House of Bush, House of Saud, by Craig Unger

"Science," the Greek word for knowledge, when appended to the word "political," creates what seems like an oxymoron. For who could claim to know politics? More complicated than any game, most people who play it become addicts and die without understanding what they were addicted to. The rest of us suffer under their malpractice as our "leaders." A truer case of the blind leading the blind could not be found. Plumb the depths of confusion here.

Re: House of Bush, House of Saud, by Craig Unger

Postby admin » Wed Nov 27, 2013 4:33 am


CHAPTER SEVEN: Friends in High Places

Breezily likable, seemingly uncomplicated, George W. Bush once said that the difference between him and his father was that his dad "attended Greenwich Country Day and I went to San Jacinto High School in Midland." [1] He was right.

Dubya, as he was known in Texas, shared much of his father's legacy -- Andover, Yale, Skull and Bones, Texas, and the oil business. But, culturally speaking, he was more of a real Texan than his dad -- much more. The elder George Bush was very much at home in the East Coast sanctums of Old Money. By contrast, Dubya was profoundly uncomfortable when he was surrounded by the "intellectual arrogance" he encountered at Yale and Harvard Business School at the height of the counterculture in the sixties and early seventies.

For George H. W. Bush, it was always a stretch to make nice with the Republican Party's powerful Christian right, which, in turn, viewed him as suspect, an interloper who sometimes said the right things but didn't really believe them. By contrast, Dubya was a genuine born-again Christian who had "accepted" Jesus Christ as his personal savior in 1985 and read the Bible and prayed daily. The elder Bush loved the family's summer retreat on Walker's Point in Kennebunkport, Maine, and all that it suggested -- golfing, lobster, the rugged Maine shore, and a rich family heritage that was deeply embedded in the Eastern Establishment. By contrast, Dubya's home away from home was not Maine, the Hamptons, or Nantucket, but Crawford, Texas, in the hardscrabble dry plains near Waco. Located right in the middle of Texas's Baptist-dominated Bible Belt, its history was bereft of Yankee railroad barons and the like and was instead studded with Ku Klux Klan marches and incidents such as the FBI assault on David Koresh's Branch Davidians, who became martyrs of the right-wing militia movement. [2] Not exactly a likely oasis of choice for a scion of the East Coast elite.

Finally, Dubya had one political advantage over his father. The elder Bush so embodied the image of a spoiled and privileged son of the Eastern aristocracy that in 1988 when Ann Richards, who was soon to become governor of Texas, delivered her famous sound bite about the elder Bush at the Democratic National Convention, the words resonated throughout the United States and made Richards a national figure. "Poor George," she had drawled, "he can't help it. He was born with a silver foot in his mouth."

By contrast, Dubya cast a figure that could be powerfully evocative of the cowboys who once strode Texas's wide-open spaces. At a time when most Texans lived in air-conditioned suburbs, but still longed for its rich and powerful mythic imagery of wide-open spaces and the Old West, he understood and appealed to rural Texas archetypes that were an amalgam of male-bonding rituals forged on the ranch, in the oil fields, and in the locker room. These were ideals that celebrated the virtues of toughness, self-reliance, and neighborliness, all generously larded with Marlboro Country-type cowboy imagery. At their best, these values were democratic in the true sense of the word, recognizing no social barriers separating the ranch hand from the millionaire. This was in large part a source of Dubya's appeal that enabled him to win support that crossed class barriers.

But the reality was wildly at odds with the imagery. Dubya was still very much a child of privilege himself. He accepted his high station in life so unquestioningly that detractors often said he had been born on third base and thought he had hit a triple. After graduating from Yale, Bush returned to Houston to join the Texas Air National Guard in 1968. [3] In addition to aircraft broker James Bath, Bush's unit consisted of several members of the River Oaks and Houston country clubs, and Lloyd Bentsen III, a son of the Texas senator. According to the Washington Post, Bush's political connections helped him get into the unit, a highly sought-after refuge for young men seeking to avoid service in Vietnam. Dubya gained admission to the guard only after Ben Barnes, the powerful Speaker of the House in Texas, intervened to get him a pilot's slot. [4]

Even after he got into the guard, Bush's stint was marked by controversy. In 1972, orders had required Bush to report to a lieutenant colonel with a Dickensian name, William Turnipseed, in Montgomery, Alabama. But, according to Turnipseed, Bush "never showed up." [5]

In the end, Bush's National Guard record was something less than distinguished and it created issues that would haunt his electoral future. In 1972, Bush was suspended from flying for "failure to accomplish annual medical examination." [6] As it happened, that was the year drug testing became part of military medical exams, and political opponents later accused Bush of avoiding the exam so as to escape detection of cocaine use. [7] [i]


During his sojourn at Harvard Business School, Bush made it clear exactly where his heart was. Classmate Marty Kahn's first memory of Bush was "sitting in class and hearing the unmistakable sound of someone spitting tobacco. I turned around and there was George sitting in the back of the room in his [National Guard] bomber jacket spitting in a cup. You have to remember this was Harvard Business School. You just didn't see that kind of thing." [8] Coming as it did during the height of the Vietnam War, in hippie-infested Cambridge, Massachusetts, the East Coast epicenter of the tie-dyed, Birkenstocked, long-haired antiwar movement, chewing tobacco was a defiant fashion statement that loudly proclaimed George W. Bush would have absolutely nothing to do with the counterculture.

If Dubya received favored status in the National Guard as a result of his powerful father, it was nothing compared to the help he got in his business career. In 1977, Bush had decided to follow in his father's footsteps and moved to Midland, Texas, where his father had started out, to launch his first oil company, Arbusto Energy.

Arbusto, which means "bush" in Spanish, was founded as a one-man outfit that Bush hoped would grow into a company that could drill for oil all over the country. Thanks to help from his uncle Jonathan Bush, a Wall Street financier, and his grandmother Dorothy Bush, Dubya, then thirty-one, put together a $4.7-million partnership consisting largely of relatives and powerful family friends to launch Arbusto. There was venture capitalist William Draper [ii] and Celanese Corporation CEO John Macomber, each of whom would serve as chairman of the Export-Import Bank during the Reagan-Bush era; Prudential Bache CEO George Ball; multimillionaire New York Republican Lewis Lehrman; and George H. W. Bush fundraiser Russell Reynolds among others. [9] Also among the investors was Dubya's National Guard friend James Bath, who put up $50,000 for 5 percent of the stock.

According to the Washington Post, Bush immediately put Arbusto on his resume to use as a credential in his unsuccessful 1978 congressional race -- even though it didn't start operations until March 1979, several months after he lost the election. [10] When it did get going, Arbusto struggled financially, forcing Bush to seek new investors to save the day. In January 1982, just a year after his father had become vice president, Dubya managed to find such an angel, New York investor Philip Uzielli, a Princeton classmate [11] and longtime friend of James Baker's. What was particularly astonishing about Uzielli's participation in Arbusto was the exorbitant price he paid -- $1 million in exchange for 10 percent of Bush's tiny company. According to Time, the entire company was then worth only $382,000. [12] In other words, Uzielli had paid twenty-six times market value for his share of the company's equity.

Bush rationalized the high price by saying, "There was a lot of romance and a lot of upside in the oil business." But at the time, the international oil market was collapsing, with the price per barrel plummeting from $38 in 1981 to $11 in 1986. [13] The situation was so bad that Vice President Bush flew to Saudi Arabia to persuade King Fahd that the oil glut had made oil too cheap and was decimating West Texas oil companies. [14] Arbusto continued to drill one dry hole after another. Its name became such a subject of mockery -- with detractors derisively emphasizing the second syllable -- that Bush changed it to Bush Exploration.

In 1984, in need of more financing, Bush merged Arbusto into another oil company, Spectrum 7. But even that wasn't enough. In the rapidly deflating boomtowns of Houston and Dallas, this was the era of real estate busts, see-through skyscrapers, and so-called glass prairies -- gleaming, new skyscrapers built during that boom that were almost entirely empty because of the recession. Banks were folding. Oil giants faced huge layoffs. The prospect for small independent oil companies in West Texas was even worse. [15]

Bush's problem was not just that Spectrum had drilled too many dry wells. As the price of oil fell, even the value of its productive wells plummeted. Investors were nowhere to be seen. In 1985, Spectrum lost $1.6 million. Altogether, it owed more than $3 million, [16] and Bush had little hope of paying it off. "We lost a lot of money," said Philip Uzielli, who had become a director of Spectrum 7. " ...Things were terrible. It was dreadful." [17]

By this time, Bush's father, then vice president, was the odds-on favorite to be the next president of the United States. But Dubya, who was about to turn forty, had accomplished almost nothing. One by one, his oil companies in their various incarnations -- Arbusto, Bush Exploration, and Spectrum 7 -- slid toward the brink, even after getting generous help from his father's and James Baker's powerful friends. The normally optimistic Bush was despondent. "I'm all name and no money," he said. [18]

But, in 1986, another savior came to Bush's rescue. A Dallas-based energy firm owned partially by Harvard University and international investor George Soros, Harken Energy, then known as Harken Oil and Gas, gave Bush a spectacular deal and bought his failing company for $2.25 million in stock. Bush got roughly $600,000 out of the deal, [19] a seat on the board, and a consultancy paying between $50,000 and $120,000 a year. [20] Now he didn't even have to work full-time and could help his father pursue the White House, where he was rapidly becoming a trusted adviser to the president.

As for why his benefactors were so generous, Harken founder Phil Kendrick was to the point: "His name was George Bush. That was worth the money they paid him." [21]

"You'd have to be an idiot not to say [that's] impressive," added Alan Quasha, a Harken shareholder. [22]

Meanwhile, Harken had problems. Loaded with debt and a history of drilling dry wells, Harken had almost nothing going for it. In 1989, it lost more than $12 million. The next year, it lost $40 million. Even these losses vastly understated the gravity of Harken's crisis. New York Times columnist Paul Krugman has since charged that Harken created a front company that seemed independent but was really under Harken's control solely to concoct phony transactions and to buy some of the firm's assets at high prices -- all to falsely inflate revenues. [25] "Mr. Bush profited personally from aggressive accounting identical to recent scams that have shocked the nation," Krugman wrote, referring to the Enron and Arthur Andersen scandals.

Phil Kendrick, who had sold most of his stock but was still a small shareholder, best characterized Harken's incomprehensible business practices: "Their annual reports and press releases get me totally befuddled," he said. "There's been so much promotion, manipulation, and inside deal-making. It's been a fast-numbers game." [26]

And yet, with the Bush name now on its marquee, suddenly all sorts of marvelous things started to happen to Harken -- new investments, unexpected sources of financing, serendipitous drilling rights in faraway countries. All thanks to people who now found Harken irresistible -- many of them close to BCCI, the Saudi-dominated bank that had political connections all over the world and whose biggest shareholder was Khalid bin Mahfouz. It was a kind of phantom courtship.

Even if Harken had not had its liabilities, for Saudi billionaires, whose wealth came from the biggest oil reserves in the world, investing in Harken was at best truly a case of selling coals to Newcastle, ice to the Eskimos. "Think about it," explains Bush's friend and business partner James Bath. "It doesn't make sense. What we would consider a big oil drill here [in Texas] would be laughable to them."

"You had this terribly complicated dance," recalls a former senior Senate investigator into BCCI. "It was not just that the Saudis used BCCI to buy power. There were people in the United States who saw the opportunity to make scads of money. They weren't exactly raping the system. It was more like consensual sex."

Neither George W. Bush nor Harken, it should be said, had any direct contact of any kind with bin Mahfouz or BCCI. Bin Mahfouz professed no knowledge of any intention to create a special relationship with Bush or Harken [23] and, according to his attorney, "does not recall that the matter of BCCI's relationship with Harken" was brought up at BCCI board meetings or "in any other fashion." [24] Likewise, Harken officials, including George W. Bush, said they were unaware of their new investors' links to BCCI. On paper, there was no relationship whatsoever between the two institutions or their principals.

