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Bin Laden Family Could Profit From a Jump
In Defense Spending Due to Ties to U.S. Bank
By DANIEL GOLDEN, JAMES BANDLER and MARCUS WALKER
Staff Reporters of THE WALL STREET JOURNAL
September 27, 2001
If the U.S. boosts defense spending in its quest to stop Osama bin
Laden's
alleged terrorist activities, there may be one unexpected
beneficiary: Mr.
bin Laden's family.
Among its far-flung business interests, the well-heeled Saudi Arabian
clan --
which says it is estranged from Osama -- is an investor in a fund
established
by Carlyle Group, a well-connected Washington merchant bank
specializing in
buyouts of defense and aerospace companies.
Through this investment and its ties to Saudi royalty, the bin Laden
family
has become acquainted with some of the biggest names in the
Republican Party.
In recent years, former President Bush, ex-Secretary of State James
Baker and
ex-Secretary of Defense Frank Carlucci have made the pilgrimage to
the bin
Laden family's headquarters in Jeddah, Saudi Arabia. Mr. Bush makes
speeches
on behalf of Carlyle Group and is senior adviser to its Asian
Partners fund,
while Mr. Baker is its senior counselor. Mr. Carlucci is the group's
chairman.
Osama is one of more than 50 children of Mohammed bin Laden, who
built the
family's $5 billion business, Saudi Binladin Group, largely with
construction
contracts from the Saudi government. Osama worked briefly in the
business and
is believed to have inherited as much as $50 million from his father
in cash
and stock, although he doesn't have access to the shares, a family
spokesman
says. Because his Saudi citizenship was revoked in 1994, Mr. bin
Laden is
ineligible to own assets in the kingdom, the spokesman added.
The bin Laden family has long disavowed Osama, and has cooperated
fully with
several federal investigations into his activities. The family
business,
headed by Osama's half-brother Bakr, epitomizes the U.S.-Saudi
alliance that
the suspected terrorist often rails against. After the 1996 truck
bombing in
Dhahran, Saudi Arabia, that killed 19 U.S. servicemen, Saudi Binladin
Group
built military barracks and airfields for U.S. troops.
But the Federal Bureau of Investigation has issued subpoenas to banks
used by
the bin Laden family seeking records of family dealings, a person
familiar
with the matter said. This person said the subpoenas weren't an
indication
the FBI had found any suspicious behavior by the family. A family
spokesman
said he had no knowledge of the subpoenas but that the family
welcomes them
and has nothing to hide.
People familiar with the family's finances say the bin Ladens do much
of
their banking with National Commercial Bank in Saudi Arabia and with
the
London branch of Deutsche Bank AG. They also use Citigroup Inc. and
ABN Amro,
the people said.
"If there were ever any company closely connected to the U.S. and its
presence in Saudi Arabia, it's the Saudi Binladin Group," says
Charles
Freeman, president of the Middle East Policy Council, a Washington
nonprofit
concern that receives tens of thousands of dollars a year from the
bin Laden
family. "They're the establishment that Osama's trying to overthrow."
Mr. Freeman, who served as U.S. ambassador to Saudi Arabia during the
Gulf
War, says he has spoken to two of Osama's brothers since hijacked
airplanes
rammed the World Trade Center and the Pentagon on Sept. 11. They told
him, he
says, that the FBI has been "remarkably sensitive, tactful and
protective" of
the family during the current crisis, recognizing its longstanding
friendship
with the U.S.
A Carlyle executive said the bin Laden family committed $2 million
through a
London investment arm in 1995 in Carlyle Partners II Fund, which
raised $1.3
billion overall. The fund has purchased several aerospace companies
among 29
deals. So far, the family has received $1.3 million back in completed
investments and should ultimately realize a 40% annualized rate of
return,
the Carlyle executive said.
But a foreign financier with ties to the bin Laden family says the
family's
overall investment with Carlyle is considerably larger. He called the
$2
million merely an initial contribution. "It's like plowing a field,"
this
person said. "You seed it once. You plow it, and then you reseed it
again."
The Carlyle executive added that he would think twice before
accepting any
future investments by the bin Ladens. "The situation's changed now,"
he said.
"I don't want to spend my life talking to reporters."
A U.S. inquiry into bin Laden family business dealings could brush
against
some big names associated with the U.S. government. Former President
Bush
said through his chief of staff, Jean Becker, that he recalled only
one
meeting with the bin Laden family, which took place in November1998.
