Mazur: John Deuss Oil Trader Max Bernegger Speaks Monday, 18 December 2006, 2:12 pm Article: Suzan Mazur

John Deuss Oil Trader Max Bernegger Speaks

By Suzan Mazur

Max Bernegger

I remember Max Bernegger's disarming smile the day he walked through the doors at Alexandra Christie, the 1970s fashion company owned by Dutch oil trader John Deuss -- where I was the model. Max was expensively tailored in a dark suit. I had no idea who he was, but I was certain he was not there to write an order for slinky silk chiffon dresses. Max Bernegger was the man behind fashion icon Norman Norell - America's Balenciaga - for many years. He moved with the confidence of a great image maker. However, to my shock and dismay, Max had come to shut down the Alexandra Christie company. And when I found out, his smile seemed somehow inappropriate. I would later discover that his philosophy about success in life was to embrace failure and triumph over it. Maybe it was a lesson that came from a lot of bruised knees on the soccer field in his native Switzerland where he played semiprofessional ball as a kid. I don't think I ever saw Max Bernegger again after those three fateful days when he rolled up the bolts of silk chiffon and took the mannequins for their last spin in the showroom's mirrors. But, we did have subsequent conversations. And he did introduce me to John Deuss after he took a position with Deuss' JOC Oil Company. In fact, Max became John Deuss' star oil trader. [ John Deuss' Editors On Record On The Man] Max Bernegger has now retired from the oil business. He did not know about the Deuss First Curacao International Bank scandal when I reached him by telephone a few days ago. Our conversation follows:

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Suzan Mazur: What was it about Dutch oil man John Deuss that made you toss your high profile fashion industry career in the 1970s for the clang of JOC Oil's telex machines? For years you were the man behind legendary fashion designer Norman Norell. Max Bernegger: I didn't know much about John Deuss before he interviewed me. It was 1974 and Deuss was looking for an advisor for his fashion business. He had a fashion house at 550 Seventh Avenue in Manhattan called Alexandra Christie, which of course is where you and I met. John Deuss - The Manhattan projects] The advisor position lasted three days, because after reviewing Alexandra Christie's performance I suggested that John close the doors of the company. The clothes were pretty but the company lacked structure. John would have had to sink a lot more money into the business to turn it around. Deuss weighed my decision and said to me, "Well Max, if we close the fashion business, you won't be able to advise us." I said, "Look, in good faith I cannot tell you to put more money in." And John said, "I'll make a deal with you. Close the business in three days. I want to hire you for JOC Oil." I liked his deal. Suzan Mazur: Did you ever determine who was in charge at Alexandra Christie? Max Bernegger: Essentially nobody was in charge. John was being fed a lot of bull about the company's profile. Plus the designer was a bit wacky, although her sister was one of John's very competent secretaries. John Deuss did not know the fashion business. Suzan Mazur: What was it about Deuss that you saw? Max Bernegger: John Deuss was a very, very exciting type of guy. He had a cool kind of fire. Highly intelligent and without formal education. He didn't even go to high school as a matter of fact. Suzan Mazur: Because of the explosives accident he had as a teen? Did he drop out of school? Max Bernegger: He did not drop out of high school. He never went. He wanted to go out in life and do things. He probably finished 8th grade. Suzan Mazur: Is that right? Max Bernegger: He told me that. Suzan Mazur: As Deuss would say, "Unbelievable!"

