The Soviet Union’s favourite billionaire

Press, 3 December 1982, Page 13

The Soviet Union’s favourite billionaire

WILLIAM SCOBIE,

in Los Angeles, looks

at the career of 84-year-old Armand Hammer, who is poised to cash in on President Reagan’s retreat from sanctions

on Moscow

With that uncanny sense of timing that has made him the world’s favourite financier, Dr Armand Hammer, czar of Occidental Petroleum. flew into Moscow this month to lay the glories of his latest multi-billion dollar Soviet-American energy deal before the new group of rulers in the Kremlin.

Hammer’s visit was planned well before the death of his old friend, Leonid Brezhnev, whose funeral he attended. But it was no lucky guess that brought the man who has been the Soviet Union’s pet capitalist for half a century to the Russian capital at such a crucial juncture. Hammer had learnt in advance of Ronald Reagan’s turnaround on the gas pipeline sanctions that have so irritated his European allies. He is taking advantage of that retreat to promote his own scheme to build for the Russians a 3000-mile lique-fied-coal pipeline from Siberia to Moscow — a project at least as large as the one the White House was at such pains to halt. At a cost approaching $lO

billion, with the Italian Government as his partner and Secretary of State George Shultz’s old firm, Bechtel, doing the engineering, the oil magnate and wheeler-dealer-supreme is embarking, at the age of 84. on an undertaking that should crown his career as East-West economic gobetween.

It was detente-minded Shultz, a former Nixon crony, who prevailed on Reagan over bitter opposition from hardliners at Defence and Commerce to end the ban on sales of United States-made equipment and technology for the SovietEuropean gas pipeline. Word that the major obstacle in the path of his new venture was about to fall soon reached Hammer. ‘‘The Doctor” — as his reverent staff call him — whistled up a helicopter to lift him from Oxy’s 16-storey Los Angeles tower roof on the first stage of his journey, with officials from Bechtel, the Californiabased world-wide construction firm, in tow. Once in Moscow, he scooped United States business rivals also in the city

for an American-Soviet Union trade meeting by gaining a series of private talks with top officials. Spry, short (sft 4in), and ever-smiling, the good Doctor has won his edge with the Soviets — and his understanding of the Russian mind — over long years. Of Rus-sian-Jewish stock, he stands between East and West “not,” according to one critic, “as a bridge but as a toll-gate.” A physician who never practised medicine, he made a million in the drug business in New York before he was 20, then sailed to revolutionary Russia in search of adventure and spoils. There he caught Lenin’s eye, and the rest is history.

A barter deal that swapped United States grain for Russian jewels and art treasures — the start of his world-famous collection — led to Hammer becoming agent and wheel-greaser for 38 foreign companies in the Soviet Union of the 19205. “'Assist Comrade Hammer in every way,” Lenin enjoined his colleagues. Returning to the United

States in the Stalin era, Hammer amassed more millions. To please his third (and present) wife, he retired at 58, only to become “hopelessly bored.” He bought an exhausted little California oil company and, in one of the more dazzling business feats of the age, turned it into today’s $l5 billion-a-year Oxy oil and chemicals conglomerate.

In the early 19705, he broke with the rest of the industry to sign lucrative agreements with the Libyan dictator, Muammar Gadaffi, who was being boycotted by the oil world. Next he used his friendship with Lord Thomson to buy into the North Sea.

Today, Oxy produces the lion’s share of North Sea oil, and despite Prime Minister Margaret Thatcher’s levy — which added $67 million to

Hammer’s tax bill last year — oil and gas earnings remained steady. By way of reprisal, Oxy has cancelled plans to build $250 million of refineries and plant in the United Kingdom. Deals with the Soviets remain Hammer’s forte. The most spectacular was in 1973, a $2O billion agreement to barter United States fertilisers for Soviet chemicals. Richard Nixon was sufficiently impressed by his pull with the Politburo to offer him the Moscow Embassy. The Doctor’s flamboyant, some say shameless, courtship of the Communists, and his unique ability to turn a rouble, has led congressional critics, and even a few of his own stockholders, to dub him a “Commie” sympathiser. “Billions of dollars are going to the sworn enemies of America,” grumbles a share-

holder, Carl Olson, of Los Angeles. “I keep my 200 shares only because they allow me to protest the Doctor’s deals.”

system.” As for Reaganaut policies which have led to what he calls “the worst ever Soviet-, United States relations.” he charges that the sanctions merely handed to European firms some $2 billion in contracts that might have gone to the United States. He is critical, too, of “donothing" administration attitudes towards alternative energy sources. The neglect, he says, could lead to a tripling of O.P.E.C. oil prices to $lOO a barrel by the 19905. “That’s what could happen if we go on ignoring alternatives to oil, and I make the forecast despite this present glut.”

Hammer’s fulsome words for Brezhnev (“with tears in his eyes he told me how much he wanted peace”) irritated many of these critics. In fact, Russians seem to be unusually prone to tears in Hammer’s presence; Lenin, “a man of intense human sympathy,” also wept as the Doctor described to him starving children he had seen on a business trip to the Urals. What is the substance in the complaints? In his new, $1.5 million oak-panelled executive suite atop the Oxy tower (four private dining rooms, an art gallery), Hammer tells visitors: “My travels have left me with a deep conviction: socialism doesn’t work, and it is going to be replaced by more and more private ventures. I want to hasten that.

“We don’t buy the Russian ideology, they don’t buy ours. Is that a reason not to trade or compete? Let history decide which is the better

His remedy: heavy investment in shale oil and coal-to-petrol projects — two Oxy specialities. Forever trying to widen Oxy horizons, Hammer last March flew three times to Peking to arrange a $230 million deal to build the world’s largest surface coal mine for the Chinese. And on December 3, he will finalise a $4 billion merger — the third largest in United States history — with Cities Cor-

poration, an Oklahoma on outfit. That will put him at the head of the eighth biggest oil major in the United States, with combined sales of $23.3 billion. Hammer shows no slackening in pace as he shuttles from capital to capital in the 28 countries where Oxy operates, working a 16-hour day. He was in Tokyo last week. Inevitably, Wall Street wonders how long he can go on, and speculates on the successor to the Oxy throne.

in his “time off” Hammer plunges into a whirl of activity, attending openings from Lima to London of his travelling art collection, hosting Prince Charles at the dedication of his New Mexico “Armand Hammer United World College,” presenting awards as head of the Government’s “War on Cancer,” receiving them for his frequent charitable hand-outs. He says he gives away most of his seven-figure salary. “Some people call me lucky,” he once told me. “I say you get lucky when you work as hard as I do.” Copyright — London Observer Service.