But like so much of what went on with BCCI, this elaborate dance often took place through convoluted financial transactions and third parties. It was not essential for the key players in this aspect of the Saudi-Bush drama even to know each other to have productive relationships. In fact, for many of the participants, the less they knew the better.


In particular, in later years George W. Bush would very much not want to know bin Mahfouz. According to his associates, bin Mahfouz was a moderately devout Muslim who eschewed excess -- at least by the standards of Saudi billionaires. [27] That meant that in addition to his Texas properties, he had, or would acquire, a large estate in Buckinghamshire, England, and homes in Jeddah, Cairo, New York, Paris, London, and Cannes. [28] Bin Mahfouz's greatest extravagance was his preferred mode of transportation. He flew his own Boeing 767, a Boeing 737, and in later years, a Bombardier Global Express, one of the hottest ultra-long-range, high-speed business jets on the market. [29] An observer who boarded one of his 767s in 2003 said that $40 million had been spent on the interior to outfit it with gold-plated bathroom fixtures, magnificent wood paneling, a drop-down movie screen with surround sound, and a bedroom with emergency medical equipment. [30]

In decades past, the Saudis had put constraints on the international ambitions of the bin Mahfouz family and National Commercial Bank, in part because Islamic tradition had outlawed the charging of interest. But with petrodollars flooding into the country and the globalization of the financial markets, such antiquated practices no longer made practical business sense. In addition, such strictures might interfere with the kind of political ties the Saudis could create through BCCI, as they had with Bert Lance and Clark Clifford when Jimmy Carter was in the White House. [31]

In 1987, when Vice President George H. W. Bush was positioning himself to succeed Reagan, several people close to BCCI began to approach Harken Energy. One of them was Arkansas investment banker Jackson Stephens, a principal in Little Rock's Stephens, Inc., one of the biggest investment banks outside of Wall Street. Stephens was so politically wired that he had access to the White House from the Carter administration through the Reagan-Bush era and into the Clinton administration. A classmate of Jimmy Carter's at the U.S. Naval Academy, Stephens was also an associate of Bert Lance, the first casualty of the BCCI scandal. But Stephens's political affiliations were not merely Democratic. Though he had been a contributor to Jimmy Carter, Stephens also gave $100,000 to George H. W. Bush's presidential campaign in 1988 and his company put in another $100,000. In addition, his wife, Mary Anne, was Arkansas cochairman of the Bush for President Campaign that year.

In the late seventies, Stephens had suggested to BCCI that it try to take over Washington, D.C.'s biggest bank, First American Bankshares, and he subsequently became a defendant in a suit aimed at preventing the takeover. He was the man who had introduced Bert Lance to BCCI founder Agha Hasan Abedi. His proximity to the corrupt bank notwithstanding, Stephens was seen as an innocent bystander or a victim in the BCCI scandal.

And so, not long after he joined forces with Harken, George W. Bush found himself in Little Rock with Jackson Stephens, who began to put a rescue plan in motion by raising $25 million from the Union Bank of Switzerland to invest in Harken in exchange for equity. What happened next was best reported in a 1991 article by Thomas Petzinger, Peter Truell, and Jill Abramson in the Wall Street Journal that detailed the links between BCCI and Harken after George W. Bush became a board member of the struggling oil company.

From the start, the deal Stephens put in play had two anomalies: For one thing, the Union Bank of Switzerland didn't ordinarily put money in small U.S. firms. For another, UBS was linked to BCCI through a joint-venture partnership in a Geneva-based bank. [32]

Before the deal could be finalized, however, the financing from UBS ran into unrelated difficulties and fell apart. As a result, still another financier was needed to rescue Harken. [33] This time, Stephens introduced Harken to a new investor, Abdullah Taha Bakhsh, a real estate magnate from Jeddah, whose subsequent injection of capital resulted in his ownership of 17.6 percent of Harken's stock.

A well-known Saudi investor, Bakhsh had been a founding member of the board of Investcorp, the enormous global investment group. [34] Bakhsh had had business dealings with the most prominent people in Saudi Arabia, including members of the Saudi royal family. [35] He also had at least two ties to BCCI. According to the Journal, he had been chairman of the Saudi Finance Co., a holding company partly controlled by BCCI shareholders. In addition, he was well acquainted with bin Mahfouz. [36]

All parties concerned -- bin Mahfouz, Bakhsh, and Harken -- have denied that Bakhsh's role in Harken had anything to do with BCCI or his relationship to bin Mahfouz. [37] "Mr. Bakhsh was not in any way representing Khalid bin Mahfouz's interests in any investment by Mr. Bakhsh in Harken Energy," says Cherif Sedky. [38]

Certainly, the Saudis could allow companies like BCCI to engage indirectly in major transactions while giving the principals plausible deniability about what was really going on. "In general, there are two sorts of investment mechanisms that wealthy Saudi businessmen do in the U.S.," says Saudi oil analyst Nawaf Obaid, "those in which they act on their own behalf, and those done on behalf of a group or consortium." [39]

Or, as the 1992 Senate investigation into BCCI put it, BCCI's principal mechanisms for doing business included "shell corporations, bank confidentiality and secrecy havens, layering of corporate structure, front men and nominees, back-to-back financial documentation among BCCI-controlled entities, kickbacks and bribes, intimidation of witnesses, and retention of well-placed insiders to discourage governmental action." [40]

In their group investments, the Saudis at times made the identities of their investors intentionally opaque. When Salem bin Laden and Khalid bin Mahfouz had first come to Houston in the seventies, they had taken on James Bath as their representative to do business deals in which they were not always visible as investors. Even if Bakhsh wasn't representing bin Mahfouz or BCCI, a knowledgeable Saudi source speculates that the Harken investment may have been part of the same strategy the Saudis had of investing in U.S. companies that were connected to powerful politicians.

Moreover, this serendipitous infusion of capital was not the only windfall for Harken that was tied to BCCI. In January 1990, by which time the elder George Bush had become president, Harken came into another stroke of unexpected good luck. The beleaguered oil company had had no offshore drilling experience whatsoever and had never even drilled outside the borders of the United States. Nevertheless, tiny Harken stunned industry analysts by beating out giant Amoco to win exclusive offshore drilling rights in Bahrain -- thanks to yet another BCCI stockholder, the prime minister of Bahrain, Sheikh Khalifa bin Salman al Khalifa.

By all accounts, George W. Bush was against the Bahrain deal and argued that Harken was too inexperienced to undertake such a costly and sophisticated venture on the other side of the globe. [41] "I thought it was a bad idea," he said, adding that he "had no idea that BCCI figured into Harken's financial dealings." [42]

But because he was the son of the president of the United States, people were lining up to do business with him. In the end, the Harken board found the prospects irresistible. Bush went along with it when the final vote came. Striking oil was never a sure thing, but if Harken got lucky, the payoff could be enormous. "This is an incredible deal, unbelievable for this small company," Houston energy analyst Charles Strain told Forbes. [43]

No one in the oil industry doubted that the Bahrain deal happened solely because Bush's father was president. Moreover, George W. Bush was one of its greatest beneficiaries and profited handsomely from it. Harken was hemorrhaging money at the time and the prospects of the Bahrain deal kept the stock price reasonably high. And since George W. had a far more grandiose business deal on his mind, the timing could not have been more fortuitous. On May 17, 1990, Bush attended a special meeting of the Harken board of directors that was called during a crisis. According to internal documents from Harken obtained by the Boston Globe, the board was told that Harken was expected to run out of money in just three days. [44]

At the time, one of Harken's biggest investors, the endowment fund of Harvard University, had engineered a plan to stave off bankruptcy by spinning off two of Harken's most troubled divisions. [45] [iii] According to a Harken memo, if the plan did not go through, the company had "no other source of immediate financing." [46]

Five days later, on May 22, Harken issued an announcement about the plan to spin off its divisions, but it expressly stated that terms of the offering were still being formulated. Meanwhile, Bush had taken out a $500,000 loan to buy into the Texas Rangers baseball team -- an investment that would later bring him $15 million and was thinking of selling his Harken stock to pay off the loan. In early June, he asked Harken's general counsel for advice. [47] In response, Bush was given a nine-page memo dated June 15, 1990, and titled "Liability for Insider Trading and Short-Term Swing Profits."

It explicitly cautioned Bush about trading so soon after the meeting the previous month: "The act of trading, particularly if close in time to the receipt of the inside information, is strong evidence that the insider's investment decision was based on the inside information. ... The insider should be advised not to sell." [48]

On June 22, just a week after the memo was written, Bush ignored the warnings given to him in it and sold 212,140 shares of stock for $848,560. It was just in time: about two months later, Harken announced soaring losses for the second quarter of $23 million. Before the year was out, the stock had plummeted from $4 to $1.25.

Not long afterward, the Securities and Exchange Commission began to consider whether to bring insider-trading charges against Bush. According to a July 1991 SEC memo, Bush declined to turn over many documents to the SEC, claiming they were private correspondence between him and his lawyer. "Bush has produced a small amount of additional documents, which provide little insight as to what Harken nonpublic information he knew and when he knew it," the memo said. [49]

On August 21, 1991, however, the SEC ruled that it would not charge Bush with insider trading. Not until the next day did Bush's attorney finally turn over the memo warning Bush against insider trading. [50] California securities lawyer Michael Aguirre told the Boston Globe that he was surprised the SEC did not probe more deeply into the case. "It appears that Mr. Bush had insider information," he said, "that he was told that such insider information could be considered material, [and] was given express warnings about what the consequences could be."

However, it is not difficult to make a case that the SEC may have been lenient because it had close ties to the Bushes. At the time, Bush's father was president of the United States. The chairman of the SEC was Richard Breeden, a former lawyer from James Baker's firm, Baker Botts, and a good friend of the Bush family's who had been nominated to the SEC by President George H. W. Bush. [51] In addition, the SEC's general counsel at the time of the investigation was James Doty, another Baker Botts attorney, who had represented George W. Bush earlier when he negotiated to buy an interest in the Texas Rangers. [52] (Doty recused himself from the investigation.) Bush himself was represented in the SEC case by Robert Jordan, who had been law partners with both Doty and Breeden at Baker Botts and who later became George W. Bush's ambassador to Saudi Arabia. [53] Insider-trading allegations aside, Harken was also under fire because of its ties to BCCI. Criticism went all the way to the Bush White House, which repeatedly denied that anything underhanded was going on. "There is no conflict of interest, or even the appearance of conflict, in these business arrangements," said presidential press secretary Marlin Fitzwater. [54]

The younger Bush was not the only figure close to the president who appeared to benefit from BCCI. In August 1991, President George H. W Bush's political director, Ed Rogers, was leaving the White House. Rogers, who had only briefly practiced law, accepted a $600,000 contract to be a lawyer for BCCl's American representative, Sheikh Kamal Adham. [55] Likewise, the deputy manager of the 1992 Bush reelection campaign, James A. Lake, won a lucrative contract as an adviser with another BCCI -- associated company. [56] One by one, BCCI hired government officials, federal prosecutors, and Federal Reserve attorneys. [iv]

The elder George Bush deftly deflected charges about BCCI. "I would suggest that the matter is best dealt with by asking [Ed Rogers] what kind of representation he is doing for this sheikh," he told a press conference. "But it has nothing to do, in my view, with the White House."

Yet there is evidence that Saudi favors to Bush interests had begun to payoff. In August 1990, Talat Othman, a Chicago investor of Arab descent who represented the interests of Abdullah Taha Bakhsh on the board of Harken Energy, was granted unusual access to the president and attended White House meetings with him to discuss Middle East policy -- at a time of crisis during which the Gulf War was brewing. [v] The White House, George W. Bush, and Harken all denied that Othman's presence was related to Bakhsh's investment.

In addition, according to the 1992 Senate BCCI investigation, the Bush Justice Department went to great lengths to block prosecution of BCCI. The Senate probe determined that federal officials repeatedly obstructed congressional and local investigations into BCCI, and for three years thwarted attempts by Manhattan district attorney Robert Morgenthau to obtain critical information about the bank.

