Re: House of Bush, House of Saud, by Craig Unger
Posted: Wed Nov 27, 2013 4:05 am
CHAPTER TWO: The Houston-Jeddah Connection
On a warm August night in 2002, James R. Bath, a little-known Texas businessman, opens the door to the front of his ranch in Liberty, a town of eight thousand people on the Trinity River outside Houston. His house is framed by trees silhouetted against a moonlit Texas sky.
About six feet tall, trim and balding, Bath mingles a wry, folksy Texas charm with some of the machismo of a veteran jet fighter pilot. The combination has served him well in cultivating relationships with some of the great Texas power brokers of the last generation -- from former governor John Connally to the Bush family.
There are many ways to tell the story of the events leading up to September 11 and the Iraq War of 2003, and Bath is hardly the most important person through whom to view them. However, his very obscurity carries its own significance. Bath happens to have served as the intentionally low-profile middleman in a passion play of sorts, the saga of how the House of Saud and its surrogates first courted the Bush family.
Bath is disarmingly hospitable as he whips up a late-night dinner and recounts the story of the birth of the Houston-Jeddah connection in the 1970s. A native of Natchitoches, Louisiana, he moved to Houston in 1965 at the age of twenty-nine to join the Texas Air National Guard. In the late sixties, after working for Atlantic Aviation, a Delaware-based company that sold business aircraft, he moved to Houston and went on to become an airplane broker on his own. Sometime around 1974 -- he doesn't recall the exact date -- Bath was trying to sell a F-27 turboprop, a sluggish medium-range plane that was not exactly a hot ticket in those days, when he received a phone call that changed his life.
The voice on the other end belonged to Salem bin Laden, heir to the great Saudi Binladin Group fortune. Then only about twenty-five, Salem was the eldest of fifty-four children of Mohammed Awad bin Laden, a brilliant engineer who had built the multibillion-dollar construction empire in Saudi Arabia. [i]
Bath not only had a buyer for a plane no one else seemed to want, he had also stumbled upon a source of wealth and power that was certain to pique the interest of even the brashest Texas oil baron. Bath flew the plane to Saudi Arabia himself -- no easy task since the aircraft could only do about 240 knots an hour -- and ended up spending three weeks in Jeddah, where he befriended two key figures in the new generation of young Saudi billionaires. [1] One of them was Salem bin Laden. In addition, Salem introduced Bath to his family and friends, including Khalid bin Mahfouz, also about twenty-five, who was the heir to the National Commercial Bank of Saudi Arabia, the biggest bank in the kingdom.
Salem was of medium height, outgoing, and thoroughly Western in his manner, says Bath. Bin Mahfouz was taller -- about six feet -- rail thin, relatively quiet and reserved. One associate says that if he had not known bin Mahfouz was a Saudi billionaire, he would have mistaken him for a biker straight out of a Harley-Davidson ad.
Bath immediately took to the two young men. "I like the Saudi mentality. They like guns, horses, aviation, the outdoors," he said. "We had a lot in common."
In many ways, bin Mahfouz [ii] and bin Laden were Saudi versions of the well-heeled good old boys whom Bath knew so well. "In Texas, you'll find the rich carrying on about being just poor country boys," he says. [2] "Well, these guys were masters of playing the poor, simple bedouin kid."
Poor, they were not. Salem and Khalid were both poised to take over the companies started by their billionaire fathers. In fact, they had almost identical family histories. Their fathers, Mohammed Awad bin Laden and Salem bin Mahfouz respectively, had both originally come from the Hadramawt, an oasislike valley in rugged, mountainous eastern Yemen. Both men were uneducated and poor bin Laden was a brilliant but illiterate bricklayer who never even learned to sign his name, and had traveled the same 750-mile trek by foot. In Jeddah, the commercial capital of Saudi Arabia, they made their fortunes off the hajj, the sacred pilgrimages to the great mosques in Mecca and Medina, bin Laden through construction and bin Mahfouz through currency exchange.
In 1931, Salem's father, Mohammed Awad bin Laden, had formed what eventually became the Saudi Binladin Group as a modest general-contracting firm that first became known for building roads, including a stunning highway with precipitous hairpin turns between Jeddah and the resort city of Taif. Ambitious and highly disciplined, the elder bin Laden advanced his cause by submitting below-cost bids on palace construction projects, including palaces for members of the royal family. [3] His shrewdest innovation was to build a ramp to the palace bedroom of the aging and partially paralyzed King Abdul Aziz. [4] Subsequently, the king made him the royal family's favorite contractor for palaces and major governmental infrastructure projects.
As a result of this growing friendship, in 1951, bin Laden won the contract to build one of the kingdom's first major roads, running from Jeddah to Medina. Eventually, he became known as the king's private contractor. "He was a nice man, very well liked by the royals," says an American oil executive who knew Mohammed Awad bin Laden. "He had the reputation of a doer, of getting things done."
The most prestigious and lucrative prize given by the royal family to the bin Ladens was for the kingdom's biggest roads [5] and exclusive rights to all religious construction, including $17 billion in contracts to rebuild the holy sites at Medina and Mecca, [6] which carried enormous iconic significance. In the center of the Grand Mosque of Mecca was the Kaaba, the holiest place to worship in all of Islam. Legend has it that the Kaaba was built after God instructed the prophet Abraham to build a house of worship, and the Archangel Gabriel gave Abraham a black stone, thought to be a meteorite, which was placed in the northeast corner of the Kaaba. "If there is one single image that signifies the Muslim world, it is that of the hajj being performed in the Kaaba," says Adil Najam, a professor at Boston University. [7] "[Rebuilding these sites] would be the Western equivalent of restoring the Statue of Liberty, Mount Rushmore, and the Lincoln Memorial -- multiplied by a factor of ten."
During the same period that Mohammed Awad bin Laden was cementing his ties with the royal family, Salem bin Mahfouz was using similar methods to woo King Abdul Aziz. After leaving the Hadramawt in 1915, bin Mahfouz had worked in various capacities for the wealthy Kaaki family of Mecca for thirty-five years, finally winning a partnership in the Kaakis' lucrative currency exchange business. [8] Because charging interest was condemned by the Koran as usury, at the time Saudi Arabia merely had money changers instead of a domestic banking industry. But bin Mahfouz went to the royal family and argued that Saudi Arabia would never be self-sufficient until the kingdom had a bank. Subsequently, bin Mahfouz won a license that allowed him to establish the National Commercial Bank of Saudi Arabia, the first bank in the kingdom.
By the early sixties, the bin Mahfouzes and the bin Ladens had made extraordinarily successful transitions from the tribal, Wild West -- like Hadramawt in Yemen to the far more commercially sophisticated world of Jeddah. Since they were outsiders -- both families were Yemenites -- the bin Ladens and the bin Mahfouzes did not have the tribal allegiances that other Saudis had, [9] and it was easy for the royal family to build them into billionaire allies who did not bring with them the political baggage other Saudis may have had. Consequently, the two great merchant families had virtual state monopolies in construction and banking.
In effect, the Saudi Binladin Group was on its way to becoming a Saudi equivalent of Bechtel, the huge California-based construction and engineering firm. [10] Likewise, bin Mahfouz had begun to build the National Commercial Bank into the Saudi version of Citibank, paving the way for it to enter the era of globalization.
Knowing full well the value of being close to the royal family in Saudi Arabia, Salem bin Laden and Khalid bin Mahfouz sought to have similar relationships in the United States. With Bath tutoring them in the ways of the West, they started coming to Houston regularly in the mid-seventies. Salem came first, buying planes and construction equipment for his family's company. [11] He bought houses in Marble Falls on Lake Travis in central Texas's Hill Country and near Orlando, Florida. [12] He started an aircraft-services company in San Antonio, Binladen Aviation, largely as a vehicle for managing his small fleet of planes. [13] He converted a BAC-111, a British medium-size commercial liner, for his own personal use, and for fun he flew Learjets, ultralights, and other planes around central Texas.
There were days that began in Geneva, continued in England, and ended up in New York. [14] Salem flew girlfriends over the Nile to see the Pyramids. "He loved to fly, and spent more time trying to entertain himself than anyone I know," says Dee Howard, [15] a San Antonio engineer who converted several aircraft for bin Laden, including the $92-million modification of a Boeing 747-400 for King Fahd's personal use, [16] the biggest such conversion in the world. The spectacularly outfitted jumbo jet boasted its own private hospital and was said to make Air Force One look modest by comparison.
From Texas to England, most Westerners who knew the bin Ladens found them irresistible. "Salem was a crazy bastard -- and a delightful guy," says Terry Bennett, a doctor who attended the family in Saudi Arabia. [17] "All the bin Ladens filled the room. It was like being in the room with Bill Clinton or someone -- you were aware that they were there. They may have had the normal human foibles, but they were good for their word and generous to a fault."
Salem loved music, the nightlife, and entertaining guests at dinner parties by playing guitar and singing "Deep in the Heart of Texas." [18] But Khalid bin Mahfouz was more reserved. "Khalid was a banker first and always acted as a banker should," remembers Bath. "He was extremely intelligent and quick to assess things."
For the most part, bin Laden and bin Mahfouz eschewed the gaudy public extravagance of sheikhs such as Mohammed al-passi, who in 1979 painted his Beverly Hills mansion in a color that evoked rotting limes and redid the statuary so that the genitals appeared more lifelike. [19] Still, this was Texas. Bigger was better, and bin Mahfouz and bin Laden observed the prevailing mores. As they became entrenched in Texas in the seventies, bin Mahfouz bought an enormous, rambling $3.5- million faux chateau, [20] later known as Houston's Versailles, [21] in the posh River Oaks section of Houston. He also purchased a four-thousand-acre ranch in Liberty County on the Trinity River near James Bath's ranch.
These men, billionaires from a fundamentalist theocratic monarchy, had arrived in a wide-open American city where strip clubs and churches were often side by side, and they fit right in. "They loved the ranch and they loved the country life," says Bath. "There was a real affinity between Texas and life in the kingdom. Khalid would come out to the ranch with the family and the kids, to ride horses, shoot guns, fireworks. They'd been going to England forever. But Texas -- there was the novelty."
***
Bin Laden and bin Mahfouz were not the only Saudis who started making the Saudi Arabia Texas commute. Saudi arms dealer Adnan Khashoggi operated a small fleet of Boeing 727s for his private use. [22] [iii] In 1970, Prince Bandar, later the ambassador on the Truman Balcony with President Bush, trained at Perrin Air Force Base near Sherman, Texas, as a fighter pilot [23] and became a daring acrobatic pilot who delighted in entertaining VIPs with his audacious aerial stunts. Joining them were the future king, then Crown Prince Fahd bin Abdul Aziz al-Saud; construction magnate Sheikh Abdullah Baroom; and others. "There were more private planes for the Saudis than many airlines have," says one pilot who flew for Salem bin Laden. [24] "It was quite an operation. Everyone had big airplanes and we flew whatever had wings."