Ms.
Becker confirmed that there was a second meeting in January 2000,
after being
read the ex-president's subsequent thank-you note. "President Bush
does not
have a relationship with the bin Laden family," says Ms.
Becker. "He's met
them twice."
Mr. Baker visited the bin Laden family in both 1998 and 1999,
according to
people close to the family. In the second trip, he traveled on a
family
plane. Mr. Baker declined comment, as did Mr. Carlucci, a past
chairman of
Nortel Networks Corp., which has partnered with Saudi Binladin Group
on
telecommunications ventures.
Former President Carter met with 10 of Osama's brothers early in 2000
on a
fund-raising trip for the Carter Center in Atlanta. According to John
Hardman, executive director of the center, the brothers told Mr.
Carter that
Osama was completely removed from the family. After Mr. Carter and
his wife
followed up with breakfast with Bakr bin Laden in New York in
September 2000,
the bin Laden family gave $200,000 to the center.
"We don't have any reason to think there's a connection" between
Osama and
the rest of the family, Mr. Hardman says.
During the past several years, the family's close ties to the Saudi
royal
family prompted executives and staff from closely held New York
publisher
Forbes Inc. to make two trips to the family headquarters, according
to Forbes
Chairman Caspar Weinberger, a former U.S. secretary of defense in the
Reagan
administration. "We would call on them to get their view of the
country and
what would be of interest to investors."
Mr. Weinberger said no trips to Saudi Arabia were planned. "If we
went," he
said, "we may or may not call upon them. I don't think the sins of
the son
should be visited on the father or the brother and the cousins and
the aunts."
There is no indication President George W. Bush has met any of the
bin
Ladens, but he was indirectly linked to one of them two decades ago.
His
longtime friend James W. Bath, who met Mr. Bush when they were both
pilots in
the Air National Guard, acted as a Texas business representative for
Osama's
older brother, Salem bin Laden, from 1976 to 1988, when Salem died in
a plane
crash. Mr. Bath brought real-estate acquisitions and other deals to
Salem bin
Laden, an ebullient man who headed the family construction business.
Mr. Bath
generally received a 5% interest as his fee, and was sometimes listed
as a
trustee in related corporate documents. Mr. Bath acknowledged that
during the
same period he invested $50,000 in two funds controlled by Mr. Bush
but said
that stake was unrelated to his dealings with Mr. bin Laden.
Among the properties that Salem bin Laden bought on Mr. Bath's
recommendation
was the Houston Gulf Airport, a lightly used airfield in League City,
Texas,
25 miles east of Houston. But Mr. bin Laden's hope that it would
develop a
major overflow airport for Houston never materialized, in part due to
concern
over wetlands. Ever since his death, his estate has sought to sell
the
airfield -- without success. Today, it is still on the market.
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-
Fearing Harm, bin Laden Kin Fled From U.S.
By PATRICK E. TYLER
September 30, 2001
New York Times
WASHINGTON, Sept. 29 �" In the first days after the terror attacks
on New York
and Washington, Saudi Arabia supervised the urgent evacuation of 24
members
of Osama bin Laden's extended family from the United States, fearing
that
they might be subjected to violence.
In his first interview since the attacks, Saudi Ambassador Bandar bin
Sultan,
also said that private planes carrying the kingdom's deputy defense
minister
and the governor of Mecca, both members of the royal family, were
grounded
and intially caught up in the F.B.I. dragnet. Both planes, one jumbo
jet
carrying 100 family members, and the other 40, were eventually
allowed to
leave when airports reopened and passports were checked.
Mr. bin Laden is estranged from his family. One of his two brothers
in the
United States called the Saudi Embassy frantically looking for
protection,
the ambassador said. The brother was sent to a room in the Watergate
Hotel
and told not to open the door.
Most of Mr. bin Laden's relatives were attending high school and
college.
They are among the 4,000 Saudi students in the United States. King
Fahd, the
ailing Saudi ruler, sent an urgent message to his embassy here saying
there
were "bin Laden children all over America" and ordered, "Take
measures to
protect the innocents," the ambassador said.
The young members of the bin Laden clan were driven or flown under
F.B.I.
supervision to a secret assembly point in Texas and then to
Washington from
where they left the country on a private charter plane when airports
reopened
three days after the attacks. Many were terrified, fearing they could
be
"lynched," after hearing news reports of sporadic violence against
Muslims
and Arab-Americans.