Max Bernegger: There's something very magnetic about him. But you know him too. He would look into your eyes. He was very, very penetrating. I was really fascinated by him. And of course, he offered me a lucrative job. It was big money at the time. He put me in charge of establishing the collecting of waste oil in the New York, New Jersey and Connecticut area. The oil fed a refinery he bought in Bayonne, New Jersey. He was reclaiming oil - taking waste oil from cars in garages - and using it as feedstock to produce #3 and #4 heating oil. There were a lot of crooks involved in collecting this stuff. And you had to be worried about ending up floating in a tank. Honest to God. Suzan Mazur: Like the scrap metal business? Same characters? Max Bernegger: Exactly. Most of them you wouldn't trust across the street. Somehow I was able to convince them to work with us though. I had to be very nice to them. And I can be very nice -- as well as a son of a bitch. Suzan Mazur: You were headquartered though in the Olympic Towers in New York? Max Bernegger: No. No. No. The Olympic Towers came after I established the network. I was working out in New Jersey, at the refinery in Bayonne, New Jersey. In Bayonne, we had the trucks coming in discharging the waste oil. We had to be very careful. Because these guys would try to cheat you with a lot of water in the waste oil and stuff like that. Suzan Mazur: So you put away the Valentino suits. Max Bernegger: It was an unbelievable switch from high fashion to waste oil. It was a lot of fun really. Exhilarating. And the operation became successful. You feel like a winner. You get a lot of confidence. And John Deuss promised me that two years after the operation became successful, he'd get me into New York trading oil, which I, of course, was looking forward to. That was the incentive for all the hard work, for the 16 and 18 hour days I'd been putting in every day and every weekend. Suzan Mazur: Did you socialize with John? Max Bernegger: Oh yes. Lunches, dinners. Travel to Bermuda, to Curacao. Flew with him to Venezuela regarding contracts, etc. John Deuss in business was unbelievably demanding okay. He demanded even of himself as much as he could possibly. He demanded that you do the same. Suzan Mazur: But you got along with him.

Max Bernegger: Oh yes. I got along with him. He challenged me a lot of times. At tennis, etc. I was a pretty good athlete myself -- I'd played soccer in the National League in Switzerland when I was 15. But I was older than Deuss. He was 31. I was about 42. I remember one day in Curacao on the way back from Venezuela. He was at the air check about 150 yards away and he challenged me to a race. I beat him. He didn't like that. It hurt him. I liked him in business too. But he was tough. Suzan Mazur: Did you have any knowledge then of the bank in Curacao, First Curacao International? Max Bernegger: I knew there was a bank. But I had nothing to do with the bank. The charming thing about John Deuss was, the moment business was over he became private. The most unbelievable guy. Gentle. Friendly. And the most generous person I've ever seen. Just to give you a quick idea. Two years ago, I went to visit Jock Ritchie [John Deuss' role model, who also served as an officer of JOC Oil] in Florida. Jock's wife had recently died of Alzheimer's disease and Jock himself had become forgetful. During the visit with Jock, he told me a story about John Deuss. Jock told me that he'd wanted to go to Scotland. And Deuss said to him, "Look don't worry about reservations and all that. I'm going to have my pilots fly you and your wife to Scotland." Ritchie's wife was still alive. And then Deuss said, "When you're ready to come back, I'll send the plane to bring you back." He was generous beyond belief. A really great, wonderful guy. Suzan Mazur: I know how special it feels. John's pilots once flew me back alone to New York from Bermuda. I called in to the fashon house - Donald Brooks, I believe - where I was booked that day, to let them know I'd be late, and no one there would believe I was calling from a jet circling Butler Airfield. In fact, they canceled the rest of my bookings. Max Bernegger: Of course there were times when we had differences. As a matter of fact, I once left John Deuss' company. He was very unhappy with me about that. But it was because one time he really dressed me down. We were on the telephone with somebody sitting there hearing the whole story. I said, "I don't need this type of thing anymore." And I quit. Suzan Mazur: You quit. Max Bernegger: I quit. But John Deuss flew back immediately and tried to convince me to reconsider. Suzan Mazur: What year was that?