Houston offered them a glimpse of a rapidly approaching Saudi future. As late as 1974, the tallest building in the Saudi capital, Riyadh, was a mere water tower, [25] but downtown Houston was already studded with gleaming skyscrapers. At home, the Saudis shopped in ancient markets known as souks, but in Houston, the extravagantly modern Galleria shopping mall had just opened. [26] Saudi Arabia was still a feudal desert kingdom where people lacked the professional skills and bureaucratic infrastructure to build a modern economy. Houston, by contrast, had gigantic energy-industry law firms -- Baker Botts; Vin- son, Elkins and Connally; Fulbright & Jaworski -- that greased the wheels of America's enormous oil industry so it could easily navigate the corridors of power in Washington. In many ways, Riyadh and Houston could scarcely have been more dissimilar; yet these differences were precisely what attracted the Saudis to Texas and catalyzed a chain of events over the next three decades that would change global history.
***
In part, it was oil that drew the two cultures together. Its history in Texas dated to January 10, 1901, when a handful of wildcatters in Beaumont, Texas, about sixty miles from Houston, drilled away until mud mysteriously bubbled up from the ground and several tons of pipe abruptly shot upward with enormous force. A few minutes later, as workmen began to inspect the damage, another geyser of oil erupted from thirty-six hundred feet under a salt dome. [27] The wildcatters had hoped to bring in fifty barrels a day. [28] Instead, the legendary Spindletop gusher brought in as many as one hundred thousand. [29] The Texas oil boom had begun.
Before long, Houston's Ship Channel had grown into a twenty-mile stretch of refineries constituting one of the great industrial complexes in the world, where hundreds and hundreds of towers and massive spherical tanks spewed smoke and steam, eerily illuminating the ghostly sky like a brightly lit Erector set. More than a quarter of all the oil used in the United States was refined there. Part of the complex, the Exxon Mobil plant in Bay town, is the biggest oil refinery in the world, producing more than half a million barrels a day. [30]
By contrast, oil was not even discovered in Saudi Arabia until 1938, [31] and even then, and for more than a generation afterward, control of the vast Saudi resources remained heavily influenced by the United States thanks to lucrative concessions granted to Aramco (the Arabian American Oil Company), a consortium of giant American oil companies and the Saudis. [32] [iv] In the early seventies, however, just before bin Laden and bin Mahfouz struck out for Texas, the world of oil underwent a dramatic change. Oil production in the United States had already peaked in 1970 and was beginning an inexorable decline at a time when more people drove more miles in bigger cars that burned more gas. Baby boomers had come of age and were driving. An elaborate suburban car culture had grown up all over the United States. There were Corvettes and Mustangs, muscle cars such as the Trans Am, and drive-in restaurants and shopping malls. The volume of America's imported oil nearly doubled -- from 3.2 million barrels a day in 1970 to 6.2 million a day in 1973. [33] Saudi Arabia's share of world exports sky-rocketed from 13 percent in 1970 to 21 percent in 1972.
Saudi Arabia's transformation from an underdeveloped backwater to one of the richest countries in the world was under way. In October 1973, just after the Arab-Israeli war, OPEC -- the Organization of Petroleum Exporting Countries -- a heretofore impotent consortium of oil-rich nations, abruptly became a genuine cartel capable of driving the price of oil up more than 300 percent. Oil, they had discovered, could be used as a weapon. Suddenly, Saudi Arabia took on the position Texas itself had once had and became the swing oil producer for the great industrial nations of the world. The biggest transfer of wealth in human history was under way. Hundreds of billions of dollars in oil revenues poured into the Saudi kingdom. [34] The Saudis were drowning in petrodollars.
Not surprisingly, most Americans don't have fond memories of the Saudi ascendancy in the seventies. With the embargo, the price of gas in the United States jumped from 38 cents a gallon in 1973 to $1.35 in 1981. [35] Soaring inflation, high interest rates, and long gas lines soon followed. A nationwide speed limit of fifty-five miles per hour was imposed in the interests of fuel efficiency. Government bureaucracies were established to reduce energy consumption.
Houston, however, benefited from the newfound Saudi wealth more than any other city in the country. All over the United States, architectural firms cut back because of the recession, but in Houston, CRS Design Associates more than doubled its payroll thanks to huge contracts from the Saudis. [36] Superdeveloper Gerald Hines built gleaming skyscrapers in downtown Houston designed by the likes of Philip Johnson and I. M. Pei -- financed, it was whispered, with Saudi riyals. Petrodollars flowed into Houston's Texas Commerce Bank, thanks to Arab clients. Saudi companies bought drill bits and pipes and lubricant in Houston. [37] The price of oil was over $30 a barrel and looked as if it would never fall and while the rest of the country had to pay the price, Texas oil producers also enjoyed the higher revenues. At last, Houston was on the map of international cafe society. Local socialites hung out at Tony's Restaurant on Westheimer Road, taking a prominent table with Princess Grace, Mick Jagger, fashion designer Bill Blass, or whichever well-known houseguest had flown in for the week. [38] In all, more than eighty companies in Houston developed strong business relationships with the Saudis. [39] It was even said that Houston was becoming to the Saudis what New York is to Israel and the Jews [40] -- another home half a world away.
***
Like the Israelis, the Saudis had one overwhelming need that they sought in this new alliance -- defense. For all its newfound wealth, the House of Saud was more vulnerable militarily than ever. A feudal desert monarchy that lacked the infrastructure of a modern industrial nation, the kingdom had more than fifteen hundred miles of coastline to defend. Its oil and gas facilities provided numerous high-value targets. Iran regularly sponsored riots during the pilgrimages to Mecca and provided support to Shiite extremists in Saudi Arabia. [41] Iraq, with which it shares a border, was a threat. Across the Red Sea, Sudan was a hospitable host to extremists. Other troublesome neighbors included Yemen, Oman, and Jordan. Saudi Arabia was vast -- it is about a quarter the size of the United States -- but it had to be defended by a population that, at the time, was under 6 million people, three-quarters of whom were women, children, and elderly. [42]
In addition, the Saudis had extraordinary internal weaknesses. As the rulers of an underdeveloped, feudal desert kingdom, they were in control of one of the most corrupt, authoritarian, undemocratic countries in the world. It was threatened by communists and Islamic revolutionaries. Women had virtually no rights. The Saudis arguably led the world in public beheadings -- many of which took place in a plaza in Riyadh referred to as Chop-Chop Square. [43]
Flooded with petrodollars, the Saudis still urgently needed a partner. As a result, the kingdom began to weave a tight alliance with the United States, militarily, economically, and politically. As the petrodollars poured in over the next twenty-five years, roughly eighty-five thousand "high-net-worth" Saudis invested a staggering $860 billion in American companies -- an average of more than $10 million a person and a sum that is roughly equivalent to the gross domestic product of Spain. [44] They took the United States by storm, selling crude, buying banks, building skyscrapers, buying weapons, investing everywhere.
Most important, the Saudis sought strong political ties to the United States through personal friendships with the powers that be. Education, training, and connections with American power brokers became prerequisites for the next generation of the Saudi elite. "They started sending their sons to school in the U.S.," says Nawaf Obaid, a Saudi oil analyst who himself was educated at Harvard and MIT. "They wanted to build up relationships with key people at the same time they had return on investments." [45]
The vast majority of the Saudi investments in the United States went into major banks and energy, defense, technology, and media companies. There were blue chips such as Citigroup and AOL Time Warner, and huge, secretive consortiums such as Investcorp, which put billions of Arab dollars in companies including Tiffany, Gucci, and Saks Fifth Avenue. But the House of Saud also made a handful of investments in troubled companies that were loaded with debt and regulatory problems -- which just happened to be owned by men who had or might have White House ties. "The leadership in the kingdom definitely supported these activities," says Prince Turki bin Faisal al-Saud, the ambassador to Great Britain who long served as Saudi minister of intelligence and was a son of the late King Faisal's. [46]
Superlawyer Edward Bennett Williams, a roguish Washington fixer, understood exactly what the Saudis were after. According to The Man to See, Evan Thomas's 1991 biography of Williams, in the seventies he accompanied Clark Clifford, a perennial adviser to Democratic presidents and one of the so-called Wise Men of Washington, on a private jet after Clifford had ill-advisedly taken on billionaire Arab clients.
"Williams gleefully acted out a pantomime of a delegation of Arabs visiting Clifford in his office," wrote Thomas. "Williams, a perfect mimic, imitated Clifford gravely telling the visiting sheikhs, 'You understand, of course, that I can only get you access.'
"Then Williams imitated the Arabs winking and grinning as they shoved a bag of gold across Clifford's desk." [47]
***
As it happened, Edward Bennett Williams's droll account of the Arab strategy for achieving entree to the inner sanctums of American power wasn't far from the truth. However, before approaching a man of Clark Clifford's stature, or, for that matter, wary Republican power brokers, the Saudis went to someone in Jimmy Carter's White House -- someone who not only had access to the president but who also happened to be desperately vulnerable.
After taking office in 1977, Carter had appointed his close friend Bert Lance, the CEO of the National Bank of Georgia (NBG), as director of the Office of Management and Budget (OMB). Lance had played a key role in Carter's presidential campaign, but in many ways he was the polar opposite of a Beltway insider like Clifford. He was not an easy fit in Washington. The media enjoyed tweaking the rumpled, six-foot-five-inch Lance, with his syrrupy Southern drawl, as something of a country bumpkin straight out of the Georgia woods. Within weeks of taking his place in the new administration, he was in trouble.
Lance had financed much of Carter's electoral campaign through overdrafts at NBG, and now that he was in the glare of the Washington political spotlight, those transactions had come under scrutiny. In addition, when he became CEO of the bank, Lance had borrowed $2.6 million to finance the purchase of his stock in the bank under terms that required him to remain its chief executive. [48] That, however, was impossible because now that he was in the government, he was required by law to resign from the bank. Worse, bank stocks had sunk so low that Lance couldn't afford to sell his stock to payoff the loan. [49] Last, Lance was charged with having mismanaged corporate and personal financial affairs by pledging the same stock as collateral for two loans, and having improperly pledged some of the bank's assets against his loans.
An investigation and trial later found Lance innocent, but his reputation was devastated. In September 1977, only a few months after he had taken over at OMB, he resigned. Lance was heavily in debt and unemployed. [50] He just had one thing going for him: he was still close friends with the president of the United States.