"It's a tragedy," said Prince Bandar. "The elders" of the
students "came to
see me, and one of them was a bright boy from Harvard who like the
others had
absolutely nothing to do with this and yet we had to tell him to go
home and
wait until the emotions calmed down. And he told me that he never
really
appreciated why the Japanese wanted a memorial or an apology for
their
treatment in World War II."
The student added, according to the prince, "I understand now that
when you
are innocent, in the face of emotion nothing, not even common sense,
can help
argue your case."
As thousands of Americans were recoiling from the Sept. 11 terror
attacks,
Saudi Arabia's ambassador, a former fighter pilot who is dean of the
diplomatic corps here, faced another kind of horror: America's
staunchest
ally in the Arab world was more prominently associated than ever
before with
Mr. bin Laden. In addition, a majority of the men who hijacked four
airliners
in the attacks carried Saudi passports.
"This is the worst thing that has ever happened to us," the prince
told
associates as the first images of the collapsing towers in New York
registered the magnitude of the crime.
This dark prediction may or may not prove to be true. But Prince
Bandar, who
is enthusiastically pro- American, kicked into high diplomatic gear
this week
with a series of public appearances to bolster the image of Arab
support for
President Bush's coalition against terrorism.
It is not going to be easy, he concedes, as the Arab world is in a
surly mood
and the fight on terror has none of the clarity that rolling back the
invasion of Kuwait by Saddam Hussein of Iraq had for many Arabs.
For this reason, Prince Bandar is also pressing the Arab world's
message on
Washington: that if the United States hopes to dry up the sources of
terrorism in the region, it must get more deeply involved in the Arab-
Israeli peace process. He said this would involve not only putting
pressure
on Israel, though increasingly he feels that is essential, but also
on the
Palestinians and their leader, Yasir Arafat.
"History will judge this coalition by how well you channel the anger
into a
positive result rather than just making it vengeance," he said.
Prince Bandar is also believed to be sending the clear message that
key air
bases in Saudi Arabia are likely to be available on a "don't ask,
don't tell"
basis, but he insists that the Bush administration has made no
requests and
has not laid out its plans. "The president said he is now in hot
pursuit' of
bin Laden, but they do not need Saudi bases to launch special forces
on
F-16's into Afghanistan," he said, adding "we have not been asked,
therefore
there is no point in answering hypothetical questions."
Surprisingly, Osama bin Laden was not a stranger even to a royal
family
member like Prince Bandar. In the early 1980's, bin Laden came to
greet the
prince and thank him for helping to build the coalition that fought
against
the Soviet occupation in Afghanistan. Prince Bandar said that Saudi
intelligence has constructed a psychological profile of Mr. bin Laden
that
portrays him as a loner in a large family. His mother, a Syrian, was
set
apart from other wives and the whisper of scandal that surrounded her
may
have deeply affected Osama bin Laden.
Mr. bin Laden is one of 52 children of a Yemeni-born migrant who made
a vast
fortune building roads and palaces in Saudi Arabia. Many have been
educated
in the United States and the family has donated millions of dollars
to
American universities.
Saudi Arabia revoked his citizenship in 1994 after he was caught
smuggling
weapons from Yemen. When the time comes for the military campaign to
root him
out, Prince Bandar has told the administration that the kingdom will
play the
role of loyal ally, but the "diplomatic game," as the prince called
it, is to
focus the Bush White House on how much preparation is required if it
hopes to
hold the support on moderate Arab states.
In particular, the Saudi prince said, he would like to see some
American
"anger" channeled at those who have obstructed or filibustered the
peace
process on both sides.
He accused some Israelis of trying to exploit the attacks on America
as a
means to discredit the Arab position. "Don't tell me that blowing up
innocent
people's houses is a fight against terrorism," the Prince said,
referring to
Israeli policies to destroy the homes and property of Palestinians
who carry
out attacks.
The prince said that his government condemns Palestinian suicide
bombers, but
said that attacks on Israeli security forces are justified because
these are
"resisting occupation."
"When the peace process is moving, people are willing to accept a
lot," he
said. "But when the peace process is stalled and this is coupled with
Israeli
behavior that is humiliating to Palestinians and people see this day
in and
day out while America takes a standoffish attitude �" all of this
creates a
harsh reality on the streets.
"The answer is to get moving," he said. "If the Arabs screw up, tell
us. If
Israel screws up, tell it."
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