The Senate investigation concluded that in 1990 and 1991 the Bush Justice Department, with Assistant Attorney General Robert Mueller [vi] leading the way, consistently put forth the public impression that it was aggressively moving against BCCI. But, in fact, the Senate probe said the Justice Department was actually impeding "the investigations of others through a variety of mechanisms, ranging from not making witnesses available, to not returning telephone calls, to claiming that every aspect of the case was under investigation in a period when little, if anything, was being done." [57]

Specifically, among other charges, the Senate report alleged that a federal prosecutor lied to Morgenthau's office about important material; that federal prosecutors failed to investigate serious allegations that BCCI laundered drug money; and that Justice Department personnel in Washington, Miami, and Tampa actively obstructed and impeded congressional attempts to investigate BCCI in 1990, and this practice continued to some extent until William P. Barr became attorney general in late October 1991.

There were many possible explanations for the Justice Department's failures -- bureaucratic rivalries and ineptitude among them. But BCCI had also shown it could undermine the judicial process in many countries. In the media, the Washington Post, Time, and many others speculated that that was exactly what was happening in the Bush Justice Department.

Given the international scope of BCCI's crimes, however, even the White House could not keep investigators away from BCCI forever. On July 5, 1991, in Great Britain, the Bank of England finally shut the bank down, letting it collapse under $12 billion of debt, and opening the way for charges in the United States and Europe against bin Mahfouz and his associates.

On July 1, 1992, Morgenthau indicted bin Mahfouz for allegedly having fraudulently obtained $300 million from BCCI depositors. BCCI's Ponzi schemes and unorthodox accounting procedures had created an insolvent bank that had defrauded depositors of between $5 billion and $15 billion. It was the biggest fraud in banking history. In England, the Observer described it as "the Gulf sheikhs' version of Robin Hood: robbing the poor to help the rich." [58]

A spokesman for bin Mahfouz says the indictment was "completely unwarranted." [59] Nevertheless, bin Mahfouz immediately resigned his position as chief operating officer of the National Commercial Bank in Saudi Arabia. To settle the charges against him, in 1993 he paid $225 million in restitution and penalties. As part of the settlement agreement, bin Mahfouz was forbidden to engage in banking in the United States in perpetuity. He also later paid an additional $253 million to settle claims with BCCI creditors. "It was a very painful experience," bin Mahfouz said, "... I'm glad it's nearly over. You are an example of your family. You have to be strong in front of your customers and in social life, but inside you are personally shattered."

As for BCCI's links to the Bush family, when political opponents suggested something was amiss, as Ann Richards's campaign did in the 1994 Texas gubernatorial race, it often blew up in their faces. "George W. Bush did not take proper precautions in choosing his business partners," says Jason Stanford, a former aide to Ann Richards, who lost the gubernatorial race to Bush. "Your average small-town preacher had better sense. These BCCI guys had some pretty bad criminal problems at the time, so there was a hint of trying to buy favors. Maybe they were hoping for a pardon -- who knows?" [60]

However, when the Richards campaign attacked Bush on the issue, they were assailed as conspiracy nuts. "Ann Richards has dragged her campaign into the gutter," said Bush spokeswoman Karen Hughes. "We have no response to silly conspiracy theories." [61]
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Re: House of Bush, House of Saud, by Craig Unger

Postby admin » Wed Nov 27, 2013 4:34 am

PART 2 OF 2 (CH. 7 CONT'D.)

The strongest critique of the Bush family's relationship with BCCI came from the 1991 Wall Street Journal. "An investigation by this paper has not revealed evidence of wrongdoing or influence-peddling by George W. Bush or anyone else connected with Harken," the Journal reported. "Yet what does emerge is a complex pattern of personal and financial relationships behind Harken's sudden good fortune.

"The mosaic of BCCI connections surrounding Harken Energy may prove nothing more than how ubiquitous the rogue bank's ties were. But the number of BCCI-connected people who had dealings with Harken -- all since George W. Bush came on board -- likewise raises the question of whether they mask an effort to cozy up to a presidential son." [62]

With regard to this tantalizing but murky relationship between the Bushes and the Saudis, the Journal could not possibly have known two things. One was that bin Mahfouz, the biggest stockholder in the most corrupt financial institution in history, would later be seen by U.S. counterterrorism analysts as the owner of one of the key conduits for the growing global terror network. And the other was that George W. Bush would become far more than just another presidential son.


[i] According to Bill Burkett, a former lieutenant colonel in the Texas National Guard, when Bush was governor of Texas and beginning plans to run for the presidency in 2000, his aides visited National Guard headquarters "on numerous occasions" to make sure that public records about his military service squared with his official autobiography's version of his service in the guard. Bush's military records read, somewhat mysteriously, "Not rated for the period 1 May 1972 through 30 April 1973. Report for this period not available for administrative reasons." A website at offers readers many of the relevant documents.
[ii] Readers may recall that as head of the Export-Import Bank in 1984, Draper, in response to lobbying from Vice President George H. W. Bush, reversed bank policy and guaranteed loans to Saddam Hussein's Iraq.
[iii] For decades, the most influential person overseeing Harvard's endowment was Robert Stone Jr., an oilman who has been described as "the driving force behind its energy investments." The Wall Street Journal reported that it was not clear if the Bush and Stone families were friends, but they were politically aligned and both had been residents of Greenwich, Connecticut, and Houston, Texas. "Mr. Stone was a financial supporter of the senior Mr. Bush when he ran for president in 1979, as were his father, siblings, and executives at his oil and gas company," the Journal reported. "Mr. Stone and his wife, Marion, also contributed to the senior Mr. Bush's successful 1988 run."
[iv] According to the Senate investigation, other high-level Washington officials hired by BCCI and its various fronts were a former secretary of defense (Clark Clifford), former senators and congressmen (John Culver, Mike Barnes), former federal prosecutors (Larry Wechsler, Raymond Banoun, and Larry Barcella), a former State Department official (William Rogers), and former Federal Reserve attorneys (Baldwin Tuttle, Jerry Hawke, and Michael Bradfield). In addition, BCCI solicited the help of Henry Kissinger, who chose not to do business with BCCI but made a referral of BCCI to his own lawyers.
[v] In 2002, during the presidency of George W. Bush, Othman again won access to the White House and met with Secretary of the Treasury Paul O'Neill to discuss U.S. government raids on Muslim charities that were allegedly funding terror.
[vi] Mueller became the director of the FBI under President George W. Bush.


1. Molly Ivins and Lou Dubose, Shrub, p. xxi.
2. Michael Lind, Made in Texas, pp. 7-9.
3. Bill Minutaglio, First Son, p. 121.
4. George Lardner Jr., "Texas Speaker Reportedly Helped Bush Get into Guard," Washington Post, September 21, 1999, p. A4. In 1999, a spokesman for Bush, who was then governor of Texas, said, "Governor Bush did not need and did not ask anybody for help."
5. Chris Williams, "Did Bush Serve? Claims He Was in Alabama Guard, but There's No Record," Associated Press, June 25, 2000.
6. Francis S. Greenlief, Major General, Chief, National Guard Bureau, September 29, 1972,
7. "Not rated for the period 1 May 1972 through 30 Apri1 1973. Report for this period not available for administrative reasons,"
8. George Lardner, Jr. and Lois Romano, "George Walker Bush," Washington Post, July 30, 1999, p. Al.
9. Ivins and Dubose, Shrub, pp. 22,23.
10. Lardner and Romano, "George Walker Bush," p. A 1.
11. Ibid.
12. Eric Pooley, Time, June 14, 1999, ... roove.html .
13. "World Oil Market and Oil Price Chronologies: 1970-2002," Energy Information Administration, Department of Energy, .
14. "The Bush-Saudi Axis," Time, September 15, 2003, .
15. Minutaglio, First Son, p. 208.
16. Lardner and Romano, "George Walker Bush," p. A 1.
17. Thomas Petzinger Jr., Peter Truell, and Jill Abramson, "Family Ties: How Oil Firm Linked to a Son of Bush Won Bahrain Drilling Pact," Wall Street Journal, December 6, 1991, p. A 1.
18. Lardner and Romano, "George Walker Bush," p. A 1.
19. Petzinger, Truell, and Abramson, "Family Ties," p. A 1.
20. Pooley, Time.
21. Ibid.
22. Petzinger, Truell, and Abramson, "Family Ties," p. A 1.
23. Interview with Cherif Sedky, attorney for Khalid bin Mahfouz.
24. E-mail correspondence with Cherif Sedky.
25. Paul Krugman, "Succeeding in Business," New York Times, July 7, 2002.
26. Richard Behar, "The Wackiest Rig in Texas," Time, October 28, 1991, p. 78.
27. Interviews with James Bath and Cherif Sedky.
28. Interview with Cherif Sedky.
29. Ibid.
30. Interview with source who boarded bin Mahfouz's planes.
31. Bin Mahfouz's attorney, Cherif Sedky, says that even though bin Mahfouz had invested nearly $1 billion in BCCI, he was little more than a passive figure in its operations. "You have to take everything in scale and context," says Sedky. "A billion is a lot of money, but it is not out of scale when I say 'passive.'" In an e-mail, Sedky added, "To the best of [Khalid bin Mahfouz's] present and unrefreshed recollection, he attended no more than three meetings of the board." "Outlaw Bank," Financial Times, July 13, 1992; and Douglas Farah, "Al Qaeda's Road Paved with Gold," Washington Post, February 17, 2002, p. A 1.

Al Qaeda's Road Paved With Gold
Secret Shipments Traced Through a Lax System In United Arab Emirates

By Douglas Farah
Washington Post Foreign Service
Sunday, February 17, 2002; Page A01

DUBAI, United Arab Emirates -- Just as the United States and its allies swept toward Afghanistan's main cities last autumn, the ruling Taliban and Osama bin Laden's al Qaeda network sent waves of couriers with bars of gold and bundles ofdollars across the porous border into Pakistan.

In small shops and businesses along the border, the money and gold, taken from Afghanistan's banks and national coffers, were collected and moved by trusted Taliban and al Qaeda operatives to the port city of Karachi, Pakistan, according to sources familiar with the events.

Then, using couriers and the virtually untraceable hawala money transfer system, they transferred millions of dollars to this desert sheikdom, where the assets were converted to gold bullion. The riches of the Taliban and al Qaeda were subsequently scattered around the world -- including some that went to the United States -- through a financial structure that has been little affected by the international efforts to seize suspected terrorist assets.

This account of the flight of the Taliban and al Qaeda treasure from Afghanistan is based on dozens of interviews in Pakistan, the United Arab Emirates, Europe and the United States. The gold trail was described by intelligence officers, law enforcement officials, gold brokers, and sources with direct knowledge of some of al Qaeda's financial movements, but not by Taliban or al Qaeda operatives.

The interviews offered a tantalizing glimpse into the critical yet mysterious role played by gold in the finances of al Qaeda, both before and after the Sept. 11 attacks. Gold has allowed the Taliban and bin Laden to largely preserve their financial resources, despite the military attack that battered their forces in Afghanistan, investigators and intelligence sources said.

Al Qaeda also used diamonds purchased in Sierra Leone and the Democratic Republic of Congo, tanzanite from Tanzania and other commodities to make money and hide assets. But gold played a uniquely important role in the group's financial structure, investigators and intelligence sources said, because it is a global currency.

"Gold is a huge factor in the moving of terrorist money because you can melt it, smelt it or deposit it on account with no questions asked," said a senior U.S. law enforcement official investigating gold transactions. "Why move it through Dubai? Because there is a willful blindness there."

Exempt from international reporting requirements for financial transactions, gold is a favored commodity in laundering money from drug trafficking, organized crime and terrorist activities, U.S. officials said. In addition, Dubai, one of seven sheikdoms that make up the United Arab Emirates, has one of the world's largest and least regulated gold markets, making it an ideal place to hide.