In October, just weeks after his resignation, Lance met with Agha Hasan Abedi, the Pakistani founder of the Bank of Credit and Commerce International, or BCCI. At the time, BCCI was said to be the fastest-growing bank in the world. Its assets had grown from $200 million in 1972 to more than $2 billion in 1977. [51] As a bank friendly to Muslim concerns, BCCI was perfectly positioned to take advantage of the petrodollars flowing into the Middle East in the wake of the OPEC oil embargo.
BCCI's ascendancy was also due to business practices that were highly unusual in the staid world of banking. Other banks gave toaster ovens to new depositors; BCCI provided prostitutes. [52] [v] Loans of millions of dollars were granted merely on the basis of a simple request. BCCI allegedly handled flight capital from countries such as India or Pakistan where currency constraints strictly prohibited the wealthy from taking their money out of the country. BCCI was luring customers away from its rivals and now had 146 branches in thirty-two countries. But it still had no presence in the biggest financial market in the world -- the United States.
"You cannot be a global bank, an international bank, without some sort of presence in the United States," Lance told BCCI founder Abedi. "This is the richest, most powerful nation in the world, and this is certainly something you ought to look at." [53] Desperate to sell his stock, Lance had just the thing in mind -- a modest Southern bank, namely, the National Bank of Georgia.
Abedi told Lance that Saudi billionaire Ghaith Pharaon might be just the person to take over NBG. Born in 1940, the dapper Pharaon was the son of a private physician to King Abdul Aziz [54] (as was Saudi billionaire arms dealer Adnan Khashoggi [55]). Pharaon's education included undergraduate work at Stanford and an MBA from Harvard Business School. He wore Savile Row suits and a Vandyke beard. Like his childhood friend Khalid bin Mahfouz, he was close to the House of Saud and personified the wave of "westernized" Saudi billionaires who came to the United States in the aftermath of the OPEC oil embargo. [56] With an annual income of $300 million in 1974, [57] Pharaon had lavish homes in Saudi Arabia and Paris, and a magnificent plantation near Savannah, Georgia, that had been owned by Henry Ford. In 1975, Pharaon helped pioneer the Arab takeover of American banks by purchasing Detroit's ailing Bank of the Commonwealth at a time when Arab money was a novelty in the United States.
Negotiations to sell the National Bank of Georgia to Pharaon and BCCI began over Thanksgiving weekend in 1977, through discussions among Lance, Abedi, and other BCCI officials. [58] On December 20, Lance announced he was selling his NBG stock to Pharaon for $2.4 million at $20 a share -- twice what it had been worth only a few weeks earlier.
Why had Saudis paid top dollar for a failing bank that was a target of federal regulators? The Senate investigation concluded that "gaining access to President Carter and the White House was ... one of the reasons the 'Arabs' were interested in having Lance represent them and in buying his interest in the National Bank of Georgia." [59]
The access Lance offered BCCI was not illusory. Through him, BCCI representatives met Jimmy Carter, the Reverend Jesse Jackson, Prime Minister James Callaghan of Great Britain, and many other officials, including Lance's attorney, the aforementioned Clark Clifford. The Senate report concluded that Carter's integrity was used by BCCI officials as the bank "went about mixing bribery and flattery to obtain access to the foreign reserves and other assets of numerous Third World countries." [60]
As for Lance, who had once been referred to as the deputy president of the United States, he returned to Georgia to work as a financial consultant. But his career in national politics was over. As for the Saudis, they had learned that they could win access to the highest levels of power in the United States.
***
On the Republican side, James Bath didn't have nearly the stature of Edward Bennett Williams or Clark Clifford, or for that matter, the visibility of Bert Lance. But in the seventies in Houston, for Khalid bin Mahfouz and Salem bin Laden, Jim Bath was the man to see. He counted among his friends and business associates no fewer than five Texans, four of them Republicans, who at one time or another would be considered presidential candidates.
Bath was friendly with the family of Senator Lloyd Bentsen, the lanky, distinguished Democrat who would run as vice presidential candidate in 1988 [vi] and later become secretary of the treasury. Bath had become partners with one of his sons, Lan Bentsen, in a small real estate firm that developed an apartment complex and airplane hangars and sought investments for the senator's blind trust. [61]
While he served in the Texas Air National Guard, Bath had also befriended the young George W. Bush, [62] who had begun training in 1970 as a pilot of F-102 fighters at Ellington Air Force Base near Houston. Bush had been a member of the "Champagne Unit" of the National Guard, so-called because it was famous for serving as the vehicle through which the sons of Houston society escaped serving in the Vietnam War.
In the mid-seventies, young Bush also introduced Bath to his father. A former Houston congressman who had lost senatorial races in 1964 to liberal Democrat Ralph Yarborough and in 1970 to the more conservative Lloyd Bentsen, the elder George Bush had been a devoted Nixon loyalist even through the mire of Watergate. His steadfastness had been rewarded with appointments as U.S. ambassador to the United Nations, as chairman of the Republican National Committee, and under President Gerald Ford, as chief liaison to the U.S. mission to China. In 1976, Bush was appointed head of the CIA.
There was also Bath's duck-hunting buddy, [63] James A. Baker III, then in his mid-forties. One of Houston's most powerful corporate attorneys and a true Texas patrician, Baker was a close friend and associate of George H. W. Bush's.
Finally, there was John Connally, the silver-haired, silver-tongued former Democratic Texas governor who became secretary of the treasury under Nixon in 1971 and who later switched to the Republican Party.
By 1976, Salem bin Laden had appointed Bath his American business representative. [64] Khalid bin Mahfouz drew up a similar arrangement with him as well. Bath was more than simply someone who could provide the Saudis with entree to political power brokers. But exactly what he did beyond that, in the intelligence world and elsewhere, was shrouded in mystery. From Time to the Wall Street Journal, the press speculated about Bath's connections to the Bushes, to John Connally, to the CIA, to BCCI, and to various figures in the Iran-contra scandal of the eighties.
When asked about his career, Bath usually downplayed his importance. By his account, he was merely "a small, obscure businessman." It was often said that he was in the CIA, but Bath denied that to Time. [65] Later, he equivocated. "There's all sorts of degrees of civilian participation [in the CIA]," he says. "It runs the whole spectrum, maybe passing on relevant data to more substantive things. The people who are called on by their government and serve -- I don't think you're going to find them talking about it. Were that the case with me, I'm almost certain you wouldn't find me talking about it." [66]
Bath's role in investing for the Saudis took various forms. "The investments were sometimes in my name as trustee, sometimes off shore corporations, and sometimes in the name of a law firm," he says. "It would vary." [67] Bath generally received a 5 percent interest as his fee and was sometimes listed on related corporate documents. [68]
On behalf of Salem bin Laden, Bath purchased the Houston Gulf Airport, a small private facility in League City, Texas, twenty-five miles east of Houston. [69] He also became the sole director of Skyway Aircraft Leasing in the Cayman Islands, which was actually owned by Khalid bin Mahfouz.
Through Skyway, Bath brokered about $150 million worth of private aircraft deals to major stockholders in BCCI such as Ghaith Pharaon and Sheikh Zayed bin Sultan al-Nahayan, president of the United Arab Emirates. To incorporate his companies in the Cayman Islands, Bath used the same firm that later set up a money-collecting front for Oliver North in the Iran-contra affair. [70] He also served as an intermediary between the Saudis and John Connally, who, having served as Nixon's treasury secretary, began to position himself for a shot at the White House in 1980.
In August 1977, John Connally and Bath teamed up with Ghaith Pharaon and bin Mahfouz to buy the Main Bank of Houston, a small community bank with about $70 million in assets. [71] Soon, the tiny bank began obtaining more than $10 million a month in hundred-dollar bills. [72] It was highly irregular for such a tiny bank to require such large amounts of cash. Such unusual transactions can be a sign of money laundering, but bank regulators in Texas said they did not know why the bank needed the money. The transactions were not illegal and the reason for them was never uncovered.
Then, in July 1978, Khalid bin Mahfouz and forty bodyguards took over an entire floor of the Mayflower Hotel in Washington, D.C., with John Connally there to introduce him to Texas billionaires William Herbert Hunt and Nelson Bunker Hunt. [73] [vii] The purpose of the meeting was allegedly to get bin Mahfouz and Pharaon to participate in the Hunt brothers' quest to corner the world's silver market. The Saudis' role in the silver deal fell through -- and the Hunt brothers' participation in it led to one of the great financial follies of the decade.
Nevertheless, through Main Bank, the young Saudis had established ties to Connally. [74] They were now in business with a legitimate presidential contender who seemed well positioned for the 1980 campaign. For two young men, still in their twenties, to have business partnerships with an American presidential candidate elevated them enormously in the eyes of the Saudis back home, especially the royal family.
With his lantern jaw and silver mane, his Stetson hat, cowboy boots, and bolo tie, Connally was straight out of central casting. He had movie-star good looks, and a powerful appeal to Wall Street and corporate America. He had survived close ties to the disgraced Nixon presidency and bribery charges in the so-called Milk Fund scandal of 1974. He had even survived the Kennedy assassination in November 1963. Sitting next to Kennedy in the motorcade, he too was shot that day, but emerged a wounded hero.
At the time, Connally had only one serious political rival in Texas -- George H. W. Bush, a man who possessed little of Connally's charisma. Whereas Connally was festooned with the iconography of the Lone Star State, Bush was a Connecticut Yankee who constantly had to prove his Texas bona fides. Connally was a po' boy from Floresville in the Texas Hill Country -- his father had been a tenant farmer -- who had made his fortune through lucrative relationships with oil barons Sid Richardson and Clint Murchison and then taken on the trappings of a brash wheeler-dealer himself. By contrast, Bush was a genuine oilman, but he was an East Coast transplant whose understated style sought to mask but only accentuated his patrician background. A partner in the huge Houston oil industry law firm of Vinson, Elkins and Connally, Connally was unabashed about being the biggest Arab-money lawyer in Texas. Bush kept his distance. Next to Connally, he seemed bland indeed.
For all that, Bush had mastered one extraordinarily important aspect of politics in a way that left Connally and scores of other wannabes in the dust. George H. W. Bush was wired. Whether it be the old-moneyed East Coast establishment or Richard Nixon's team, the rising young Turks of the new conservative movement or the power brokers of Republican Party infrastructure, Bush either knew the right people or knew how to meet them and make them his friends. He knew people who would enable him to raise campaign funds, to get the right decisions made at government agencies such as the Securities and Exchange Commission and the Export Import Bank, people who would back his son's oil companies, who would perform favors when called on. He did not like to make decisions without knowing the outcome in advance. From the Petroleum Club in Midland, Texas to the Bayou Club in Houston to the Bohemian Grove [viii] in California; from clubby men's institutions like the CIA and the oil industry -- he had cultivated an extraordinary power base. In the long run, it was capable of taking him all the way to the White House.