Max Bernegger: 1979. Suzan Mazur: And you stopped working with him when? Max Bernegger: About 1979. Suzan Mazur: What was it like trading oil at JOC in the Olympic Towers? A place of great intrigue in the 70s. Aside from Deuss' oil company, the Arab African International Bank and Chief Executive Magazine on the 19th floor, there was Halston on the 20th floor. And on the residence side of the Towers, arms dealer Adnan Khassoggi shared a floor with Kuwait's Alghanim family. . . Max Bernegger: Once in the Towers, I had to learn to trade. I already knew the product from the Bayonne operation. And I knew refining. So it was somewhat easy for me to learn to trade. Oil trading is nice. But it's tough. You have to be very, very precise. You have to know what you're saying. There's no way of backing out. And JOC Oil at the time did not have a very good performance reputation in the market place. Suzan Mazur: I thought it was considered the most important independent oil trader in the late 1970s? Max Bernegger: In the late 70s yes. But we're talking now about 1974-75. We had a big struggle to start working with major oil companies like Mobil, Exxon. Phibro wouldn't deal with us. So I got the hang of the trading, which didn't take very long. John Deuss gave you one month, two months to do the job. I still remember the first Transworld Oil cargo of #2 oil sold. There were only 450,000 barrels. And they were so damned proud to do the deal. I was sweating, making sure I did everything right and proper. And then I had to start rebuilding John Deuss' trading company, later Transworld Oil. I established working connections with all the companies in New York. At one time we had a deal with Gulf Oil to buy 10,000 tons of aviation fuel and jet fuel in Curacao and the price in the meantime went crazy. We had to perform. And Deuss was a little on edge and said, "How do we get out of the deal?" And I said, "Look, John," and Jock Ritchie was with me, "we are going to perform on this deal if it costs us a million dollars." Our reputation was at stake. And he immediately agreed.

I did a deal where I bought Gulf Oil #2 fuel oil in Canada. Picked up some additional heating oil #2 fuel oil from the Venezuelans. And brought it to Australia. Deuss made $4.5 million on that cargo. On a small little nothing cargo. I put those deals together one after the other. And we did incredibly well. One year I made $100 million profit for TWO. Suzan Mazur: Can you tell me about the controversial Soviet deal in which Deuss was slow to pay for shipped Soviet oil because the Soviets failed to provide sufficient signatures on the contract? Max Bernegger: I knew John Deuss owed money to the Soviets. He went to Moscow basically to negotiate and they took his passport away from him. And he called me from Moscow and I was working on another deal and didn't know about this. Deuss said, "Max, I don't know what's going to happen." Suzan Mazur: That was in what year? Max Bernegger: I think it was 1975. And he said, "I'm not sure what's going to happen here." But somehow he went to the Dutch Consulate and got his passport back and he got out of the Soviet Union. The only reason I think they let him go was that there were too many people in the Soviet oil company who would lose their heads if the government found out how stupid they were in their dealings with Deuss. They made some major mistakes with Letter of Credit that went beyond the date. While the Soviets delayed the presentation of the L/C, they increased their crude oil prices -- breaking the agreed upon contract -- as fully loaded ships were en route to the US. John could really have told them, I don't owe you anything. Of course he intended to pay the Soviets. But at the time he was in real trouble. We were happy that he made it back. Suzan Mazur: You said you don't agree that he was one of the catalysts in the collapse of the Soviet Union. I mean he'd been an early player in the Soviet Union trading oil and also in the Arabian Gulf. Max Bernegger: He had the connections to people in the Soviet government who make very important decisions and who were the ones in charge. And when the Soviet Union collapsed, of course, those were the guys who made the money, who were the people you talked to and tried to make deals with. That was the normal thing. Deuss had less influence and connections in Russia than Marc Rich. Deuss had this strength because Oman was behind him. Suzan Mazur: What more can you say about the Soviet collapse over oil?