Dubai is also one of the region's most open banking centers and is the commercial capital of the United Arab Emirates, one of three countries that maintained diplomatic relations with the Taliban until shortly after Sept. 11. Sitting at a strategic crossroad of the Persian Gulf, South Asia and Africa, Dubai has long been a financial hub for Islamic militant groups. Much of the $500,000 used to fund the Sept. 11 attacks came through Dubai, investigators believe.

"All roads lead to Dubai when it comes to money. Everyone did business there," said Patrick Jost, who until last year was a senior financial enforcement officer in the Treasury Department's Financial Crimes Enforcement Network.

32. Petzinger, Truell, and Abramson, "Family Ties," p. A 1.
33. Ibid.
34. Larry Gurwin and Adam Zagorin, "All That Glitters," Time, November 6, 1995, p. 52.

Monday, Nov. 06, 1995



FOR YEARS, GUCCI HAD BEEN descending from Riviera swank to Jersey gaud. Its overlicensed double-G appeared on everything from coffee mugs to ashtrays. Fake versions of its handbags were sold on urban street corners everywhere. Then, suddenly, it found a shoe that fit: a sexy, backless clodhopper that became the must-have of devotees of high style in 1993. Gucci went on a winning streak. By March 1995 its designer, Tom Ford, was electrifying the fashion world with a revival of '60s rebellion. Soon celebrities like Madonna were in head-to-toe Gucci. At the company's London boutique this fall was a waiting list 100 chic names long for the new, $325 velvet hip-huggers. At Bergdorf Goodman in Manhattan, 256 women await a reshipment of $295 high-heel pumps. The fever has hit Wall Street. Last week Gucci was the red-hot initial public offering. At $22 a share, the once unhip, money-losing 72-year-old Florentine company was worth $1.3 billion.

No one is as happy about that turnaround as Nemir Kirdar, 59, the Iraqi-born founder and president of Investcorp, the Arab investment boutique that engineered Gucci's turnaround. Shod in black reptile-skin Gucci loafers, Kirdar sat confidently in his company's New York City office--occupying the entire 37th floor of a Park Avenue high-rise--contemplating Gucci's renaissance. After Investcorp bought the company in the late 1980s, Gucci lost so much money some feared it would go bust. "There was a time," says Kirdar, "when--in the minds of several of our clients as well as some of our own professionals--Gucci was a write-off." But during the first half of this year, Gucci posted a $24.8 million profit, five times the figure for the same period last year.

Gucci is only one of many jewels in Kirdar's crown. In 1984 Investcorp bought Tiffany & Co.--and sold it in a 1987 public offering for six times its purchase price. In 1990 Investcorp bought Saks Fifth Avenue. Since its founding in 1982, Kirdar's bank has arranged more than 50 acquisitions in the U.S. and Europe, valued at more than $7 billion. Such deals have spawned press accounts praising the bank's "gold-plated reputation" and Kirdar as "the banker to billionaires...a legend in financial circles." Says G. William Miller, a former Treasury Secretary: "Investcorp [has] shown a tremendous ability to buy, develop and sell businesses."

A close look at Investcorp's record, however, indicates its reputation may not be entirely deserved. Many Investcorp acquisitions have turned into costly disappointments. The bank stands accused of serious misconduct in two court cases that have received almost no public attention. Moreover, former executives of a prestigious jewelry firm under Investcorp control have told TIME they believe the firm has engaged in misleading accounting practices. Investcorp has a cozy relationship with officials in Bahrain, where the company is based and where the government is responsible for regulating it.

Although Investcorp calls itself a merchant bank, it is more like a leveraged buyout firm, the Arab world's answer to Kohlberg Kravis Roberts. Kirdar rounds up brand-name companies and repackages them for sale to deep-pocket clients in the Persian Gulf. At the right moment, Investcorp and its partners "cash out" by selling off acquisitions at a profit--through a private sale or a public stock offering. Investcorp certainly spends money like a billionaires' bank. An eight-story headquarters in Bahrain (Investcorp House) is complemented not only by the premises on New York's Park Avenue but also by posh offices in London's Mayfair district. White-uniformed butlers glide around serving executives catered gourmet lunches at their desks. Many clients receive annual invitations to conferences like one held in July at New York's Waldorf-Astoria. In 1992, on the occasion of its 10th anniversary, Investcorp threw a lavish party at London's Victoria and Albert Museum. Guests nibbled on caviar served from ice sculptures and strolled under garlands of peonies adorned with caged songbirds. When major deals are in the works, senior executives zoom across the Atlantic on the Concorde. "They fly the Concorde if they want a salami sandwich," jokes a former bank adviser. "I've never seen anybody throw money around like Investcorp."

Before launching Investcorp, Kirdar worked for Chase Manhattan Bank, where he was in charge of operations in the Persian Gulf. (Many of his senior executives are Chase alumni.) He was there at the height of the oil shocks of the 1970s and forged close ties with some of the richest men in the region. Abdul-Rahman Al-Ateeqi, a former Oil Minister and Finance Minister of Kuwait, has been Investcorp's chairman since the beginning. The vice chairman, Ahmed Ali Kanoo, heads a family with a net worth estimated at $1.5 billion.

In 1983, just a year after the bank was launched and when Kirdar and his colleagues were doing business from rented space in a Holiday Inn in Bahrain, he boasted that he was putting together a bank "like something J.P. Morgan envisaged." Thanks to Kirdar's connections, Investcorp was able to raise $50 million in start-up capital and four years later another $50 million. Investcorp's list of founding shareholders reads like a Who's Who of the gulf, including the names of dozens of leading businessmen and members of the region's ruling families, among them Sheik Ahmed Zaki Yamani, the former Oil Minister of Saudi Arabia, and seven members of the Saudi royal family. The vips generated tremendous interest, and when the new bank sold a large chunk of its stock to the public, prospective buyers in Bahrain queued up at dawn.

The bank has reported healthy profits year after year. (In 1994 it posted a net profit of $51 million, down from record earnings of $67.3 million in 1993.) Its stock, listed on the Bahrain Stock Exchange, has quadrupled in price since the bank's founding. But for Investcorp clients who participate in takeovers arranged by the bank, it has not always been smooth sailing. Many deals have been duds. Dellwood Foods, a troubled New York dairy acquired in 1985, languishes unsold in Investcorp's portfolio. Also unsold is Chaumet, a world-famous French jeweler, which has racked up millions of dollars in losses. Other flops include the Carvel ice-cream chain and New York Department Stores of Puerto Rico, disposed of last year at a substantial loss. A huge disappointment has been Color Tile, America's largest chain of floor-covering stores. The company lost $46.3 million last year and was close to bankruptcy until Investcorp and other investors pumped in $30 million in August. Kirdar acknowledges that many deals have not worked out as hoped, but cites the bank's willingness to work with troubled companies over the long haul, nursing them back to health.

Investcorp's biggest deal ever was the 1990 takeover of Saks Fifth Avenue. When Investcorp bought the prestigious chain, it was evidently hoping to repeat its triumph with Tiffany. Investcorp certainly promoted Saks to its clients that way. A 1990 private-placement memo to Arab clients obtained by TIME contains an extremely bullish forecast on the first page: Saks was expected to produce an investment return of 25.9% a year, and was likely to be sold within four years. One reason Investcorp failed to repeat its Tiffany coup with Saks is that the $1.6 billion purchase price was $200 million to $300 million too high, according to several sources, including a former Investcorp executive with direct knowledge of the deal. "Kirdar wanted it badly," recalls this source, "and he said, 'Let's just do a bid that'll knock everybody out.'" During the two years after the takeover, Saks reportedly lost $398 million, and Investcorp and its clients were forced to invest an additional $300 million in the company. More than five years have passed, and there has been no public offering. Investcorp says Saks has rebounded, but it declines to provide details or predict when the company will go public.

How has Investcorp managed to raise billions of dollars when its track record is so uneven? Its sales force is based in Bahrain, about an hour's flight from most of the bank's clients. Scores of Arabic-speaking marketers travel throughout the region, offering deals and updates on past transactions. It's a level of "expensive, personalized service," says Kirdar, that Investcorp's competitors can't match. Investcorp's success in the Middle East may also be due to its marketing documents, which are not overseen by Western regulatory agencies. The contrast is striking between an Investcorp private-placement memorandum and a prospectus approved by the Securities and Exchange Commission. The SEC-approved prospectus for Gucci is filled with warnings and disclaimers, including a section on "risk factors" that runs 3 1/2 pages. A Saks private-placement memorandum circulated to mostly Arab investors discusses risk factors in less than a page and the language is much less blunt.

Cultural factors also help explain Investcorp's marketing success. When the bank got started in the early 1980s, many of its Arab clients were unschooled in Western business practices. Kirdar was their bridge to the West. He spoke their language, sprang from their culture, yet was Western educated (he has an M.B.A. from New York's Fordham University) and had trained in a big U.S. bank. Kirdar understood his clients' taste in brand names. One reason Investcorp bought Gucci, says an Arab banker, is that "the Arabs wear the shoes." Many were happy to hand millions of dollars to Kirdar with few strings attached.

Now, a younger generation of wealthy Arabs tends to be more sophisticated--and less willing to let Investcorp managers stuff their portfolios with shares of uncertain value. An adviser to an Arab family with a net worth between $500 million and $1 billion told Time his clients have become disenchanted. "If you hit on one of their big deals like Tiffany, the rewards can be spectacular. But a whole string of others have been very disappointing, and all they do is send you fancy reports with Investcorp's latest solution for a turnaround and very little numerical analysis. You have no recourse."

The questions about Investcorp go beyond its dealmaking record. Two former executives of Chaumet, which the bank took over in 1987, accuse it of engaging in accounting gimmickry. The elegant French jeweler, with headquarters in Paris' Place Vendome, was acquired for $45 million in a court-supervised sale after its previous owners were charged with fraud and forced into bankruptcy. Investcorp then sold chunks of the company to clients. Later, as part of a turnaround strategy, seasoned French jewelry executive Charles Lefevre was installed as chairman, working under Investcorp's close supervision.

Despite Lefevre's efforts, Chaumet lost about $24 million in 1992. Early the next year, Investcorp held a board meeting in Paris, and Lefevre was invited to meet the directors. In view of the losses, Lefevre was bracing himself for criticism--or at least some tough questions. Instead, he recalls, "they said, 'Congratulations--for the first time you're showing a profit.'"

DURING HIS TENURE AT CHAUMET, Lefevre says, he uncovered many questionable accounting practices--an observation shared by another former executive. For example, Lefevre discovered that in 1990 Chaumet had sold about $4 million worth of jewelry to a customer in the gulf. The supposed sale, says Lefevre, was a sham. He claims that they "sent worthless merchandise" and that the bill was not paid. But the existence of the invoice made it possible to book $4 million in extra revenue for that year, enabling Chaumet nearly to break even. (Investcorp insists Chaumet never engaged in such practices.)

Lefevre also says Chaumet sold watches and jewelry at inflated prices to a shell company in Switzerland called Lausanne Investments; he says the sales allowed Chaumet to get poorly selling merchandise off its books without showing a loss. (Thousands of watches were later sold to dealers in the U.S. at a fraction of their inventory value, according to sources with direct knowledge of the transactions.) Chaumet's 1993 and 1994 financial statements, filed in a French commercial court, refer to the company's transactions with Lausanne but do not reveal who owned or controlled it.

Lefevre says he protested what he regarded as improper accounting and left the company in early
1993. The remainder of his contract was paid off in full via a wire transfer from a bank in the Cayman Islands. Curiously, Lefevre notes, the money was wired not by Chaumet or even Investcorp but by Lausanne Investments.

Investcorp denies it ever misinformed Chaumet's shareholders about the company's performance and says they knew Chaumet lost money in 1992. The bank acknowledges that clients do not receive complete financial statements (unless they ask for them) but only "investment reports" showing operating income (before interest and taxes) rather than net income. Since clients agree to receive information in this form, says Investcorp, there is no problem. That ignores a critical factor: Chaumet's sales of inventory to Lausanne at inflated prices. If it had not been for those sales, Chaumet would have reported much higher losses in 1993 and 1994.