And in the short run -- within a few years -- Saudis seeking access to the highest levels of American power soon forgot Bert Lance, Clark Clifford, and John Connally and realized that George H. W Bush was the man to see.
_______________
[i] Because the Hegira calendar used in Saudi Arabia does not consistently conform to the Gregorian calendar used in the West, the ages of many Saudis in this book are approximate.
[ii] Bin Mahfouz has widely been identified in the media as the brother-in-law of Osama bin Laden, thanks to congressional testimony by former CIA director James Woolsey. But a spokesman for bin Mahfouz denies the assertion, and the author has found no evidence to back up Woolsey's charge.
[iii] Khashoggi made a fortune as a middleman on an estimated 80 percent of Saudi-American arms deals, including commissions of more than $100 million from Lockheed alone between 1970 and 1975.
[iv] The Saudis first granted concessions to explore for oil in Saudi Arabia to the British, thanks to Jack Philby, who is best known today as the father of the notorious British spy Kim Philby. At a time when King Abdul Aziz was hoping to find water, Philby persuaded him to let him look for oil. According to Daniel Yergin's The Prize, Philby was dismissed by British government officials as merely a bit player. But Standard Oil of California recognized that he had access to the king and signed him on to help acquire concessions. The initial concession agreement called for Socal to put $175,000 in gold up front, an additional loan of $100,000 eighteen months later, and still another loan of $500,000 on the discovery of oil. The concession was good for sixty years and covered 360,000 square miles. It was one of the greatest bargains in history.
[v] According to the U.S. Senate's BCCI probe, the bank's involvement in prostitution grew out of its "special protocol department" in Pakistan, which allegedly serviced "the personal requirements of the Al-Nahyan family of Abu Dhabi, and other BCCI VIPs, including other Middle Eastern rulers." The Senate report asserts that Abedi employed a woman who helped him cement his relationship with the Al-Nahyan family by providing them with Pakistani prostitutes. The report says that the woman was reputed to have first won the attention of the royal family "by arranging to get virgin women from the villages from the ages of 16 to 20. [She] would make payments to their families, take the teenaged girls into the cities, and teach them how to dress and how to act. The women were then brought to the Abu Dhabi princes. "For years, [she] would take 50 to 60 girls at a time to large department stores in Lahore and Karachi to get them outfitted for clothes. Given the size of [her] retinue and her spending habits -- $100,000 at a time was not unusual when she was outfitting her charges -- she became notorious and there was substantial competition among clothiers and jewelers for her business. ... According to one U.S. investigator with substantial knowledge of BCCI's activities, some BCCI officials have acknowledged that some of the females provided some members of the Al-Nahyan family were young girls who had not yet reached puberty, and in certain cases, were physically injured by the experience. The official said that former BCCI officials had told him that BCCI also provided males to homosexual VIPs."
[vi] Bentsen's most memorable moment in politics came in the 1988 campaign when his youthful rival, GOP vice presidential candidate Dan Quayle, invoked President John F. Kennedy's name, to which Bentsen replied, "I knew Jack Kennedy. Jack Kennedy was a friend of mine. And, Senator, you're no Jack Kennedy."
[vii] In 1973, Bunker, Herbert, and Lamar Hunt, three sons of oil billionaire H. L. Hunt, began to hedge against the depreciating dollar by investing in silver at a time when gold could not be purchased in the United States. By hoarding huge quantities of the precious metal, they pushed the price of silver to more than $50 an ounce. But in 1980, the price plummeted to $9 an ounce. The Hunts never recovered from the financial debacle and eventually had to sell their art collections.
[viii] The Bohemian Grove has held secret meetings for a global elite since 1873 in a redwood forest of northern California. In addition to Republican presidents Eisenhower, Nixon, Reagan, and George H. W. Bush, members have included James Baker, Richard Cheney, Donald Rumsfeld, David Rockefeller, William Casey, and Henry Kissinger. Each year, the members don red, black, and silver robes and conduct a ritual in which they worship a giant stone owl.
NOTES:
1. Interview with James Bath.
2. Ibid.
3. Unattributed, biography of Osama bin Laden, PBS Frontline Online.
4. Michael field, The Merchants, p. 105.
5. Ibid.
6. Lowell Bergman and Martin Smith, "Saudi Time Bomb," PBS Frontline, November 15, 2001.
7. Interview with Adil Najam.
8. Field, The Merchants, p. 106.
9. Interview with Jamie Etheridge, analyst for Strategic Forecasting.
10. Jane Mayer, "The Contractors," New Yorker, May 5, 2003, p. 35.
11. Interview with James Bath.
12. Interview with Gerry Auerbach.
13. Suzanne Hoholik and Travis E. Poling, San Antonio Express-News, August 22, 1998, pt. A, p. 1.
14. Pavlo Solodko, "The Bin Ladin Business" [in Ukrainian], Lviv Halytski Kontrakty, no. 45, pp. 8, 24.
15. Dee Howard, telephone interview.
16. Mike Ward, "Bin Laden Relatives Have Ties to Texas," Austin American Statesman, November 9, 2001, p. Al.
17. Interview with Terry Bennett.
18. Torch Lewis, Business & Commercial Aviation, December 2001, p. 112.
19. Dennis McLellan, "Obituary: Mohammed al-Fassi," Los Angeles Times, December 31, 2002, pt. 2, p. 10.
20. Dan Balz, "The Saudi Connection," Washington Post, April 19, 1981, p. C 1.
21. Interview with a Houston associate of bin Mahfouz.
22. Robert Baer, Sleeping with the Devil, p. 41; and interview with bin Laden pilots.
23. Scott Farwell, "Saudi Arabia Asks Iran for Son of bin Laden," Dallas Morning News, September 8, 2003.
24. Interview with Heinrich Rupp.
25. Sandra Mackey, The Saudis, p. 45.
26. International Council of Shopping Centers, "The Impact of Shopping Malls," http://www.lcsc.org.
27. Daniel Yergin, The Prize, p. 84; and Herbert S. Parmet, George Bush, p. 69.
28. Yergin, The Prize, p. 84.
29. Parmet, George Bush, p. 69.
30. Edward Vulliamy, "The Dark Heart of the American Dream," Observer (London), June 16, 2002, p. 22.
31. Yergin, The Prize, p. 300.
32. Ibid., pp. 287-91.
33. Ibid., p. 591.
34. "The Arming of Saudi Arabia," transcript of PBS Frontline #1112, February 16, 1993.
35. California Energy Commission, "Historical Yearly Average California Gasoline Prices per Gallon," http://www.energy.ca.gov/gasoline/stati ... usted.html
36. Steve Emerson, The American House of Saud, p. 53.
37. Balz, "The Saudi Connection," p. C1.
38. Mimi Swartz, "Oscar Wyatt," Texas Monthly, September 2001.
39. City of Houston, Office of the Mayor, Mayoral Speeches, www.ci.houston.tx.us/city/govt/mayor/sp ... 020701.htm.
40. Balz, "The Saudi Connection," p. C1.
41. Anthony Cordesman, Saudi Arabia, p. 7.
42. Mackey, The Saudis, p. 293.
43. Robert Baer, "The fall of the House of Saud," Atlantic Monthly, May 2002, p. 55.
44. Washington Post, February 11, 2002, p. A17; and Prince Bandar bin Sultan bin Abdul Aziz al-Saud, U.S.-Saudi Arabian Business Council, Third Plenary Meeting, Washington, D.C., October 2, 1996.
45. Interview with Nawaf Obaid.
46. Interview with Prince Turki.
47. Gay Jervey and Stuart Taylor Jr., "From Statesman to Front Man: How Clark Clifford's Career Crashed," American Lawyer, November 1992, p. 49.
48. Jonathan Beaty and S. C. Gwynne, The Outlaw Bank, p. 149; and James Ring Adams and Douglas Frantz, A Full Service Bank, p. 36.
49. Adams and Frantz, A Full Service Bank, p. 32.
50. Beaty and Gwynne, The Outlaw Bank, p. 149.
51. Adams and Frantz, A Full Service Bank, p. 27.
52. Ibid., p. 34; and The BCCI Affair: A Report to the Committee on Foreign Relations, United States Senate, by Senator John Kerry and Senator Hank Brown, December 1992, 102nd Collg., 2nd sess., Senate Print 102-140. NB: This December 1992 document is the penultimate draft of the Senate foreign Relations Committee report on the BCCI affair. After it was released by the committee, Senator Hank Brown, reportedly acting at the behest of Henry Kissinger, pressed for the deletion of a few passages, particularly in chapter 20, "BCCI and Kissinger Associates." As a result, the final hard-copy version of the report, as published by the Government Printing Office, differs slightly from the committee's soft-copy version at www.fas.org/irp/congress/1992_rpt/bcci/04crime.htm .
53. Beaty and Gwynne, The Outlaw Bank, p. 150.
54. Ghaith Pharaon's profile on his website at www.pharaon.com.
55. "Hunting bin Laden," PBS Frontline; www.pbs.org/wgbh/pages/frontline/shows/ ... amily.html.
56. Alexander Stuart, "Citizen Connally: The Businessman You Never Knew," Fortune, July 31, 1978, p. 86.
57. James Ring Adams and Kenneth Timmerman, American Spectator, May 1997.
58. The BCCI Affair, Senate Print 102-140.
59. Ibid.
60. Ibid.
61. Jonathan Beaty with reporting by S.C. Gwynne, "A Mysterious Mover of Money and Planes," Time, October 28, 1991, p. 80.
62. Interview with James Bath.
63. Ibid.
64. Jerry Urban, "Feds Investigate Entrepreneur Allegedly Tied to Saudis," Hous ton Chronicle, June 4,1992, p. A21.
65. Beaty with Gwynne, "A Mysterious Mover of Money and Planes," p. 80.
66. Interview with James Bath.
67. Ibid.
68. Daniel Golden, James Bandler, and Marcus Walker, "Special Report: Aftermath of Terror -- Bin Laden Family Could Profit from a Jump in Defense Spending Due to Ties to U.S. Bank," Wall Street Journal, September 27, 2001.
69. Urban, "Feds Investigate Entrepreneur."
70. Beaty with Gwynne, "A Mysterious Mover of Money and Planes," p. 80.
71. Associated Press, August 18,1977.
72. Brad Kuh, "BCCI Tentacles Reached Far, Even into Central Florida," Orlando Sentinel Tribune, August 11, 1991, p. A 1.
73. Paul Galloway, "Bankrupt Hunt Brothers Bid Adieu to Art collections Worth Millions," Chicago Tribune, May 10, 1990, p. C 1.
