gold, diamonds, coal and other resources and minerals, has virtually no oil.)

Not only were the apartheid security forces and police waging war against ANC supporters domestically, but the South African Defense Force was backing the guerrilla armies of Angola and Mozambique, trying to overturn the black Marxist governments in those countries. South Africa also had troops in Namibia, then known as South West Africa, in defiance of U.N. resolutions calling for Namibian independence.

“Supporting apartheid was tantamount to prolonging human rights violations in South Africa and the region,” Richard Hengeveld, the former director of the Shipping Research Bureau, wrote in a document submitted to South Africa’s Truth and Reconciliation Commission in 1997. “The availability of liquid fuel in particular was not only a vital requirement to keep the apartheid economy moving, but also, in a literal sense, essential in order to enable the police and military to move into the townships, carry out invasions and bombings of neighbouring countries and continue the illegal occupation of Namibia,” he wrote.

Of 865 identified deliveries by tankers in excess of 50,000 tons from 1979 to 1993, the Shipping Research Bureau found that 149 shipments were linked to Rich; 26.2 million tons, or 15 per cent of the total tonnage uncovered, were attributable to the businessman based in Zug, Switzerland, though “additional deliveries are most likely hidden under the name of front companies.”

An apartheid-era official from the Strategic Fuel Fund—South Africa’s oil procurement agency—confirmed in a recent interview that the former government traded directly with Rich, sometimes through front companies. The SFF considered Rich to be its most reliable supplier during the boycott, said the official, who asked not to be named.

Rich was indicted in 1983 on more than 50 counts of tax evasion, fraud, racketeering and trading with the enemy. The Justice Department charged that he evaded more than $48 million in taxes (the largest tax fraud case in U.S. history), committed mail and wire fraud, profited from “daisy chain” oil sales, and brokered illegal oil deals with Iran during the U.S. hostage crisis. Rich’s companies paid $200 million in criminal fines and penalties in 1984 in connection with the case, but he was not tried as an individual.

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