And who owns Lausanne Investments? "Investcorp does not own Lausanne Investments," a bank spokesman declared. When TIME pursued the issue, the spokesman changed his answer. Lausanne, he said, was owned by the same investors who own Chaumet--a group led by Investcorp. This means Investcorp controlled the seller and the buyer and used that control to slash Chaumet's losses. While there is nothing odd about a jeweler's disposing of excess stock this way, Lausanne's ownership is not disclosed in Chaumet's publicly filed financial statements, which means anyone who read them would get a distorted impression of the company's performance. Investcorp insists its own clients were informed, but declines to provide documentation. "We give our clients what they need," says Kirdar. "We do not mislead them."

Moreover, if you believe the plaintiffs in two civil suits against Investcorp, the company doesn't always play straight. When Investcorp took over the Circle K convenience-store chain in 1993, it did so through a vehicle called CK Acquisitions. That shell company has now been sued by rival bidders for allegedly making false statements to a bankruptcy-court judge who had to approve the bid. The complaint alleges that CK Acquisitions failed to disclose that Circle K management would own stock in the retailer after the takeover. (That was an important point because it could help explain why management endorsed the offer.) The plaintiffs are seeking $30 million in actual damages and $200 million in punitive damages. Investcorp's law firm managed to get the action dismissed, but last spring a judge reinstated it, saying the issues were too complex and important to be decided without a trial. Investcorp partner Savio Tung denies the allegations in the complaint. Says he: "We did not do anything wrong."

Another little-noticed case involves even more serious charges. The complaint, filed in Manhattan federal court, accuses Investcorp and five of its board members, as well as other defendants, of fraud and extortion. According to the complaint, the defendants tried to loot the Saudi European Bank, an Arab-owned institution in Paris. The lawsuit was filed by the bank's former parent company, headed by Syrian-born banker Jamal Radwan. The complaint charges that several defendants concocted a scheme for Investcorp to take over Saudi European Bank. In addition, Kirdar allegedly threatened to persuade other banks to stop doing business with Radwan's. Some of the individuals named in the complaint are also accused of trying to bribe and threaten Radwan to get him to approve "uneconomic and illegal loans and business transactions for their personal benefit." A few of these individuals drained money out of the bank, the complaint alleges, "by making fraudulent statements and presenting false and misleading financial information," leading to bad loans. In 1989 Saudi European nearly collapsed, and in order to avert a financial crisis, French authorities arranged for an investment group to take it over. According to the lawsuit, fraudulent borrowing and other misconduct by the defendants had crippled the bank. Investcorp and several other defendants have filed motions to dismiss the complaint. A number of them are also plaintiffs in continuing litigation against Radwan in which they accuse him of swindling them out of several million dollars. (In fact, Radwan conceived his own lawsuit as a "counterattack.") He denies the allegations.

The Saudi European suit, according to Investcorp general counsel Lawrence Kessler, is "completely without merit, and we expect to see it dismissed." (Other defendants deny all charges). When TIME asked Kirdar to comment on the litigation, he not only rejected the charges but also said he barely knew Radwan and doubted he had ever spoken more than "15 words" to him. Both men, however, worked for Chase Manhattan in the Middle East in the '70s and, says Radwan, both attended management meetings. Radwan supplied Time with a photograph of himself with Kirdar taken in Switzerland in 1988.

Whatever the merits of the complaint, it highlights the intriguing background of a key Investcorp insider: Abdullah Taha Bakhsh, a Saudi tycoon who has served on Investcorp's board since the bank was founded and who helped persuade other rich Saudis to invest. (Like Investcorp, Bakhsh filed a motion to dismiss the Saudi European action, and his lawyer expects it to be granted.) The complaint points out that Bakhsh was a major shareholder of Paris-based Al Saudi Banque, which collapsed in 1988, and accuses him of looting that institution. One of Bakhsh's other holdings is the First Commercial Financial Group, a commodities futures firm in Chicago that has been sanctioned repeatedly by regulators. In a court ruling in 1990, a judge held that First Commercial failed to raise "a single credible defense" to a customer's allegations that the firm had defrauded him. "The case," wrote the judge, "establishes once more that there are virtually no limits to greed, or the ingenuity of men in devising schemes to cheat." First Commercial is still having run-ins with regulators. Last May the Commodity Futures Trading Commission accused it of engaging in a check-kiting scheme to mislead regulators about its financial condition. The firm is fighting the charges.

The issue of bank regulation is a vital one in the wake of scandals at Britain's Barings Bank and Japan's Daiwa Bank. The biggest debacle of recent years was the 1991 collapse of the Bank of Credit and Commerce International, which cost depositors billions of dollars. Much of the blame was placed on regulators who seemed oblivious to B.C.C.I.'s frauds. No one is suggesting that this is another B.C.C.I. case in the making. When questioned about Investcorp's practices, its officials noted that the bank is licensed in Bahrain and is well supervised. "It's a very strong regulatory agency," says Kessler.

But questions remain. Investcorp has thrived in the Bahraini environment, perhaps because some of the most powerful businessmen in the tiny island state are directors and major shareholders. When the bank was founded, it was granted an extraordinary privilege by the Bahrain government. At the time, foreigners were barred from buying stock in publicly traded companies unless they were citizens of Bahrain or of one of five neighboring countries in the Gulf Cooperation Council. The Bahrain authorities allowed Investcorp to sell 25.8% of its stock to a company owned entirely by citizens of Iraq (a non-gcc country), including Kirdar. Another clue to the bank's status in Bahrain appears in an SEC filing by Sports & Recreation Inc., a Tampa, Florida-based firm that sells sporting goods through Sports Unlimited shops. When Investcorp took the firm public in 1992, the prospectus said one of its largest shareholders was a shell company owned by Bahrain's Ministry of Finance. This would be roughly equivalent to the U.S. Treasury Department's putting money into a takeover arranged by a Wall Street buyout firm.

In the Middle East, where business deals are often driven by personal ties, Kirdar enjoys a warm relationship with Bahrain's Prime Minister, Sheik Khalifa bin Sulman al-Khalifa, a brother of the ruling Emir. Last year Sheik Khalifa met with Investcorp's board and commended the bank on its success. A press report on the meeting failed to mention that the ruling family may have a considerable personal stake in that prosperity: millions of shares were sold to members of the clan when the bank was founded. As for the Prime Minister, he may not be the best judge of banks. He used to own stock in B.C.C.I.

--With reporting by Ginia Bellafante/New York

35. Petzinger, Truell, and Abramson, "Family Ties," p. A 1.
36. E-mail correspondence with Cherif Sedky.
37. Ibid.; and Petzinger, Truell, and Abramson, "Family Ties," p. A 1.
38. E-mail to author from Cherif Sedky.
39. Interview with Nawaf Obaid.
40. 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 Cong., 2nd Sess., Senate Print 102-140.
41. Interview with Harken source.
42. Micah Morrison, "Who Is David Edwards?" Wall Street Journal, March 1, 1995, p.14.
43. Toni Mack, "Fuel for Fantasy," Forbes, September 3, 1990, p. 37.
44. Michael Kranish and Beth Healy, "Board Was Told of Risks Before Bush Stock Sale," Boston Globe, October 30, 2002, ... ale+.shtml .
45. Glenn Simpson, "Harvard Was Unlikely Savior of Bush Energy firm Harken," Wall Street Journal, October 9, 2002, ... 96,00.html.
46. Kranish and Healy, "Board Was Told of Risks Before Bush Stock Sale."
47. Ibid.
48. White House spokesman Dan Bartlett pointed out that the memo was addressed to the Harken board and did not mention Bush by name. "This is a general memo that goes through the perfunctory guidelines of a rights offering," Bartlett said. "It was not specific to the transaction that the president was contemplating": ibid.
49. Kelly Wallace, "Senators: Release Records on Bush Stock Sale," CNN Washington Bureau, July 16, 2002, ... .
50. Kranish and Healy, "Board Was Told of Risks Before Bush Stock Sale."
51. Mike Allen and George Lardner Jr., "Harken Papers Offer Details on Bush Knowledge," Washington Post, July 14, 2002, p. A 1.
52. Bennett Roth, "Clerical Mix-up Blamed in Bush Stock Sale Filing," Houston Chronicle, July 4, 2002, p. A 1.
53. Allen and Lardner, "Harken Papers Offer Details on Bush Knowledge," p. A 1.
54. Petzinger, Truell, and Abramson, "Family Ties," p. A 1.
55. The BCCI Affair, Senate Print 102-140.
56. Ibid.
57. Ibid.
58. Laurence Marks and Barry Hugill, "The BCCI Scandal," Observer, July 21, 1991, p.19.
59. Interview with Cherif Sedky.
60. Interview with Jason Stanford.
61. Associated Press Worldstream, November 3, 1994.
62. Petzinger, Truell, and Abramson, "Family Ties," p. A 1.
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Re: House of Bush, House of Saud, by Craig Unger

Postby admin » Wed Nov 27, 2013 4:39 am


Given that James Baker and George H. W. Bush later compared Saddam Hussein to Adolf Hitler, why did they support the Iraqi dictator for more than seven years after they first learned of his atrocities? In his 1995 memoirs, The Politics of Diplomacy, a somewhat chagrined James Baker looks back on his years as secretary of state and attempts to explain his role in forging this munificent policy toward such a brutal monster. The strongest argument Baker makes is that initially the United States needed Saddam's Iraq to contain the emerging threat of Iran's Islamic fundamentalism. He also asserts, less persuasively, that Iraq was "a potentially helpful Arab ally" in the Middle East peace process. [1] Even less convincingly, Baker argues that giving Saddam incentives might "stem nuclear proliferation, bring economic benefits, and enhance prospects for Arab-Israeli peace." [2] Finally, Baker cites banal domestic economic and political considerations. The Department of Agriculture loan guarantees to Iraq, he says, were extremely popular with American agricultural interests. If the Bush administration had not supported these programs, Baker adds, "we would surely have been castigated" by Democratic congressmen.

By the late eighties, however, neoconservative Republican policy makers such as Richard Perle and Paul Wolfowitz had begun voicing their discontent with the Bush administration's pro-Saddam policies. A militant hawk sometimes referred to by critics as the Prince of Darkness, Perle was a fellow at the American Enterprise Institute, later chaired the Defense Policy Board, and was often a supporter of policies endorsed by the Likud, Israel's largest right-wing political party. Even during the Iran-Iraq War, Perle had been uncomfortable with supporting Saddam and felt that "the right course immediately after the end of that war would have been to say to Saddam, now we've had enough of you too, and we're not gonna tolerate it." [3]

By the spring of 1990, Saddam Hussein's love affair with the White House had survived ten years of the Reagan-Bush era, but thanks to Saddam's overreaching, Richard Perle was about to get his wish. As a rule, in the Arab world it didn't hurt to lash out at Israel. But on April 2, Saddam made the kind of slip of the tongue of which diplomatic catastrophes are borne, boasting that he had chemical weapons and would use them to "make fire eat up half of Israel." [4] James Baker's State Department immediately issued a statement saying the remarks were "inflammatory, irresponsible, and outrageous." [5]

Saddam was so stunned by the angry reaction from Washington that he promptly got on the phone to King Fahd of Saudi Arabia and demanded that Fahd send someone to Iraq immediately to act as a go-between with the United States. The best man for the job was Fahd's nephew Prince Bandar. [6]

It was the kind of task at which Bandar excelled. By now a specialist in back-channel operations, Bandar had so assiduously cultivated the powers that be in Washington that he lived in a realm far above any other mere "diplomat." Bandar was close to James Baker, National Security Adviser Brent Scowcroft, Secretary of Defense Dick Cheney, and Chairman of the Joint Chiefs of Staff Colin Powell. [7] Between 1984 and 1987, he met or talked to Defense Secretary Caspar Weinberger at least sixty-four times. [8] Colin Powell noted with distress that the Saudi billionaire functioned as if he were a cabinet officer within the Bush administration. [9] Even that was an understatement: Bandar was free from the congressional oversight that constrained cabinet officers.

