ZUG, Switzerland — Zug has bloomed into Switzerland's wealthiest state, its prettily preserved old town surrounded by plush office towers and bustling factories and its suburbs home to hundreds of millionaires.
So city leaders perhaps could afford to be less than enthusiastic when shadowy financier Marc Rich — who for many years was Zug's biggest taxpayer and benefactor — asked for their help in his campaign to get his now controversial pardon from then-President Bill Clinton.
While international and other Swiss public figures petitioned Clinton on Rich's behalf, Mayor Christoph Luchsinger and Vice Mayor Toni Guegler merely wrote a studiously polite letter addressed to Rich himself Dec. 5:
"On your own request the City Council of Zug confirms the following: Mr. Marc Rich is known to the City Council of Zug for many years as an international businessman and chairman of different firms registered in Zug. As a head of this (sic) companies, Mr. Marc Rich always fulfilled his obligations and his duties to the City of Zug.
"The City Council of Zug is also aware of the fact that Mr. Marc Rich has been very charitable for many years within important projects."
Rich was less than impressed.
On Marc Rich & Co. Holding GmbH letterhead, he sent a fax the same day to his longtime U.S.-based attorney Robert Fink: "I've just received the attached letter from the Mayor and Vice Mayor of Zug. You can tell that it's not exactly what I asked for. I don't know if you want to use this letter as it is or if you like me to try to get some changes."
Fink's answer is unknown.
By comparison, the socialist mayor of nearby Zurich, Josef Estermann, said this in a letter sent to Rich's lawyers but addressed to the U.S. president:
"I have known Mr. Rich for some time and confirm to you that he is an honest, upright citizen who has also been very charitable for many years. Any wrongdoing that he has been accused of must have been largely surpassed by his voluntary contributions to society as a whole over the almost 20 years that he has been out of the country."
The local Green-Alternative Alliance, long a critic of Rich's presence, is gleeful over the letter from Zug's leaders.
"For 20 years, Marc Rich was one of the biggest political bones of contention here. They knew if they wrote Clinton a pardon letter, then all hell would have broken loose," says Green party member Josef Lang, Switzerland's most vocal critic of Rich.
Rich and a handful of other ambitious commodities traders arrived in Zug in the early 1970s to make their fortunes on oil markets.
He made the town his home in 1983 to avoid an indictment by a U.S. federal grand jury on more than 50 counts of fraud, racketeering, trading with Iran during the U.S. Embassy hostage crisis and evading more than $48 million in income taxes — crimes that could have earned him more than 300 years in prison.
Switzerland didn't regard tax evasion as a crime and, as a neutral country, didn't have any embargo against Iran and so it refused to treat Rich as a crook or hand him over to the United States despite strong diplomatic pressure.
"The establishment defended him and local people argued that he was good for Zug because he paid high taxes and sponsored local culture and the ice hockey team," Lang says.
Lang faced public ostracism in the 1980s over his party's campaigns against Rich's dealings with unsavory regimes.
But public sentiment turned in 1992, when locked-out strikers from West Virginia's Ravenswood Aluminium Corp. demonstrated in Zug against Rich's control of their company, recalls Lang, whose party now holds five of the 40 seats on the town council.
"And now the defenders of Rich are as isolated as we once were," he adds with a grin.
There are an estimated 2,000 millionaires among Zug's 100,000 inhabitants. While his offices are in Zug, Rich lives in nearby Meggen, a suburb on Lake Lucerne's "Gold Coast," whose residents include Russian pianist Vladimir Ashkenazy and Irish flutist James Galway as well as wealthy industrialists and lawyers.
Zug doesn't seem particularly concerned America's formerly most wanted fugitive has agreed to sell his Marc Rich & Co. Investments to Russian-owned Crown Resources and retire from most of his business activities.
"We have enough companies without Marc Rich," Robert Bisig, director of Zug's economic department, says with a shrug when asked if the deal will have any local impact.
Anyway, Crown Resources is based in Zug, too, as is the commodities giant Glencore, which was founded by Rich but renamed after he sold out in 1993.
In all, some 20,000 companies are registered in Zug, including 1,000 new firms last year alone.
Foreign companies are attracted by the educated labor force, top schools, the proximity of the economic hub of Zurich, the quality of life surrounded by lakes and mountains, and above all Zug's famously low taxes.
"We are the state with by far the lowest taxes," Bisig says proudly in an interview in the government's airy headquarters. "The taxpayer is always treated as a valued customer rather than as someone who owes us a debt or is a potential tax evader."
Lang worries Zug's success story has a downside.
"There is the danger that shady firms will come to Zug because they know that they can hide in the mass of other new companies and the police and legal system simply won't be able to cope," he says.
Lang fears the expansion of Crown, one of Russia's largest financial industrial conglomerates, may provide a cover for Russian organized crime — but stresses there's no evidence Crown is under mob influence.
Bisig says he's confident local authorities can ensure that all the companies stay within the law.
Until now, there haven't been any problems, he insists. He points to the local jail visible from his third-floor office and says none of the inmates are linked to financial or tax crimes.
And, as for Zug's most notorious financier, he adds, "Like everyone else, Marc Rich has always complied with Swiss law."