Max Bernegger: The Soviets at that point were influencing markets because they had so much gasoline in the tanks, holding back as much as they could and then letting it loose on the market. Then, of course, the market was suddenly flooded with the stuff and the prices went down. Suzan Mazur: Do you think Deuss was one of the catalysts in the demise of the Soviet Union? Max Bernegger: I definitely think he probably saw the thing coming. He's very very smart. And when the man sees an opportunity before anybody else sees it, then he will seize the opportunity and capitalize on it. Suzan Mazur: Is Deuss his own master? Max Bernegger: I think John Deuss is totally independent. His whole way of thinking. He's a very unique guy who stands on his own. Who will probably make deals with anybody as long as he can profit.. He has no qualms about that. But I have never known him to be beholden to anybody or to any organization. The only time John Deuss had very strong backing was in the 1980s with Oman. That was organized through a Shell guy. I don't know who that guy was. [Michael Corrie who introduced spymaster Ted Shackley to John Deuss?] But the South Africa network was organized long before Deuss knew Ted Shackley. The South African thing was something in which I was involved early on. I made the connection with the international oil company that needed oil in South Africa. But they couldn't bring it in. The oil came from Saudi Arabia, but was not allowed to go from Saudi Arabia into South Africa. There was an exchange okay. The oil could not come from any of the Gulf states. They all boycotted South Africa. The refineries in South Africa were partly owned by US Majors. And they had to feed their refineries. So the deal was that they would deliver to Deuss Saudi light crude. They would sell to Deuss' Transworld Oil Saudi crude, which TWO would sell on the world market. TWO would then supply non-Saudi crude to the South African refinery. Deuss had a deal with a Middle East supplier where he could exchange the Saudi crude. Bring Mid Eastern crude to South Africa to a refinery, a partly-owned American refinery. It was altogether legal because it was delivered by an offshore company and by a Mid Eastern willing supplier who would close his eyes to the final destination of the crude. Suzan Mazur: And how did you feel about world opinion regarding the South African apartheird regime? Max Bernegger: I knew a few other trading companies that sold oil to South Africa on similar conditions. It is a lousy explanation and certainly not a moral one.

Suzan Mazur: Do you think what's happened with the bank in Curacao - the carousel fraud VAT-skimming deposits - may have been some type of payback by the Russians for Deuss taking advantage of the missing signature contract of the 1970s? The bulk of the 2,500 FCIB accounts in question are said to be Russian. Max Bernegger: I don't think so. If this was payback by the Russians, it would not have been from that time. Deuss has done deals with the Russians in between. Major deals. With Russian oil companies controlled by the government. I don't think this was retribution. There will always be high stakes. Whatever is behind this, which I think is more Deuss being questioned to find out what is happening and who is involved and so forth. Suzan Mazur: Does it make sense to you that he's being held for months without charge? Max Bernegger: It's totally ridiculous. He went back to Holland, his country, voluntarily to answer questions. That they would put him in custody there is ridiculous. The man is so prominent. If he wanted to flee, he could have flown from Bermuda to another country where there's no extradition. And it is outrageous to keep him in custody for months without indicting him and keep him at Christmas. I think they're just putting tremendous pressure on him to come up with whatever they want to know. Suzan Mazur: Then you have to wonder why a bank like FCIB gets shut down over financial irregularities while the big banks are maybe penalized by a fine and continue to operate. Max Bernegger: Because it's a little bank. If you're a big bank, say Citibank, it's a different story. Little banks can get shut down very easily. In the Caribbean there are other banks that are so much more secretive. They cannot be touched at all. Why they went after him, I don't know. John Deuss is a brilliant man. I've been in many, many meetings with him with lawyers. He makes lawyers look stupid. He's so smart, so quick. He would avoid anything that would threaten him with jail. It's all so bizarre. Suzan Mazur: Where did you go after you left John Deuss' TWO in 1979? Max Bernegger: I got together with a small company in Texas and started an oil trading company in New York called Quasar Petroleum. It did extremely well. But it came to the point where we needed so much capital to trade big time that we decided we didn't have the money to do it. We needed a few hundred million dollars with credit lines and all that. Then I started a company where we did oil brokering. Within two years we were number two.. We did very well. Made a lot of money. I enjoyed it. It was very successful. I was on top of the world in the fashion business. Next on top of the world in oil trading. Then on top of the world in brokering. I am 74 years old and I feel like I'm 15.

I owe John Deuss an awful lot. He brought me into the oil business and had confidence in me. He changed my life.
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Suzan Mazur's reports have appeared in the Financial Times, Economist, Forbes, Newsday, Philadelphia Inquirer, Bermuda's Mid Ocean News, CounterPunch and Scoop, among others, as well as on PBS, CBC and MBC. She has been a guest on McLaughlin, Charlie Rose and various Fox Television News programs. Email: sznmzr@aol.com