But his relationship with President Bush was what truly set Bandar apart. During Reagan's first term, Bandar had lunched with Vice president Bush several times a year. In 1985, when Bush was just beginning to be derided as a wimp by the media, Bandar staged a huge party for him with entertainment by singer Roberta Flack. [10] Bandar said he regarded the president "almost like a buddy." [11]

The relationship went both ways. From the administration's point of view, Bandar was important because he was both a confidant of King Fahd's and had had close contact with Saddam Hussein. As reported by Bob Woodward in The Commanders, on April 5, just after Saddam's remarks about Israel, Bandar flew to Iraq in his own private jet. When Bandar sat down with Saddam, the Iraqi dictator insisted that he had been misinterpreted. "I want to assure President Bush and His Majesty King Fahd that I will not attack Israel," he said. [12]

Four days later, Bandar met with Bush in the Oval Office and relayed news of the conversation. Bush was stunned. If Saddam didn't mean to attack Israel, then why had he said it? Even though Bush was skeptical about trusting Saddam, he resumed his generous policies toward Iraq. The Commerce Department tried to stop the flow of U.S. technology to Iraq, but its efforts were stymied by the White House. In May 1990, the Bush administration continued to share military intelligence with Saddam. In July, the White House pushed for additional agricultural loans to Iraq and rebuffed efforts by the Defense and Commerce departments to restrict the export of dual-use technology. And at the end of July 1990, Bush opposed congressional efforts to impose sanctions on Iraq -- all in an effort to bring Iraq "into the family of nations." [13] Bush and Saddam had kissed and made up.

Or so it seemed. Meanwhile, the State Department joined Defense and Commerce in becoming increasingly concerned about Saddam. On July 19, State sent a memo to Baker advising stricter controls because Saddam was developing chemical and biological weapons and was working on nuclear weapons. "Iraq has been attempting to obtain items to support these proliferation activities from U.S. exporters, in some cases successfully," said the memo, which was initialed by Baker to acknowledge that he had read it. [14] According to the memo, a review had uncovered seventy-three export licenses for goods sent to Iraq that were "probably proliferation related," including seventeen licenses for bacteria that could be used with biological weapons and computers for chemical and weapons programs.

Finally, Baker changed course. On July 25, he asked Commerce secretary Robert Mosbacher for new controls over exports. "Iraq's extraordinarily aggressive weapons proliferation efforts make this situation urgent," wrote Baker.

That same day, the U.S. ambassador to Iraq, April Glaspie, [i] was summoned to a rare meeting with Saddam Hussein. For years, Iraq had nursed a grudge with Kuwait concerning the oil-rich border shared by the two countries. Earlier that month, Iraq had accused Kuwait of stealing Iraqi oil and engaging in an "imperialist-Zionist plan" to depress oil prices through overproduction. [15] According to Al Jumhuriya, a government-controlled newspaper in Baghdad, Kuwait had seized Iraqi territory and stolen $2.4 billion of oil from disputed oil fields along their border. [16]

On July 27, 1990, Bandar told the administration that Saddam had assured Arab leaders that he was not going to invade Kuwait. [17] But Saddam was lying. By then he had already sent thirty thousand troops to the Kuwaiti border. By July 31, the number had risen to one hundred thousand. [18] On August 1, a CIA assessment reported, "Baghdad almost certainly believes it is justified in taking military action to reclaim its 'stolen' territory and oil rights." [19] The very next day, Iraqi troops invaded Kuwait. By the middle of August, the total number of Iraqi troops in Kuwait and the nearby region was more than two hundred thousand. [20] Worse, the Iraqis were within striking distance of Saudi Arabia. According to Dick Cheney, another forty thousand Iraqi soldiers had been deployed in southern Iraq, near Saudi Arabia. [21]

This was Bush's worst nightmare. To defend the biggest oil fields in the world, he had helped build Saddam into a powerful military force as a bulwark against the Islamic fundamentalist threat. But now Saddam himself had become the threat. Iraq already had enormous oil reserves. If he won the Saudi oil fields as well, with the oil from Iraq, Kuwait, and the Saudis, Saddam would control about 40 percent of the world's known oil reserves. [22] To President Bush, also an oilman, such a prospect was horrifying. Saddam would be able to manipulate oil prices at will and would have the American economy at his mercy. The Reagan and Bush administrations had created a monster.

Now the Bush team dramatically switched course. On August 5, President Bush stepped off Marine One on the White House lawn and, referring to the Iraqi invasion, uttered the most famous words of his presidency: "This will not stand, this aggression against Kuwait."

The spontaneous remark meant one thing: war. [23] But before that could happen, the United States had to build an international coalition; it had to make sure the Saudis would allow the use of American troops on Saudi soil; and it had to build domestic support. As the United States began to deploy forces to the Middle East, James Baker brought the Soviets on board, worked the United Nations Security Council, and lined up $15 billion each in promises from the Saudis and Kuwait.

That was just the beginning. On November 3, 1990, Baker left Washington and visited twelve countries on three continents over the next three weeks. According to his memoirs, the day after Thanksgiving, "I had set a personal record with a thirty-seven-hour day that took me from Jeddah, Saudi Arabia, to Bogota, Columbia, to Los Angeles, then home to Houston. ... I met personally with all my Security Council counterparts in an intricate process of cajoling, extracting, threatening, and occasionally buying votes." A coalition was coming together. [24]

But Saudi cooperation was still an open question. Close as Bush was to them, he could not be certain what course of action they might take. In fact, Bush and Bandar had wildly different views about Kuwait. Bush's relationship with Kuwait went back thirty years. When he was head of Zapata Off-Shore, he had built Kuwait's first offshore oil well with the approval of the ruling al-Sabah family of Kuwait. [25] The Kuwaitis were his benefactors and he was forever indebted to them. By contrast, Bandar had only contempt for Kuwait, which he derided at every opportunity, even stooping to bathroom humor. When Bandar excused himself to go to the men's room, he was known to say, "I've got to go to Kuwait." [26]

In addition, the royal family was divided. On the one hand, the House of Saud was outraged by Saddam. "[Saddam] doesn't realize that the implications of his actions are upsetting the world order," Fahd told Bush. "He is following Hitler in creating world problems ... I believe nothing will work with Saddam but the use of force." [27] On the other hand, the House of Saud would face fierce opposition from puritanical Islamic clerics if American "infidels" used the holy lands to attack Iraq. [28]

As a result, it was essential that the House of Saud see that Saddam was an imminent threat to their survival. On August 3, Cheney called Bandar to his office for a meeting with Colin Powell, Undersecretary of Defense Paul Wolfowitz, and National Security Council staffer Richard Haass. The purpose was to convince Bandar that Saddam intended to attack the House of Saud as well. Cheney and Powell took out overhead photos that showed three Iraqi divisions moving through Kuwait, one of them directly toward the Saudi border. [29] The other divisions might follow, and Riyadh was just 275 miles away. When Cheney arrived in Saudi Arabia a few weeks later and asked permission for American troops to use Saudi bases, King Fahd had clearly gotten the message. The Saudis "didn't just want (Saddam) ejected from Kuwait, they wanted him destroyed," said Secretary of State James Baker. "For them, the only solution was an American-led war that would annihilate Saddam's military machine once and for all." [30]

Having convinced the House of Saud, the Bush administration still had to win the hearts and minds of Americans. In the United States, one of the most effective lobbyists was Bandar. Again and again, he persuaded even the most unlikely allies in the United States -- thanks to an approach that was extraordinarily ecumenical for one of the preeminent custodians of an Islamic theocracy that reviled the West. At a memorable private breakfast in late October 1990, one could enjoy the spectacle of the most prominent Arab in America wooing over the capital's staunchest supporters of Israel, including Representatives Stephen J. Solarz of New York, Tom Lantos of California, and Robert G. Torricelli of New Jersey. [31] Bandar even sent out Christmas cards to influential Washingtonians with a very non-Muslim message: "Behold, the angels said: 'O Mary, God giveth thee glad tiding of a Word from Him: his name will be Christ Jesus, the son of Mary, held in honour in this world and the Hereafter and of [the company of] those nearest God." [32]

Winning over the public at large, however, required more convincing. The problem was no matter how evil Saddam may have been, Americans seemed to find him more palatable than Iran's Ayatollah Khomeini, who referred to the United States as the "Great Satan." True, as villains go, Saddam was straight out of central casting. He had killed hundreds of thousands of Iranians, thousands of his own citizens, used chemical weapons, and committed atrocity after atrocity. But because Saddam had long been an ally of the Reagan and Bush administrations, such heinous crimes had gotten little attention in the media and few Americans thought of him as a dangerous enemy.

Given that Saddam's atrocities against Iran and the Kurds had not stirred the American populace, why should his invasion of Kuwait cause more than a ripple? Few Americans even knew where the tiny emirate was. Even if they did, why should Americans go to war over this particular border dispute? If this was about defending democracy, Kuwait certainly didn't make the cut. Only sixty-five thousand people out of a population of about 2 million were given the privilege of voting -- males who could prove Kuwaiti ancestry dating back to 1920. [33] Women had no political rights whatsoever. Executive power was in the hands of the emir, who was chosen by and was a member of the ruling al-Sabah family. Senator Daniel Patrick Moynihan had described Kuwait as "a poisonous enemy of the United States" famous for its "singularly nasty" anti-Semitism. [34]

And since most Americans thought oil was not a good enough reason to go to war, both Bush and Baker floundered for a rationale to put soldiers in harm's way. "If you're [trying] to get me to say that low gasoline prices are worth American lives, it's not something I'm going to say," said Baker. [35]

"The fight isn't about oil," Bush asserted. "The fight is about naked aggression that will not stand."

All of which meant that Americans suddenly had to buy into the notion of Saddam's villainy, even though it was a villainy their government had secretly supported for many years. To that end, the Kuwaiti government swiftly poured millions of dollars into twenty public relations agencies, lobbying groups, and law firms to rally U.S. public opinion against Saddam. [36] On August 11, just nine days after the invasion, Hill & Knowlton agreed to represent Citizens for a Free Kuwait, a front group funded almost entirely by the Kuwaiti government. [37] [ii] The vast majority of the budget of Citizens for a Free Kuwait went to Hill & Knowlton.

Hill & Knowlton was not just the world's largest PR firm, it was also the most politically wired firm in the country. The firm's chairman, Robert Gray, had been a key aide in both of Ronald Reagan's presidential campaigns. On the Democratic side, the firm relied on Vice Chairman Frank Mankiewicz, who had worked for both Robert F. Kennedy and George McGovern.

In this case, however, the most important politico on the Hill & Knowlton staff was the man running its Washington office, Craig Fuller, a friend of President George H. W. Bush's who had served as his chief of staff when Bush was vice president. With Fuller on the Kuwaiti account from day one, [38] Hill & Knowlton went into overdrive, putting 119 executives in twelve offices across the country on it. According to Second Front, John R. MacArthur's account of U.S. censorship and propaganda during the Gulf War, Hill & Knowlton organized a Kuwait Information Day on twenty college campuses on September 12. On Sunday, September 23, churches across the country observed a national day of prayer for the embattled emirate. The next day, Americans celebrated Free Kuwait Day. There were tens of thousands of bumper stickers and T-shirts, as well as media kits on Kuwaiti history. Hill & Knowlton's Lew Allison, a former news producer for CBS and NBC, created two dozen video news spots about Kuwait for the evening news. [39] All over the country, there were full-scale press conferences showing torture by the Iraqis. As the end of 1990 approached, the American media, which had largely ignored Saddam's atrocities against Iran and the Kurds when they took place, again and again broadcast reports of his mayhem.