74. Roy Rowan, "A Hunt Crony Tells All," Fortune, June 30, 1980, p. 54.
On a warm August night in 2002, James R. Bath, a little-known Texas businessman, opens the door to the front of his ranch in Liberty, a town of eight thousand people on the Trinity River outside Houston. His house is framed by trees silhouetted against a moonlit Texas sky.
About six feet tall, trim and balding, Bath mingles a wry, folksy Texas charm with some of the machismo of a veteran jet fighter pilot. The combination has served him well in cultivating relationships with some of the great Texas power brokers of the last generation -- from former governor John Connally to the Bush family.
There are many ways to tell the story of the events leading up to September 11 and the Iraq War of 2003, and Bath is hardly the most important person through whom to view them. However, his very obscurity carries its own significance. Bath happens to have served as the intentionally low-profile middleman in a passion play of sorts, the saga of how the House of Saud and its surrogates first courted the Bush family.
Bath is disarmingly hospitable as he whips up a late-night dinner and recounts the story of the birth of the Houston-Jeddah connection in the 1970s. A native of Natchitoches, Louisiana, he moved to Houston in 1965 at the age of twenty-nine to join the Texas Air National Guard. In the late sixties, after working for Atlantic Aviation, a Delaware-based company that sold business aircraft, he moved to Houston and went on to become an airplane broker on his own. Sometime around 1974 -- he doesn't recall the exact date -- Bath was trying to sell a F-27 turboprop, a sluggish medium-range plane that was not exactly a hot ticket in those days, when he received a phone call that changed his life.
The voice on the other end belonged to Salem bin Laden, heir to the great Saudi Binladin Group fortune. Then only about twenty-five, Salem was the eldest of fifty-four children of Mohammed Awad bin Laden, a brilliant engineer who had built the multibillion-dollar construction empire in Saudi Arabia. [i]
Bath not only had a buyer for a plane no one else seemed to want, he had also stumbled upon a source of wealth and power that was certain to pique the interest of even the brashest Texas oil baron. Bath flew the plane to Saudi Arabia himself -- no easy task since the aircraft could only do about 240 knots an hour -- and ended up spending three weeks in Jeddah, where he befriended two key figures in the new generation of young Saudi billionaires. [1] One of them was Salem bin Laden. In addition, Salem introduced Bath to his family and friends, including Khalid bin Mahfouz, also about twenty-five, who was the heir to the National Commercial Bank of Saudi Arabia, the biggest bank in the kingdom.
Salem was of medium height, outgoing, and thoroughly Western in his manner, says Bath. Bin Mahfouz was taller -- about six feet -- rail thin, relatively quiet and reserved. One associate says that if he had not known bin Mahfouz was a Saudi billionaire, he would have mistaken him for a biker straight out of a Harley-Davidson ad.
Bath immediately took to the two young men. "I like the Saudi mentality. They like guns, horses, aviation, the outdoors," he said. "We had a lot in common."
In many ways, bin Mahfouz [ii] and bin Laden were Saudi versions of the well-heeled good old boys whom Bath knew so well. "In Texas, you'll find the rich carrying on about being just poor country boys," he says. [2] "Well, these guys were masters of playing the poor, simple bedouin kid."
Poor, they were not. Salem and Khalid were both poised to take over the companies started by their billionaire fathers. In fact, they had almost identical family histories. Their fathers, Mohammed Awad bin Laden and Salem bin Mahfouz respectively, had both originally come from the Hadramawt, an oasislike valley in rugged, mountainous eastern Yemen. Both men were uneducated and poor bin Laden was a brilliant but illiterate bricklayer who never even learned to sign his name, and had traveled the same 750-mile trek by foot. In Jeddah, the commercial capital of Saudi Arabia, they made their fortunes off the hajj, the sacred pilgrimages to the great mosques in Mecca and Medina, bin Laden through construction and bin Mahfouz through currency exchange.
In 1931, Salem's father, Mohammed Awad bin Laden, had formed what eventually became the Saudi Binladin Group as a modest general-contracting firm that first became known for building roads, including a stunning highway with precipitous hairpin turns between Jeddah and the resort city of Taif. Ambitious and highly disciplined, the elder bin Laden advanced his cause by submitting below-cost bids on palace construction projects, including palaces for members of the royal family. [3] His shrewdest innovation was to build a ramp to the palace bedroom of the aging and partially paralyzed King Abdul Aziz. [4] Subsequently, the king made him the royal family's favorite contractor for palaces and major governmental infrastructure projects.
As a result of this growing friendship, in 1951, bin Laden won the contract to build one of the kingdom's first major roads, running from Jeddah to Medina. Eventually, he became known as the king's private contractor. "He was a nice man, very well liked by the royals," says an American oil executive who knew Mohammed Awad bin Laden. "He had the reputation of a doer, of getting things done."
The most prestigious and lucrative prize given by the royal family to the bin Ladens was for the kingdom's biggest roads [5] and exclusive rights to all religious construction, including $17 billion in contracts to rebuild the holy sites at Medina and Mecca, [6] which carried enormous iconic significance. In the center of the Grand Mosque of Mecca was the Kaaba, the holiest place to worship in all of Islam. Legend has it that the Kaaba was built after God instructed the prophet Abraham to build a house of worship, and the Archangel Gabriel gave Abraham a black stone, thought to be a meteorite, which was placed in the northeast corner of the Kaaba. "If there is one single image that signifies the Muslim world, it is that of the hajj being performed in the Kaaba," says Adil Najam, a professor at Boston University. [7] "[Rebuilding these sites] would be the Western equivalent of restoring the Statue of Liberty, Mount Rushmore, and the Lincoln Memorial -- multiplied by a factor of ten."
During the same period that Mohammed Awad bin Laden was cementing his ties with the royal family, Salem bin Mahfouz was using similar methods to woo King Abdul Aziz. After leaving the Hadramawt in 1915, bin Mahfouz had worked in various capacities for the wealthy Kaaki family of Mecca for thirty-five years, finally winning a partnership in the Kaakis' lucrative currency exchange business. [8] Because charging interest was condemned by the Koran as usury, at the time Saudi Arabia merely had money changers instead of a domestic banking industry. But bin Mahfouz went to the royal family and argued that Saudi Arabia would never be self-sufficient until the kingdom had a bank. Subsequently, bin Mahfouz won a license that allowed him to establish the National Commercial Bank of Saudi Arabia, the first bank in the kingdom.
By the early sixties, the bin Mahfouzes and the bin Ladens had made extraordinarily successful transitions from the tribal, Wild West -- like Hadramawt in Yemen to the far more commercially sophisticated world of Jeddah. Since they were outsiders -- both families were Yemenites -- the bin Ladens and the bin Mahfouzes did not have the tribal allegiances that other Saudis had, [9] and it was easy for the royal family to build them into billionaire allies who did not bring with them the political baggage other Saudis may have had. Consequently, the two great merchant families had virtual state monopolies in construction and banking.
In effect, the Saudi Binladin Group was on its way to becoming a Saudi equivalent of Bechtel, the huge California-based construction and engineering firm. [10] Likewise, bin Mahfouz had begun to build the National Commercial Bank into the Saudi version of Citibank, paving the way for it to enter the era of globalization.
Knowing full well the value of being close to the royal family in Saudi Arabia, Salem bin Laden and Khalid bin Mahfouz sought to have similar relationships in the United States. With Bath tutoring them in the ways of the West, they started coming to Houston regularly in the mid-seventies. Salem came first, buying planes and construction equipment for his family's company. [11] He bought houses in Marble Falls on Lake Travis in central Texas's Hill Country and near Orlando, Florida. [12] He started an aircraft-services company in San Antonio, Binladen Aviation, largely as a vehicle for managing his small fleet of planes. [13] He converted a BAC-111, a British medium-size commercial liner, for his own personal use, and for fun he flew Learjets, ultralights, and other planes around central Texas.
There were days that began in Geneva, continued in England, and ended up in New York. [14] Salem flew girlfriends over the Nile to see the Pyramids. "He loved to fly, and spent more time trying to entertain himself than anyone I know," says Dee Howard, [15] a San Antonio engineer who converted several aircraft for bin Laden, including the $92-million modification of a Boeing 747-400 for King Fahd's personal use, [16] the biggest such conversion in the world. The spectacularly outfitted jumbo jet boasted its own private hospital and was said to make Air Force One look modest by comparison.
From Texas to England, most Westerners who knew the bin Ladens found them irresistible. "Salem was a crazy bastard -- and a delightful guy," says Terry Bennett, a doctor who attended the family in Saudi Arabia. [17] "All the bin Ladens filled the room. It was like being in the room with Bill Clinton or someone -- you were aware that they were there. They may have had the normal human foibles, but they were good for their word and generous to a fault."
Salem loved music, the nightlife, and entertaining guests at dinner parties by playing guitar and singing "Deep in the Heart of Texas." [18] But Khalid bin Mahfouz was more reserved. "Khalid was a banker first and always acted as a banker should," remembers Bath. "He was extremely intelligent and quick to assess things."
For the most part, bin Laden and bin Mahfouz eschewed the gaudy public extravagance of sheikhs such as Mohammed al-passi, who in 1979 painted his Beverly Hills mansion in a color that evoked rotting limes and redid the statuary so that the genitals appeared more lifelike. [19] Still, this was Texas. Bigger was better, and bin Mahfouz and bin Laden observed the prevailing mores. As they became entrenched in Texas in the seventies, bin Mahfouz bought an enormous, rambling $3.5- million faux chateau, [20] later known as Houston's Versailles, [21] in the posh River Oaks section of Houston. He also purchased a four-thousand-acre ranch in Liberty County on the Trinity River near James Bath's ranch.
These men, billionaires from a fundamentalist theocratic monarchy, had arrived in a wide-open American city where strip clubs and churches were often side by side, and they fit right in. "They loved the ranch and they loved the country life," says Bath. "There was a real affinity between Texas and life in the kingdom. Khalid would come out to the ranch with the family and the kids, to ride horses, shoot guns, fireworks. They'd been going to England forever. But Texas -- there was the novelty."
***
Bin Laden and bin Mahfouz were not the only Saudis who started making the Saudi Arabia Texas commute. Saudi arms dealer Adnan Khashoggi operated a small fleet of Boeing 727s for his private use. [22] [iii] In 1970, Prince Bandar, later the ambassador on the Truman Balcony with President Bush, trained at Perrin Air Force Base near Sherman, Texas, as a fighter pilot [23] and became a daring acrobatic pilot who delighted in entertaining VIPs with his audacious aerial stunts. Joining them were the future king, then Crown Prince Fahd bin Abdul Aziz al-Saud; construction magnate Sheikh Abdullah Baroom; and others. "There were more private planes for the Saudis than many airlines have," says one pilot who flew for Salem bin Laden. [24] "It was quite an operation. Everyone had big airplanes and we flew whatever had wings."
