Doing Well by Doing Good: ‘Tax Cheat’ Trumpets Largesse

Foundation Lauds Pardoned Fugitive Marc Rich as New York Seeks $137 Million Tax Debt

By Daniel Treiman

Published April 25, 2003, issue of April 25, 2003.
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Marc Rich, the pardoned tax fugitive, has given away more than $100 million in the last two decades, according to an elegant, hard-bound history of his philanthropic work issued recently by his foundation.

It turns out, though, that even if recipients returned every penny, it still might not be enough to settle his tax bill. New York state tax authorities told the Forward that a two-year-old warrant seeking $137 million from Rich in unpaid state taxes and fines remains outstanding.

The billionaire financier is best known as the recipient of a controversial January 2001 pardon from then-president Bill Clinton. Rich had fled the United States for Europe in 1983 shortly before a grand jury indicted him on charges that he and his associates plotted to evade $48 million in federal taxes and violated sanctions against Iran while Americans were being held hostage there.

But the Switzerland-based Rich Foundation for Education, Culture and Welfare is highlighting another side of Rich’s activities during the last two decades. In recent months, it has mailed out approximately 1,000 copies of a hard-bound, 105-page commemorative book detailing 20 years of Rich’s charitable work. The book has been sent to other foundations, non-profit organizations and journalists around the world, said Avner Azulay, the Rich Foundation’s Israel-based managing director, in an e-mail to the Forward.

Between 1981 and 2001, Rich’s foundations gave approximately $115 million to nearly 1,200 organizations in more than 50 countries, according to the book. The majority of Rich’s giving — $60.2 million — has been in Israel, where he has funded a diverse array of cultural, educational, social welfare and Jewish-Arab coexistence projects. Rich has also given widely to both Jewish and non-Jewish causes in Latin America and Europe, and he donated $395,000 to fund projects, such as public-health efforts, in the Palestinian territories.

“Outside the United States, if you ask people about Marc Rich in many Jewish communities who have benefited from his largesse, I’m not sure they know anything other than Marc Rich the philanthropist,” said Mark Charendoff, president of the Jewish Funders Network, a New York-based group that provides services for Jewish grant-makers.

Charendoff called Rich “an enormously generous man” and said his philanthropies have “been involved in some very creative projects” and are “very effective funders.”

But even as Rich’s foundation is promoting his charitable efforts, a spokesman for the New York State Department of Taxation and Finance, Michael Bucci, told the Forward that a warrant filed in March 2001 against Rich seeking $137 million in unpaid state taxes and penalties remains outstanding. Bucci said that because of state taxpayer privacy laws, he was unable to comment as to whether payments have been made on this balance. When the warrant was filed, the taxation department said it reflected a debt of $26.9 million in back taxes from the years 1980-1982, $13.5 million in penalties and $97.4 million in interest.

“There have been conversations with Mr. Rich’s representatives,” Bucci said. “We’re not able to characterize or comment on them at this time.”

Marvin Smilon, a public affairs officer for the U.S. Attorney’s Office for the Southern District of New York, said that there are not currently any publicly filed federal charges against Rich. He said, however, that a federal investigation into the circumstances of Rich’s pardon remains ongoing.

Azulay, a former Mossad agent, said that questions about Rich’s legal issues and personal matters are “irrelevant to the Rich Foundation’s activity, before or after the pardon.” Rich did not reply to an e-mail seeking comment.

One of Rich’s most prominent gifts was to Birthright Israel, the $210 million Jerusalem-based partnership between Jewish communities around the world, the Israeli government and Diaspora Jewish philanthropists that has brought 40,000 young Jews on trips to Israel since 2000. As one of its philanthropic partners, Rich pledged $5 million to the program.

Rich, who has renounced his American citizenship, has been more modest in his giving to programs in the United States — such gifts total only $3.7 million. According to Azulay, more than $3 million of that was given to cancer research, a major focus of giving for Rich, whose 27-year-old daughter, Gabrielle, died of complications from leukemia treatment in 1997.

Only 17 American Jewish groups and institutions are listed in the commemorative book as having received funding for American-based projects, including, among others, several yeshivas, the Center for Jewish History in New York and the Anti-Defamation League.

Rich’s giving, and the suspicion that it contributed to the willingness of prominent American Jews and Israeli officials to support his clemency effort, sparked an uproar in some segments of the American Jewish community.

Rabbi Eric Yoffie, president of the Union of American Hebrew Congregations, blasted those who had supported Rich’s pardon appeal after accepting his money. Writing in a February 2001 opinion article, the Reform leader argued that the fugitive’s supporters “were bought” by his philanthropy.

Prominent individuals associated with Birthright Israel wrote to the president urging him to pardon Rich. So did the ADL’s national director, Abraham Foxman, whose organization received $250,000 from Rich. Foxman later declared at a press conference that it had “probably” been a mistake to lobby Clinton for the pardon.

Also controversial was the inclusion of letters from grantees testifying to the Rich Foundation’s philanthropy in the pardon appeal sent to the president on Rich’s behalf. The letters were presented as “Letters Expressing Support for the Pardon of Mr. Marc Rich,” but many of the letter-writers have said they were simply letters of acknowledgement and that they had no idea they were to be used in a pardon effort. The foundation solicited many of the letters in the fall of 2000, saying they would be used for a commemorative book. The new Rich Foundation book features more than 50 quotes praising the charitable activities of Rich and his foundation — the bulk drawn from letters that were included in the pardon packet.

Charendoff said he thought that given that Rich had been pardoned, “most people are willing to go on from there and make a fresh start.”

“I realize that’s not universally the case in the Jewish community,” he said. “But there were enough people who I think responded to the pardon by saying ‘If the president saw fit to pardon him, that’s good enough for me.’”

In fact, Azulay wrote in an e-mail, the wave of publicity surrounding the presidential pardon “definitely increased the number of new applicants to the Foundation. Institutions and individuals who had no knowledge of the existence of the Foundation have applied.”

But Yoffie — who has maintained that while a group could ethically accept Rich’s charity, it should not honor him — told the Forward that he is not changing his view on Rich.

“A respectable Jewish organization today would not honor Mr. Rich for his philanthropic activities, because of the questions that have been raised about his character and his criminal activities,” Yoffie said.

A new round of publicity regarding the pardon appeared to be avoided late last month, when U.S. District Judge Gladys Kessler upheld the right of the Bush administration to deny public access to records on the 177 pardons and commutations Clinton approved on his last day in office.

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