Then, on October 10, Hill & Knowlton was granted a forum to present its evidence against Iraq before the congressional Human Rights Caucus. Their chief witness was a fifteen-year-old Kuwaiti girl who was aid to have firsthand knowledge of Iraqi atrocities. She went only by her first name Nayirah. Her last name was withheld, presumably in the interests of preventing reprisals against her or her family. [40]

As recounted in Second Front, Nayirah cried as she testified about her time as a volunteer at the al-Addan hospital. "While I was there, I saw the Iraqi soldier come into the hospital with guns and go into the room where fifteen babies were in incubators," she said. "They took the babies out of the incubators, took the incubators, and left the babies on the cold floor to die." [41]

After the hearing, Congressman Tom Lantos said that "we have never had the degree of ghoulish and nightmarish horror stories coming from totally credible witnesses that we have at this time." President Bush said that he was happy that the atrocities in Kuwait had been highlighted on CNN. [42] Bush referred to the incubator story at least five more times during the next five weeks. [43] Amnesty International published the story with only a minor qualification, saying that over three hundred premature babies had been left to die. [44] Repeated again and again, it spread quickly across the globe.

As MacArthur pointed out, it is difficult to overstate the significance of the incubator story. Saddam had done many horrible things, but Nayirah's testimony suddenly enabled the press to compare him to Hitler. Here you had a guileless teenage girl's tearful account of a dictator so depraved he would have his soldiers kill innocent babies. Even though he had long supported Saddam, President Bush himself fueled the Hitler analogy, asserting that Saddam's troops had performed "outrageous acts of barbarism. ... I don't believe that Adolf Hitler ever participated in anything of that nature." [45]

Over the next three months, the "baby killer" story made its way along the media food chain. I t was referred to again and again in speeches by President Bush and Vice President Dan Quayle. It was in the New York Times and the Sunday Times of London, on CBS and CNN, in Time, on the wires and in countless newspapers across the country from the Los Angeles Times to the St. Louis Post-Dispatch. But it wasn't true.

While the story was in the news, Middle East Watch, a New York based human rights organization, was also following up on it, but unlike most of the American press, it did not simply repeat previously published reports without verifying them. It sent an investigator named Aziz Abu-Hamad to hospitals in Kuwait, where he found many doctors who refuted the incubator story. In a January 6, 1991 memo, less than two weeks before the war began, Abu-Hamad noted, "I have yet to come across the name of one family whose premature baby was allegedly thrown out of an incubator." He added that while he could not irrevocably refute the charges about the incubators, he had found many bogus stories about Iraqi atrocities in Kuwait. "Many prominent Kuwaitis had been reported dead before I left for Saudi Arabia, but I was surprised to find them alive and well." [46]

On March 15, 1991, after the Gulf War was over, ABC News's John Martin finally sorted out the mess. In his news report, he quoted Dr. Mohammed Matar, the director of Kuwait's primary health care system, and his wife, Dr. Fayeza Youssef, chief of obstetrics. "No, (the Iraqis] didn't take [the babies] away from their incubator. ... To tell the truth ... no nurses to take care of these babies, and that's why they died." [47]

Martin again specifically asked if Iraqi soldiers had left the babies on the floors to die. "I think this is something just for propaganda," replied Matar. Even Amnesty International, the highly respected human rights organization that had helped publicize the story, now issued a retraction of sorts, asserting that its team had "found no reliable evidence that Iraqi forces had caused the death of babies by removing them or ordering their removal from incubators." [48]

How had such a false but provocative story become part of the conventional wisdom that created the war-frenzied support of the Gulf War? For that, one must go back to the original source of the story, Nayirah, the fifteen-year-old Kuwaiti girl who had testified before Congress. After all, what better source for reporters across the country than congressional testimony, even though it was not under oath, from a tearful teenage girl even though she declined to give her full name.

But who really was Nayirah? At the time of her testimony, her full name had been kept secret to protect her family from reprisals in occupied Kuwait. But, as John MacArthur revealed a year after the war was over, there was a better reason to keep her name secret. She was the daughter of the Kuwaiti ambassador to the United States, Saud Nasir al-Sabah. "Such a pertinent fact might have led to impertinent demands for proof of Nayirah's whereabouts in August and September of 1990, when she said she witnessed the atrocities, as well as corroboration of her charges," MacArthur wrote. [49]

It is worth adding that Nayirah was not just the ambassador's daughter, but as such was a member of the ruling family of Kuwait, the same family that had granted oil concessions to George H. W. Bush's Zapata Off-Shore company thirty years earlier.


At the same time that Nayirah was telling Americans about Iraqi atrocities, the Pentagon began telling Americans about the looming Iraqi military threat. By mid-September, even before Nayirah's testimony, the Bush administration claimed that 250,000 Iraqi troops were in Kuwait and the surrounding region. But there was compelling evidence that the Iraqi military threat to the Saudis had either been vastly overstated by the United States or that Iraq had withdrawn its troops. In August, a Japanese newspaper approached Peter Zimmerman, a fellow with the U.S. Arms Control and Disarmament Agency, with photos of Kuwait taken by a Soviet commercial satellite company. Zimmerman showed the photos to various other experts and "all of us agreed we couldn't see anything in the way of military activity." [50]

The media, however, was too cautious to run with a story saying that the Pentagon had exaggerated the Iraqi military threat. Nevertheless, ABC News pursued the story and bought a set of five Soviet satellite pictures of eastern Kuwait and southern Iraq, which were taken on September 13, at a time during which the United States asserted that the Iraqi military force was at full strength. [51] According to Zimmerman, the photos were "astounding in their quality." [52] But when he reviewed them with another expert, both of them were shocked not by what they saw, but by what they didn't see. "We turned to each other and we both said, 'There's nothing there,' " said Zimmerman. Nothing suggested an Iraqi military presence anywhere in Kuwait. "In fact," Newsweek reported, "all they could see, in crystal-clear detail, was the U.S. buildup in Saudi Arabia." [53] Where were the Iraqi soldiers? The evidence strongly suggested that Cheney's presentation to Prince Bandar six weeks earlier vastly overstated the Iraqi threat -- or that the Iraqis had retreated.

ABC News, however, had neglected to obtain a photo showing one thirty-kilometer strip of land in Kuwait. Perhaps all the Iraqi troops were hiding in that sector. But an enterprising reporter in Florida named Jean Heller got her newspaper, the St. Petersburg Times, to purchase the missing photo. It too showed no sign of the missing Iraqi troops. "The Pentagon kept saying the bad guys were there, but we don't see anything to indicate an Iraqi force in Kuwait of even twenty percent the size the administration claimed," Zimmerman told Heller. [54]

As the story spread, the Pentagon's PR machine shifted into damage-control mode. A spokesman said the military "sticks by its numbers," then went to work discouraging ABC, CBS, and the Chicago Tribune from pursuing the story. ABC News's Mark Brender explained that the network dropped it partly because the photos were inconclusive, but also because there was "a sense that you would be bucking the trend. ... If you're going to stick your neck out and say that the number of Iraqi forces may not be as high as the administration is saying, then you better be able to say how many there are." [55] One of the few major newspapers to suggest that Iraq never really showed up for battle en masse was Newsday, which, after the Gulf War was under way, reported that American troops had encountered a "phantom enemy." It noted that most of the huge Iraqi army, which was said to have half a million troops in Kuwait and southern Iraq, simply was nowhere to be seen. In addition, as if foreshadowing the Iraq War of 2003, Saddam Hussein's supposed chemical warfare never materialized.

One senior American commander told a Newsday reporter that the information about the Iraqi defenses put out before the war was highly exaggerated. "There was a great disinformation campaign surrounding this war," he said. [56]


Later, after America's overwhelming military superiority quickly defeated Iraq, only one serious criticism of George H. W. Bush's triumphant policy emerged -- and that came from within his own administration. Why on earth had he not allowed American troops to march all the way to Baghdad?

In A World Transformed, the book he and his national security adviser Brent Scowcroft published in 1998, Bush explained that he allowed Saddam to stay in power because "trying to eliminate Saddam ... would have incurred incalculable human and political costs. Apprehending him was probably impossible. ... We would have been forced to occupy Baghdad and, in effect, rule Iraq. ... There was no viable 'exit strategy' we could see, violating another of our principles. Furthermore, we had been self-consciously trying to set a pattern for handling aggression in the post-Cold War world. Going in and occupying Iraq, thus unilaterally exceeding the United Nations' mandate, would have destroyed the precedent of international response to aggression that we hoped to establish. Had we gone the invasion route, the United States could conceivably still be an occupying power in a bitterly hostile land." [57]

That response was persuasive, but it did not satisfy everyone, particularly Paul Wolfowitz, the rising young policy maker in the neo-conservative camp who was then undersecretary of defense. In 1992, just after the Gulf War but while Bush was still in office, Wolfowitz oversaw the drafting of a policy statement on America's mission in the post-Cold War era. Called "Defense Planning Guidance," the forty-six-page classified document, which was coauthored by I. Lewis Libby, who later became Vice President Dick Cheney's chief of staff, circulated at high levels in the Pentagon. After it was leaked to the press and met a hostile reaction, the White House ordered Secretary of Defense Dick Cheney to rewrite the highly controversial document. The policy paper was never implemented during the administration of George H. W. Bush, and soon Bill Clinton was in office.

Nevertheless, a decade later, Wolfowitz's original draft became extraordinarily relevant. It outlined several scenarios in which U.S. interests might be threatened, focusing specifically on North Korea and Iraq, where the greatest dangers were the proliferation of weapons of mass destruction, terrorism, and a sudden shock to the global supply of oil. The policy paper also asserted, somewhat patronizingly, that coalitions of the type Bush and Baker had put together for the Gulf War "hold considerable promise," but that in the end they were not necessarily the answer. The United States, Wolfowitz insisted, would have to be prepared to take unilateral military action. [58] Wolfowitz's policies suggested a new sort of militaristic idealism in which preemptive strikes were justifiable if they took out a brutal dictator. If such actions alienated America's longtime allies, he seemed to be saying, so be it. That was the price we must be prepared to pay. As to whether the new policy might commit the United States to enormous costs both in terms of human life and in dollars, or whether it might lead to even greater dangers, Wolfowitz had no answer.


[i] Glaspie was widely criticized for supposedly leaving Saddam with the impression that the United States was giving a green light to his invasion of Kuwait. But Tariq Aziz, who was present at the meeting between Saddam and Glaspie, told ABC TV's Good Morning America that she did nothing of the kind. "No, she didn't do that," said Mr. Aziz. "... We didn't have that false illusion that the United States would watch and would not react severely to any move towards Kuwait." He said Iraq knew before the invasion that there would be serious repercussions, including a harsh American reaction. "We knew that there would be a conflict."
[ii] The Kuwaiti government channeled $11.9 million dollars to Citizens for a Free Kuwait, whose only other funding totaled $17,861.