Houston offered them a glimpse of a rapidly approaching Saudi future. As late as 1974, the tallest building in the Saudi capital, Riyadh, was a mere water tower, [25] but downtown Houston was already studded with gleaming skyscrapers. At home, the Saudis shopped in ancient markets known as souks, but in Houston, the extravagantly modern Galleria shopping mall had just opened. [26] Saudi Arabia was still a feudal desert kingdom where people lacked the professional skills and bureaucratic infrastructure to build a modern economy. Houston, by contrast, had gigantic energy-industry law firms -- Baker Botts; Vin- son, Elkins and Connally; Fulbright & Jaworski -- that greased the wheels of America's enormous oil industry so it could easily navigate the corridors of power in Washington. In many ways, Riyadh and Houston could scarcely have been more dissimilar; yet these differences were precisely what attracted the Saudis to Texas and catalyzed a chain of events over the next three decades that would change global history.
***
In part, it was oil that drew the two cultures together. Its history in Texas dated to January 10, 1901, when a handful of wildcatters in Beaumont, Texas, about sixty miles from Houston, drilled away until mud mysteriously bubbled up from the ground and several tons of pipe abruptly shot upward with enormous force. A few minutes later, as workmen began to inspect the damage, another geyser of oil erupted from thirty-six hundred feet under a salt dome. [27] The wildcatters had hoped to bring in fifty barrels a day. [28] Instead, the legendary Spindletop gusher brought in as many as one hundred thousand. [29] The Texas oil boom had begun.
Before long, Houston's Ship Channel had grown into a twenty-mile stretch of refineries constituting one of the great industrial complexes in the world, where hundreds and hundreds of towers and massive spherical tanks spewed smoke and steam, eerily illuminating the ghostly sky like a brightly lit Erector set. More than a quarter of all the oil used in the United States was refined there. Part of the complex, the Exxon Mobil plant in Bay town, is the biggest oil refinery in the world, producing more than half a million barrels a day. [30]
By contrast, oil was not even discovered in Saudi Arabia until 1938, [31] and even then, and for more than a generation afterward, control of the vast Saudi resources remained heavily influenced by the United States thanks to lucrative concessions granted to Aramco (the Arabian American Oil Company), a consortium of giant American oil companies and the Saudis. [32] [iv] In the early seventies, however, just before bin Laden and bin Mahfouz struck out for Texas, the world of oil underwent a dramatic change. Oil production in the United States had already peaked in 1970 and was beginning an inexorable decline at a time when more people drove more miles in bigger cars that burned more gas. Baby boomers had come of age and were driving. An elaborate suburban car culture had grown up all over the United States. There were Corvettes and Mustangs, muscle cars such as the Trans Am, and drive-in restaurants and shopping malls. The volume of America's imported oil nearly doubled -- from 3.2 million barrels a day in 1970 to 6.2 million a day in 1973. [33] Saudi Arabia's share of world exports sky-rocketed from 13 percent in 1970 to 21 percent in 1972.
Saudi Arabia's transformation from an underdeveloped backwater to one of the richest countries in the world was under way. In October 1973, just after the Arab-Israeli war, OPEC -- the Organization of Petroleum Exporting Countries -- a heretofore impotent consortium of oil-rich nations, abruptly became a genuine cartel capable of driving the price of oil up more than 300 percent. Oil, they had discovered, could be used as a weapon. Suddenly, Saudi Arabia took on the position Texas itself had once had and became the swing oil producer for the great industrial nations of the world. The biggest transfer of wealth in human history was under way. Hundreds of billions of dollars in oil revenues poured into the Saudi kingdom. [34] The Saudis were drowning in petrodollars.
Not surprisingly, most Americans don't have fond memories of the Saudi ascendancy in the seventies. With the embargo, the price of gas in the United States jumped from 38 cents a gallon in 1973 to $1.35 in 1981. [35] Soaring inflation, high interest rates, and long gas lines soon followed. A nationwide speed limit of fifty-five miles per hour was imposed in the interests of fuel efficiency. Government bureaucracies were established to reduce energy consumption.
Houston, however, benefited from the newfound Saudi wealth more than any other city in the country. All over the United States, architectural firms cut back because of the recession, but in Houston, CRS Design Associates more than doubled its payroll thanks to huge contracts from the Saudis. [36] Superdeveloper Gerald Hines built gleaming skyscrapers in downtown Houston designed by the likes of Philip Johnson and I. M. Pei -- financed, it was whispered, with Saudi riyals. Petrodollars flowed into Houston's Texas Commerce Bank, thanks to Arab clients. Saudi companies bought drill bits and pipes and lubricant in Houston. [37] The price of oil was over $30 a barrel and looked as if it would never fall and while the rest of the country had to pay the price, Texas oil producers also enjoyed the higher revenues. At last, Houston was on the map of international cafe society. Local socialites hung out at Tony's Restaurant on Westheimer Road, taking a prominent table with Princess Grace, Mick Jagger, fashion designer Bill Blass, or whichever well-known houseguest had flown in for the week. [38] In all, more than eighty companies in Houston developed strong business relationships with the Saudis. [39] It was even said that Houston was becoming to the Saudis what New York is to Israel and the Jews [40] -- another home half a world away.
***
Like the Israelis, the Saudis had one overwhelming need that they sought in this new alliance -- defense. For all its newfound wealth, the House of Saud was more vulnerable militarily than ever. A feudal desert monarchy that lacked the infrastructure of a modern industrial nation, the kingdom had more than fifteen hundred miles of coastline to defend. Its oil and gas facilities provided numerous high-value targets. Iran regularly sponsored riots during the pilgrimages to Mecca and provided support to Shiite extremists in Saudi Arabia. [41] Iraq, with which it shares a border, was a threat. Across the Red Sea, Sudan was a hospitable host to extremists. Other troublesome neighbors included Yemen, Oman, and Jordan. Saudi Arabia was vast -- it is about a quarter the size of the United States -- but it had to be defended by a population that, at the time, was under 6 million people, three-quarters of whom were women, children, and elderly. [42]
In addition, the Saudis had extraordinary internal weaknesses. As the rulers of an underdeveloped, feudal desert kingdom, they were in control of one of the most corrupt, authoritarian, undemocratic countries in the world. It was threatened by communists and Islamic revolutionaries. Women had virtually no rights. The Saudis arguably led the world in public beheadings -- many of which took place in a plaza in Riyadh referred to as Chop-Chop Square. [43]
Flooded with petrodollars, the Saudis still urgently needed a partner. As a result, the kingdom began to weave a tight alliance with the United States, militarily, economically, and politically. As the petrodollars poured in over the next twenty-five years, roughly eighty-five thousand "high-net-worth" Saudis invested a staggering $860 billion in American companies -- an average of more than $10 million a person and a sum that is roughly equivalent to the gross domestic product of Spain. [44] They took the United States by storm, selling crude, buying banks, building skyscrapers, buying weapons, investing everywhere.
Most important, the Saudis sought strong political ties to the United States through personal friendships with the powers that be. Education, training, and connections with American power brokers became prerequisites for the next generation of the Saudi elite. "They started sending their sons to school in the U.S.," says Nawaf Obaid, a Saudi oil analyst who himself was educated at Harvard and MIT. "They wanted to build up relationships with key people at the same time they had return on investments." [45]
The vast majority of the Saudi investments in the United States went into major banks and energy, defense, technology, and media companies. There were blue chips such as Citigroup and AOL Time Warner, and huge, secretive consortiums such as Investcorp, which put billions of Arab dollars in companies including Tiffany, Gucci, and Saks Fifth Avenue. But the House of Saud also made a handful of investments in troubled companies that were loaded with debt and regulatory problems -- which just happened to be owned by men who had or might have White House ties. "The leadership in the kingdom definitely supported these activities," says Prince Turki bin Faisal al-Saud, the ambassador to Great Britain who long served as Saudi minister of intelligence and was a son of the late King Faisal's. [46]
Superlawyer Edward Bennett Williams, a roguish Washington fixer, understood exactly what the Saudis were after. According to The Man to See, Evan Thomas's 1991 biography of Williams, in the seventies he accompanied Clark Clifford, a perennial adviser to Democratic presidents and one of the so-called Wise Men of Washington, on a private jet after Clifford had ill-advisedly taken on billionaire Arab clients.
"Williams gleefully acted out a pantomime of a delegation of Arabs visiting Clifford in his office," wrote Thomas. "Williams, a perfect mimic, imitated Clifford gravely telling the visiting sheikhs, 'You understand, of course, that I can only get you access.'
"Then Williams imitated the Arabs winking and grinning as they shoved a bag of gold across Clifford's desk." [47]
***
As it happened, Edward Bennett Williams's droll account of the Arab strategy for achieving entree to the inner sanctums of American power wasn't far from the truth. However, before approaching a man of Clark Clifford's stature, or, for that matter, wary Republican power brokers, the Saudis went to someone in Jimmy Carter's White House -- someone who not only had access to the president but who also happened to be desperately vulnerable.
After taking office in 1977, Carter had appointed his close friend Bert Lance, the CEO of the National Bank of Georgia (NBG), as director of the Office of Management and Budget (OMB). Lance had played a key role in Carter's presidential campaign, but in many ways he was the polar opposite of a Beltway insider like Clifford. He was not an easy fit in Washington. The media enjoyed tweaking the rumpled, six-foot-five-inch Lance, with his syrrupy Southern drawl, as something of a country bumpkin straight out of the Georgia woods. Within weeks of taking his place in the new administration, he was in trouble.
Lance had financed much of Carter's electoral campaign through overdrafts at NBG, and now that he was in the glare of the Washington political spotlight, those transactions had come under scrutiny. In addition, when he became CEO of the bank, Lance had borrowed $2.6 million to finance the purchase of his stock in the bank under terms that required him to remain its chief executive. [48] That, however, was impossible because now that he was in the government, he was required by law to resign from the bank. Worse, bank stocks had sunk so low that Lance couldn't afford to sell his stock to payoff the loan. [49] Last, Lance was charged with having mismanaged corporate and personal financial affairs by pledging the same stock as collateral for two loans, and having improperly pledged some of the bank's assets against his loans.
An investigation and trial later found Lance innocent, but his reputation was devastated. In September 1977, only a few months after he had taken over at OMB, he resigned. Lance was heavily in debt and unemployed. [50] He just had one thing going for him: he was still close friends with the president of the United States.
