Electricity supply deal with fraud fugitive angers Labour

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The Independent Online
LABOUR yesterday demanded that the Government explain why the first foreign licence to trade in British electricity was awarded last week to a Swiss company whose chairman is wanted in the United States on charges of tax evasion, fraud and racketeering.

Marc Rich, a 58-year-old commodity dealer and chairman of Rich and Co, fled the US in 1984. He was described in Congress as 'the largest indicted tax evader in our nation's history'. Lawyers estimated that, if convicted, Rich faced a theoretical maximum sentence of 300 years' jail.

Rich now runs the multi-billion-dollar oil, minerals and metals trading empire from Zug, Switzerland. The country does not have a comprehensive extradition treaty with the US.

Despite knowing that if Rich set foot in Britain he could be arrested by Scotland Yard and extradited, the Office of Electricity Regulation (Offer) gave Rich and Co a licence on Friday to buy privatised electricity and sell it to industrial users.

Offer said it was aware of Rich's background, but the accounts and business plan presented by the company's London office gave it no reason to withhold a licence. It is understood that Department of Trade and Industry ministers did not know about the deal.

Martin O'Neill, Labour's Energy spokesman, said yesterday: 'Tim Eggar (the Energy minister) will have to explain why a company run by a man under investigation by the Americans was granted a licence. Both Offer and Mr Eggar have a duty to ensure that any company dealing in British electricity has a suitable financial basis.'

Offer has allowed Rich & Co to supply 4,600 non-domestic premises. In 1994 it will be able to supply 50,000 customers. In 1998 all limits will be abolished.

The forerunner of Rich and Co was founded in New York in 1974. In 1982, US prosecutors laid subpoenas alleging that the company had broken oil-price regulations in 1980-81 and shipped profits to Switzerland to avoid US taxes.

The following year, Marc Rich International, Rich himself, and Pincus 'Pinky' Green, a company founder, were indicted on charges of racketeering, fraud, tax evasion and illegal trading with Iran.

The alleged unpaid taxes of dollars 48m ( pounds 32m), and alleged illegal oil profits of dollars 50m, were described as 'the largest tax-evasion scheme ever prosecuted'.

The companies pleaded guilty to 38 lesser charges of making false statements to federal authorities and tax evasion. They were allowed to operate in the US, but charges against Rich and Green themselves were not dropped. Both are still wanted men.

(Photographs omitted)