In October, just weeks after his resignation, Lance met with Agha Hasan Abedi, the Pakistani founder of the Bank of Credit and Commerce International, or BCCI. At the time, BCCI was said to be the fastest-growing bank in the world. Its assets had grown from $200 million in 1972 to more than $2 billion in 1977. [51] As a bank friendly to Muslim concerns, BCCI was perfectly positioned to take advantage of the petrodollars flowing into the Middle East in the wake of the OPEC oil embargo.
BCCI's ascendancy was also due to business practices that were highly unusual in the staid world of banking. Other banks gave toaster ovens to new depositors; BCCI provided prostitutes. [52] [v] Loans of millions of dollars were granted merely on the basis of a simple request. BCCI allegedly handled flight capital from countries such as India or Pakistan where currency constraints strictly prohibited the wealthy from taking their money out of the country. BCCI was luring customers away from its rivals and now had 146 branches in thirty-two countries. But it still had no presence in the biggest financial market in the world -- the United States.
"You cannot be a global bank, an international bank, without some sort of presence in the United States," Lance told BCCI founder Abedi. "This is the richest, most powerful nation in the world, and this is certainly something you ought to look at." [53] Desperate to sell his stock, Lance had just the thing in mind -- a modest Southern bank, namely, the National Bank of Georgia.
Abedi told Lance that Saudi billionaire Ghaith Pharaon might be just the person to take over NBG. Born in 1940, the dapper Pharaon was the son of a private physician to King Abdul Aziz [54] (as was Saudi billionaire arms dealer Adnan Khashoggi [55]). Pharaon's education included undergraduate work at Stanford and an MBA from Harvard Business School. He wore Savile Row suits and a Vandyke beard. Like his childhood friend Khalid bin Mahfouz, he was close to the House of Saud and personified the wave of "westernized" Saudi billionaires who came to the United States in the aftermath of the OPEC oil embargo. [56] With an annual income of $300 million in 1974, [57] Pharaon had lavish homes in Saudi Arabia and Paris, and a magnificent plantation near Savannah, Georgia, that had been owned by Henry Ford. In 1975, Pharaon helped pioneer the Arab takeover of American banks by purchasing Detroit's ailing Bank of the Commonwealth at a time when Arab money was a novelty in the United States.
Negotiations to sell the National Bank of Georgia to Pharaon and BCCI began over Thanksgiving weekend in 1977, through discussions among Lance, Abedi, and other BCCI officials. [58] On December 20, Lance announced he was selling his NBG stock to Pharaon for $2.4 million at $20 a share -- twice what it had been worth only a few weeks earlier.
Why had Saudis paid top dollar for a failing bank that was a target of federal regulators? The Senate investigation concluded that "gaining access to President Carter and the White House was ... one of the reasons the 'Arabs' were interested in having Lance represent them and in buying his interest in the National Bank of Georgia." [59]
The access Lance offered BCCI was not illusory. Through him, BCCI representatives met Jimmy Carter, the Reverend Jesse Jackson, Prime Minister James Callaghan of Great Britain, and many other officials, including Lance's attorney, the aforementioned Clark Clifford. The Senate report concluded that Carter's integrity was used by BCCI officials as the bank "went about mixing bribery and flattery to obtain access to the foreign reserves and other assets of numerous Third World countries." [60]
As for Lance, who had once been referred to as the deputy president of the United States, he returned to Georgia to work as a financial consultant. But his career in national politics was over. As for the Saudis, they had learned that they could win access to the highest levels of power in the United States.
***
On the Republican side, James Bath didn't have nearly the stature of Edward Bennett Williams or Clark Clifford, or for that matter, the visibility of Bert Lance. But in the seventies in Houston, for Khalid bin Mahfouz and Salem bin Laden, Jim Bath was the man to see. He counted among his friends and business associates no fewer than five Texans, four of them Republicans, who at one time or another would be considered presidential candidates.
Bath was friendly with the family of Senator Lloyd Bentsen, the lanky, distinguished Democrat who would run as vice presidential candidate in 1988 [vi] and later become secretary of the treasury. Bath had become partners with one of his sons, Lan Bentsen, in a small real estate firm that developed an apartment complex and airplane hangars and sought investments for the senator's blind trust. [61]
While he served in the Texas Air National Guard, Bath had also befriended the young George W. Bush, [62] who had begun training in 1970 as a pilot of F-102 fighters at Ellington Air Force Base near Houston. Bush had been a member of the "Champagne Unit" of the National Guard, so-called because it was famous for serving as the vehicle through which the sons of Houston society escaped serving in the Vietnam War.
In the mid-seventies, young Bush also introduced Bath to his father. A former Houston congressman who had lost senatorial races in 1964 to liberal Democrat Ralph Yarborough and in 1970 to the more conservative Lloyd Bentsen, the elder George Bush had been a devoted Nixon loyalist even through the mire of Watergate. His steadfastness had been rewarded with appointments as U.S. ambassador to the United Nations, as chairman of the Republican National Committee, and under President Gerald Ford, as chief liaison to the U.S. mission to China. In 1976, Bush was appointed head of the CIA.
There was also Bath's duck-hunting buddy, [63] James A. Baker III, then in his mid-forties. One of Houston's most powerful corporate attorneys and a true Texas patrician, Baker was a close friend and associate of George H. W. Bush's.
Finally, there was John Connally, the silver-haired, silver-tongued former Democratic Texas governor who became secretary of the treasury under Nixon in 1971 and who later switched to the Republican Party.
By 1976, Salem bin Laden had appointed Bath his American business representative. [64] Khalid bin Mahfouz drew up a similar arrangement with him as well. Bath was more than simply someone who could provide the Saudis with entree to political power brokers. But exactly what he did beyond that, in the intelligence world and elsewhere, was shrouded in mystery. From Time to the Wall Street Journal, the press speculated about Bath's connections to the Bushes, to John Connally, to the CIA, to BCCI, and to various figures in the Iran-contra scandal of the eighties.
When asked about his career, Bath usually downplayed his importance. By his account, he was merely "a small, obscure businessman." It was often said that he was in the CIA, but Bath denied that to Time. [65] Later, he equivocated. "There's all sorts of degrees of civilian participation [in the CIA]," he says. "It runs the whole spectrum, maybe passing on relevant data to more substantive things. The people who are called on by their government and serve -- I don't think you're going to find them talking about it. Were that the case with me, I'm almost certain you wouldn't find me talking about it." [66]
Bath's role in investing for the Saudis took various forms. "The investments were sometimes in my name as trustee, sometimes off shore corporations, and sometimes in the name of a law firm," he says. "It would vary." [67] Bath generally received a 5 percent interest as his fee and was sometimes listed on related corporate documents. [68]
On behalf of Salem bin Laden, Bath purchased the Houston Gulf Airport, a small private facility in League City, Texas, twenty-five miles east of Houston. [69] He also became the sole director of Skyway Aircraft Leasing in the Cayman Islands, which was actually owned by Khalid bin Mahfouz.
Through Skyway, Bath brokered about $150 million worth of private aircraft deals to major stockholders in BCCI such as Ghaith Pharaon and Sheikh Zayed bin Sultan al-Nahayan, president of the United Arab Emirates. To incorporate his companies in the Cayman Islands, Bath used the same firm that later set up a money-collecting front for Oliver North in the Iran-contra affair. [70] He also served as an intermediary between the Saudis and John Connally, who, having served as Nixon's treasury secretary, began to position himself for a shot at the White House in 1980.
In August 1977, John Connally and Bath teamed up with Ghaith Pharaon and bin Mahfouz to buy the Main Bank of Houston, a small community bank with about $70 million in assets. [71] Soon, the tiny bank began obtaining more than $10 million a month in hundred-dollar bills. [72] It was highly irregular for such a tiny bank to require such large amounts of cash. Such unusual transactions can be a sign of money laundering, but bank regulators in Texas said they did not know why the bank needed the money. The transactions were not illegal and the reason for them was never uncovered.
Then, in July 1978, Khalid bin Mahfouz and forty bodyguards took over an entire floor of the Mayflower Hotel in Washington, D.C., with John Connally there to introduce him to Texas billionaires William Herbert Hunt and Nelson Bunker Hunt. [73] [vii] The purpose of the meeting was allegedly to get bin Mahfouz and Pharaon to participate in the Hunt brothers' quest to corner the world's silver market. The Saudis' role in the silver deal fell through -- and the Hunt brothers' participation in it led to one of the great financial follies of the decade.
Nevertheless, through Main Bank, the young Saudis had established ties to Connally. [74] They were now in business with a legitimate presidential contender who seemed well positioned for the 1980 campaign. For two young men, still in their twenties, to have business partnerships with an American presidential candidate elevated them enormously in the eyes of the Saudis back home, especially the royal family.
With his lantern jaw and silver mane, his Stetson hat, cowboy boots, and bolo tie, Connally was straight out of central casting. He had movie-star good looks, and a powerful appeal to Wall Street and corporate America. He had survived close ties to the disgraced Nixon presidency and bribery charges in the so-called Milk Fund scandal of 1974. He had even survived the Kennedy assassination in November 1963. Sitting next to Kennedy in the motorcade, he too was shot that day, but emerged a wounded hero.
At the time, Connally had only one serious political rival in Texas -- George H. W. Bush, a man who possessed little of Connally's charisma. Whereas Connally was festooned with the iconography of the Lone Star State, Bush was a Connecticut Yankee who constantly had to prove his Texas bona fides. Connally was a po' boy from Floresville in the Texas Hill Country -- his father had been a tenant farmer -- who had made his fortune through lucrative relationships with oil barons Sid Richardson and Clint Murchison and then taken on the trappings of a brash wheeler-dealer himself. By contrast, Bush was a genuine oilman, but he was an East Coast transplant whose understated style sought to mask but only accentuated his patrician background. A partner in the huge Houston oil industry law firm of Vinson, Elkins and Connally, Connally was unabashed about being the biggest Arab-money lawyer in Texas. Bush kept his distance. Next to Connally, he seemed bland indeed.
For all that, Bush had mastered one extraordinarily important aspect of politics in a way that left Connally and scores of other wannabes in the dust. George H. W. Bush was wired. Whether it be the old-moneyed East Coast establishment or Richard Nixon's team, the rising young Turks of the new conservative movement or the power brokers of Republican Party infrastructure, Bush either knew the right people or knew how to meet them and make them his friends. He knew people who would enable him to raise campaign funds, to get the right decisions made at government agencies such as the Securities and Exchange Commission and the Export Import Bank, people who would back his son's oil companies, who would perform favors when called on. He did not like to make decisions without knowing the outcome in advance. From the Petroleum Club in Midland, Texas to the Bayou Club in Houston to the Bohemian Grove [viii] in California; from clubby men's institutions like the CIA and the oil industry -- he had cultivated an extraordinary power base. In the long run, it was capable of taking him all the way to the White House.
And in the short run -- within a few years -- Saudis seeking access to the highest levels of American power soon forgot Bert Lance, Clark Clifford, and John Connally and realized that George H. W Bush was the man to see.
_______________
[i] Because the Hegira calendar used in Saudi Arabia does not consistently conform to the Gregorian calendar used in the West, the ages of many Saudis in this book are approximate.
[ii] Bin Mahfouz has widely been identified in the media as the brother-in-law of Osama bin Laden, thanks to congressional testimony by former CIA director James Woolsey. But a spokesman for bin Mahfouz denies the assertion, and the author has found no evidence to back up Woolsey's charge.
[iii] Khashoggi made a fortune as a middleman on an estimated 80 percent of Saudi-American arms deals, including commissions of more than $100 million from Lockheed alone between 1970 and 1975.
[iv] The Saudis first granted concessions to explore for oil in Saudi Arabia to the British, thanks to Jack Philby, who is best known today as the father of the notorious British spy Kim Philby. At a time when King Abdul Aziz was hoping to find water, Philby persuaded him to let him look for oil. According to Daniel Yergin's The Prize, Philby was dismissed by British government officials as merely a bit player. But Standard Oil of California recognized that he had access to the king and signed him on to help acquire concessions. The initial concession agreement called for Socal to put $175,000 in gold up front, an additional loan of $100,000 eighteen months later, and still another loan of $500,000 on the discovery of oil. The concession was good for sixty years and covered 360,000 square miles. It was one of the greatest bargains in history.
[v] According to the U.S. Senate's BCCI probe, the bank's involvement in prostitution grew out of its "special protocol department" in Pakistan, which allegedly serviced "the personal requirements of the Al-Nahyan family of Abu Dhabi, and other BCCI VIPs, including other Middle Eastern rulers." The Senate report asserts that Abedi employed a woman who helped him cement his relationship with the Al-Nahyan family by providing them with Pakistani prostitutes. The report says that the woman was reputed to have first won the attention of the royal family "by arranging to get virgin women from the villages from the ages of 16 to 20. [She] would make payments to their families, take the teenaged girls into the cities, and teach them how to dress and how to act. The women were then brought to the Abu Dhabi princes. "For years, [she] would take 50 to 60 girls at a time to large department stores in Lahore and Karachi to get them outfitted for clothes. Given the size of [her] retinue and her spending habits -- $100,000 at a time was not unusual when she was outfitting her charges -- she became notorious and there was substantial competition among clothiers and jewelers for her business. ... According to one U.S. investigator with substantial knowledge of BCCI's activities, some BCCI officials have acknowledged that some of the females provided some members of the Al-Nahyan family were young girls who had not yet reached puberty, and in certain cases, were physically injured by the experience. The official said that former BCCI officials had told him that BCCI also provided males to homosexual VIPs."
[vi] Bentsen's most memorable moment in politics came in the 1988 campaign when his youthful rival, GOP vice presidential candidate Dan Quayle, invoked President John F. Kennedy's name, to which Bentsen replied, "I knew Jack Kennedy. Jack Kennedy was a friend of mine. And, Senator, you're no Jack Kennedy."
[vii] In 1973, Bunker, Herbert, and Lamar Hunt, three sons of oil billionaire H. L. Hunt, began to hedge against the depreciating dollar by investing in silver at a time when gold could not be purchased in the United States. By hoarding huge quantities of the precious metal, they pushed the price of silver to more than $50 an ounce. But in 1980, the price plummeted to $9 an ounce. The Hunts never recovered from the financial debacle and eventually had to sell their art collections.
[viii] The Bohemian Grove has held secret meetings for a global elite since 1873 in a redwood forest of northern California. In addition to Republican presidents Eisenhower, Nixon, Reagan, and George H. W. Bush, members have included James Baker, Richard Cheney, Donald Rumsfeld, David Rockefeller, William Casey, and Henry Kissinger. Each year, the members don red, black, and silver robes and conduct a ritual in which they worship a giant stone owl.
NOTES:
1. Interview with James Bath.
2. Ibid.
3. Unattributed, biography of Osama bin Laden, PBS Frontline Online.
4. Michael field, The Merchants, p. 105.
5. Ibid.
6. Lowell Bergman and Martin Smith, "Saudi Time Bomb," PBS Frontline, November 15, 2001.
7. Interview with Adil Najam.
8. Field, The Merchants, p. 106.
9. Interview with Jamie Etheridge, analyst for Strategic Forecasting.
10. Jane Mayer, "The Contractors," New Yorker, May 5, 2003, p. 35.
11. Interview with James Bath.
12. Interview with Gerry Auerbach.
13. Suzanne Hoholik and Travis E. Poling, San Antonio Express-News, August 22, 1998, pt. A, p. 1.
14. Pavlo Solodko, "The Bin Ladin Business" [in Ukrainian], Lviv Halytski Kontrakty, no. 45, pp. 8, 24.
15. Dee Howard, telephone interview.
16. Mike Ward, "Bin Laden Relatives Have Ties to Texas," Austin American Statesman, November 9, 2001, p. Al.
17. Interview with Terry Bennett.
18. Torch Lewis, Business & Commercial Aviation, December 2001, p. 112.
19. Dennis McLellan, "Obituary: Mohammed al-Fassi," Los Angeles Times, December 31, 2002, pt. 2, p. 10.
20. Dan Balz, "The Saudi Connection," Washington Post, April 19, 1981, p. C 1.
21. Interview with a Houston associate of bin Mahfouz.
22. Robert Baer, Sleeping with the Devil, p. 41; and interview with bin Laden pilots.
23. Scott Farwell, "Saudi Arabia Asks Iran for Son of bin Laden," Dallas Morning News, September 8, 2003.
24. Interview with Heinrich Rupp.
25. Sandra Mackey, The Saudis, p. 45.
26. International Council of Shopping Centers, "The Impact of Shopping Malls," http://www.lcsc.org.
27. Daniel Yergin, The Prize, p. 84; and Herbert S. Parmet, George Bush, p. 69.
28. Yergin, The Prize, p. 84.
29. Parmet, George Bush, p. 69.
30. Edward Vulliamy, "The Dark Heart of the American Dream," Observer (London), June 16, 2002, p. 22.
31. Yergin, The Prize, p. 300.
32. Ibid., pp. 287-91.
33. Ibid., p. 591.
34. "The Arming of Saudi Arabia," transcript of PBS Frontline #1112, February 16, 1993.
35. California Energy Commission, "Historical Yearly Average California Gasoline Prices per Gallon," http://www.energy.ca.gov/gasoline/stati ... usted.html
36. Steve Emerson, The American House of Saud, p. 53.
37. Balz, "The Saudi Connection," p. C1.
38. Mimi Swartz, "Oscar Wyatt," Texas Monthly, September 2001.
39. City of Houston, Office of the Mayor, Mayoral Speeches, www.ci.houston.tx.us/city/govt/mayor/sp ... 020701.htm.
40. Balz, "The Saudi Connection," p. C1.
41. Anthony Cordesman, Saudi Arabia, p. 7.
42. Mackey, The Saudis, p. 293.
43. Robert Baer, "The fall of the House of Saud," Atlantic Monthly, May 2002, p. 55.
44. Washington Post, February 11, 2002, p. A17; and Prince Bandar bin Sultan bin Abdul Aziz al-Saud, U.S.-Saudi Arabian Business Council, Third Plenary Meeting, Washington, D.C., October 2, 1996.
45. Interview with Nawaf Obaid.
46. Interview with Prince Turki.
47. Gay Jervey and Stuart Taylor Jr., "From Statesman to Front Man: How Clark Clifford's Career Crashed," American Lawyer, November 1992, p. 49.
48. Jonathan Beaty and S. C. Gwynne, The Outlaw Bank, p. 149; and James Ring Adams and Douglas Frantz, A Full Service Bank, p. 36.
49. Adams and Frantz, A Full Service Bank, p. 32.
50. Beaty and Gwynne, The Outlaw Bank, p. 149.
51. Adams and Frantz, A Full Service Bank, p. 27.
52. Ibid., p. 34; and The BCCI Affair: A Report to the Committee on Foreign Relations, United States Senate, by Senator John Kerry and Senator Hank Brown, December 1992, 102nd Collg., 2nd sess., Senate Print 102-140. NB: This December 1992 document is the penultimate draft of the Senate foreign Relations Committee report on the BCCI affair. After it was released by the committee, Senator Hank Brown, reportedly acting at the behest of Henry Kissinger, pressed for the deletion of a few passages, particularly in chapter 20, "BCCI and Kissinger Associates." As a result, the final hard-copy version of the report, as published by the Government Printing Office, differs slightly from the committee's soft-copy version at www.fas.org/irp/congress/1992_rpt/bcci/04crime.htm .
53. Beaty and Gwynne, The Outlaw Bank, p. 150.
54. Ghaith Pharaon's profile on his website at www.pharaon.com.
55. "Hunting bin Laden," PBS Frontline; www.pbs.org/wgbh/pages/frontline/shows/ ... amily.html.
56. Alexander Stuart, "Citizen Connally: The Businessman You Never Knew," Fortune, July 31, 1978, p. 86.
57. James Ring Adams and Kenneth Timmerman, American Spectator, May 1997.
58. The BCCI Affair, Senate Print 102-140.
59. Ibid.
60. Ibid.
61. Jonathan Beaty with reporting by S.C. Gwynne, "A Mysterious Mover of Money and Planes," Time, October 28, 1991, p. 80.
62. Interview with James Bath.
63. Ibid.
64. Jerry Urban, "Feds Investigate Entrepreneur Allegedly Tied to Saudis," Hous ton Chronicle, June 4,1992, p. A21.
65. Beaty with Gwynne, "A Mysterious Mover of Money and Planes," p. 80.
66. Interview with James Bath.
67. Ibid.
68. Daniel Golden, James Bandler, and Marcus Walker, "Special Report: Aftermath of Terror -- Bin Laden Family Could Profit from a Jump in Defense Spending Due to Ties to U.S. Bank," Wall Street Journal, September 27, 2001.
69. Urban, "Feds Investigate Entrepreneur."
70. Beaty with Gwynne, "A Mysterious Mover of Money and Planes," p. 80.
71. Associated Press, August 18,1977.
72. Brad Kuh, "BCCI Tentacles Reached Far, Even into Central Florida," Orlando Sentinel Tribune, August 11, 1991, p. A 1.
73. Paul Galloway, "Bankrupt Hunt Brothers Bid Adieu to Art collections Worth Millions," Chicago Tribune, May 10, 1990, p. C 1.
74. Roy Rowan, "A Hunt Crony Tells All," Fortune, June 30, 1980, p. 54.