1. James A. Baker III, The Politics of Diplomacy, pp. 262-63.
2. Ibid., p. 264.
3. "Richard Perle: The Making of a Neo-Conservative," transcript, interview with Ben Wattenberg, Public Broadcasting System's Think Tank, .
4. Baker, The Politics of Diplomacy, p. 268.
5. Bob Woodward, The Commanders, p. 200.
6. Ibid.
7. Ibid., p. 213.
8. Stephen Engelberg, "U.S.-Saudi Deals in 90's Shifting Away from Cash Toward Credit," New York Times, August 23, 1993, p. A 1.
9. Evan Thomas, with John Barry, Thomas M. Defrank, and Douglas Waller, "The Reluctant Warrior," Newsweek, May 13, 1001, p. 18.
10. Woodward, The Commanders, p. 200.
11. David B. Ottaway, "Been There, Done That; Prince Bandar, One of the Great Cold Warriors, faces the Yawn of an Era," Washington Post, July 21, 1996, p. Fl.
12. Woodward, The Commanders, p. 202.
13. Murray Waas and Craig Unger, "In the Loop," New Yorker, November 2, 1992, p. 64ff.
14. Douglas Frantz, "Bush Denial on Iraq Arms Aid Challenged," Los Angeles Times, September 24, 1992, p. A 24.
15. Carlyle Murphy, "Iraq Accuses Kuwait of Plot to Steal Oil, Depress Prices; Charge Seen as Part of Gulf Power Move by Saddam Hussein," Washington Post, July 18, 1990.
16. Caryle Murphy, "Iraq Takes Hard Line as Talks Open; Baghdad Press Insists That Kuwait Accede to Demands," Washington Post, July 31, 1990, p. A 14.
17. Woodward, The Commanders, p. 232.
18. Murphy, "Iraq Takes Hard Line as Talks Open," p. A 14.
19. "CIA Support to the US Military During the Persian Gulf War," Persian Gulf Illnesses Task Force, Director of Central Intelligence, June 16, 1997, National Security Archives, .
20. Molly Moore, "Bush Stresses Saddam's Isolation After the Arab League Vote," Washington Post, August 12, 1990, p. A 21.
21. R. Jeffrey Smith, "Iraqis fortify Defense in Kuwait; Ground Battle Would Result in Significant U.S. Casualties, Officials Warn," Washington Post, August 21, 1990, p. A 1.
22. Woodward, The Commanders, p. 226.
23. Herbert S. Parmet, George Bush, p. 458.
24. Baker, The Politics of Diplomacy, pp. 304-5.
25. Kevin Philips, "Bush's Worst Political Nightmare," Los Angeles Times, January 13, 1991, p. M4; and Anthony Kimery, "A Well of a Deal," Common Cause, Spring 1991.
26. Woodward, The Commanders, p. 214.
27. George Bush and Brent Scowcroft, A World Transformed, p. 320.
28. Ibid., p. 321.
29. Woodward, The Commanders, p. 243.
30. Baker, The Politics of Diplomacy, p. 289.
31. Evans and Novak, November 8, 1990.
32. John Elvin, "Inside the Beltway," Washington Times, December 14, 1990, p. A6.
33. John R. MacArthur, Second Front, p. 43.
34. Ibid., p. 44.
35. David Hoffman, "Gulf Crisis Tests Baker as Diplomat," Washington Post, November 2, 1990, p. A 1.
36. John Stauber and Sheldon Rampton, Toxic Sludge Is Good for You (Common Courage Press, 1995), web version from
37. Ibid.
38. O'Dwyer's FARA Report, vol. 5, no. 1 (January 1991), pp. 8, 10.
39. MacArthur, Second Front, p. 150.
40. Ibid., pp. 57-58.
41. Ibid., p.58.
42. Ibid., p. 60.
43. Ibid., p. 65.
44. Ibid., p. 66.
45. Ibid., p. 70.
46. Ibid., pp. 68-69.
47. Ibid., p. 73.
48. Ibid., p. 74.
49. John MacArthur, "Remember Nayirah, Witness for Kuwait?" Seattle Post Intelligencer, January 12, 1992, p. D 1.
50. MacArthur, Second Front, p. 173
51. Ned Zeman, "Periscope," Newsweek, December 3, 1990, p. 6.
52. MacArthur, Second Front, p. 174.
53. Zeman, "Periscope," p. 6.
54. Jean Heller, "Photos Don't Show Buildup," St. Petersburg Times, January 6, 1991, p. A 1.
55. MacArthur, Second Front, p. 174.
56. Ibid., pp. 177-78.
57. Bush and Scowcroft, A World Transformed, p. 489.
58. "The War Behind Closed Doors," PBS Frontline, ... /wolf.html.
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Re: House of Bush, House of Saud, by Craig Unger

Postby admin » Wed Nov 27, 2013 4:41 am

CHAPTER NINE: The Breaking Point

For all their anti-Americanism, even the most militant Islamists agreed that something had to be done about Saddam Hussein, a secular ruler who was seen as bent on destroying Islam. Immediately after Iraq invaded Kuwait in August, one of their leaders went to Riyadh to meet with Defense Minister Prince Sultan and to present him with an alternative way of going after Saddam without having to rely on the U.S. military. That militant leader was Osama bin Laden.

By this time a battle-hardened thirty-three-year-old, bin Laden told Sultan that the kingdom did not have to allow American infidels on Saudi soil to fight Saddam's troops. [1] Fresh from driving the Soviets out of Afghanistan, Osama was ready to take on another superpower. Armed with maps and a detailed ten-page plan, he asserted that his family's construction and engineering equipment could be used to quickly build fortifications. [2] Thanks in part to U.S. support for the Afghanistan campaign, bin Laden already had a global network of Islamic warriors ready to bolster Saudi forces. If the Islamic forces could defeat a true superpower like the Soviet Union, he argued, they could certainly take on Saddam Hussein. As Muslims, Iraqi soldiers could not possibly be deeply committed to someone as secular as Saddam and would not resist the jihad.

Stunned by bin Laden's proposal, Prince Sultan warned Osama that Saddam had four thousand tanks. "There are no caves in Kuwait," he said. "You cannot fight them from the mountains and caves. What will you do when he lobs the missiles at you with chemical and biological weapons?" [3]

"We [will] fight him with faith," bin Laden replied. He said he could lead the fight himself and promised to put together one hundred thousand former warriors from the Afghanistan War. [4] Still devoted to the House of Saud, bin Laden warned the royals that if they allowed U.S. soldiers near the holy mosques of Medina and Mecca, militant Islamists, not just in Saudi Arabia but throughout the entire Muslim world, would not overlook "Riyadh's transgressions of the sacred principles of Islam." [5] In its search for military security, he said, the royal family risked losing its religious legitimacy.

According to one report, for reasons that are unclear, bin Laden left his meeting with Prince Sultan thinking that the House of Saud agreed with him and was going to accept his offer. [6] But soon, he received the news that would transform his life: King Fahd was going to allow U.S. forces into the kingdom. [7]

To bin Laden, this development was "a backbreaking calamity." For decades, the secretive House of Saud had maintained its two different realities. In the West, it proudly paraded its alliance with the United States as evidence of its security and the Saudi entry into the modern world. But within Saudi Arabia, the House of Saud had downplayed any ties to the United States so as not to provoke militant Islamists. Now, however, the double marriage between the two mortal enemies was out in the open. When King Fahd asked the senior Islamic clerics who oversaw the Saudi judiciary to endorse the idea of allowing U.S. troops in Saudi Arabia, at first they refused. [8] Allowing American soldiers on sacred Saudi soil was so abhorrent that it called into question the very legitimacy of the House of Saud as the custodian of Islam. Throughout all of Saudi Arabia, Islamists could talk of nothing else but the schism between the royal family and the ulema.

Meanwhile, on August 7, 1990, the United States began sending the most sophisticated and powerful fighting machine in the history of the world into the ancient desert kingdom of Saudi Arabia. First, there were paratroopers of the 82nd Airborne Division; then F-15 fighter jets and B-52 bombers. [9] The Saudi port town of Khafhi on the Persian Gulf near the Kuwait border was transformed overnight into a bustling garrison. Transport planes laden with soldiers and equipment arrived every ten minutes.

Tens of thousands of American soldiers -- blacks, Asians, Christians, Jews, even women made their way into a tribal, male- dominated Arab culture that had never seen anything of the like. Soon, the most awesome display of high-tech aerial firepower ever assembled straddled the entire Islamic world from east to west. There were aircraft carrier battle groups in the Indian Ocean and the Red Sea. Radar-dodging Stealth F-117 bombers moved into the area. F-111 bombers headed for Turkey and B-52s to the Indian Ocean island of Diego Garcia, both within striking distance of Iraqi targets. There were F-15 Eagles armed with Sparrow and Sidewinder missiles; the F/A-18 Hornet with missiles, laser-guided bombs, and cluster bombs; the A-10 Thunderbolt and A-6 Intruder ground-attack planes, armed with Hellfire missiles; and the AH-64 Apache missile and cannon-bearing helicopter.

To Americans, the imminent war had the makings of a patriotic but antiseptic spectacle that carried no more risk than a video game. In addition, the Saudi and American leadership had never been on better terms. When George and Barbara Bush visited American troops in Saudi Arabia during the Thanksgiving holiday in 1990, the New Yorker reported, Bush called Bandar, who was in the country at the time. The Bushes were staying in the royal palace, and when Bandar arrived at their quarters, the president told him how much his recently divorced daughter, Dorothy, appreciated the friendship of Bandar's family. Dorothy had been alone at the White House with her children when Princess Haifa, Bandar's wife, invited her and the rest of the family over for Thanksgiving. The gesture so deeply touched the president that he was moved to tears. [10] The first lady began to call him Bandar Bush.

But poignant as the friendship was between Bandar and Bush, within the Arab world at large there was little warmth toward the United States. True, James Baker had forged a coalition that had significant backing from the leadership of the Arab world. [11] But on the so-called Arab "street," the arrival of U.S. troops ripped open bitter wounds within the Islamic world that dated back to the Crusades. As hundreds of thousands of U.S. troops began flooding into Saudi Arabia in August, fundamentalists in Iran called for a boycott of the hajj so long as U.S. forces were in Saudi Arabia. [12] In November, a Saudi F-15 pilot defected to Sudan with his aircraft in protest of the U.S. military presence. [13] A sermon in the Grand Mosque in Mecca by a prominent academic asserted that a U.S. "occupation" of the region was part of a long-range plan. The message was stark: "If Iraq has occupied Kuwait, then America has occupied Saudi Arabia. The real enemy is not Iraq. It is the West." [14] Tape recordings of it circulated throughout the kingdom. For millions of Muslims, the U.S. presence was a humiliation of Islam that called forth visions of invading Christians and Jews.

A rising tide of anti-Americanism and animus against the House of Saud swept through the kingdom. Repeatedly using language that evoked images of the medieval holy war against Islam, bin Laden asserted that King Fahd had "sided with the Jews and Christians" and had committed an "unforgivable sin." [15] "The American government has made the greatest mistake in entering a peninsula that no religion from the non-Muslim states has entered for fourteen centuries," he said. He declared that the arrival of U.S. troops constituted a grave and unprecedented threat to Islam, a Crusader attack that marked "the ascendance of Christian Americans over us and the conquest of our lands." [16] For the first time since the annunciation of the Prophet Muhammad, bin Laden said, the three most sacred places of Islam - Mecca, Medina, and Jerusalem -- were "under the open and covert control of non-Muslims." [17]

Still, bin Laden refrained from challenging the House of Saud directly, as many militant Islamists did, and directed his anger toward the United States. He called for a boycott of all American products. "When we buy American goods, we are accomplices in the murder of Palestinians," he said, asserting that American tax dollars ended up funding Israel, which then killed Palestinians. [18] But this was just the beginning. He and his acolytes were prepared to go much further.


Early in the evening of November 5, 1990, in New York City, it became clear exactly how far bin Laden and his associates were prepared to go. Three months had passed since bin Laden's meetings with Prince Sultan and a huge invading armada of American soldiers and materiel had landed in Arab lands, poised for attack. Rabbi Meir Kahane, the fiery founder of the militant Jewish Defense League, was appearing at a meeting at the New York Marriott Hotel on West Forty-Ninth Street in Manhattan. Kahane, who referred to Arabs as "dogs" and whose slogan was "Every Jew a .22," had been characterized by author Robert I. Friedman as a "Pied Piper of confused Jewish youth" who had "a knack for convincing youngsters that violence in the name of Greater Israel or Soviet Jewry is heroic in the tradition of the Bible." [19] Elected to the Knesset, the Israeli parliament, in 1984 by advocating the expulsion of all Arabs from Israel, Kahane had subsequently been barred from elective office in Israel after a new law banned parties that had racist platforms. As Kahane took questions from the audience, a man of Arab descent with an odd smile on his face suddenly approached and shot Kahane dead with a silver-plated .357 handgun. [20]

The man who pulled the trigger, El Sayed Nosair, was a thirty-four-year-old New York City air-conditioner repairman originally from Egypt. Nosair was just one of dozens of young Arabs who spent time at the Al-Kifah Refugee Center in Brooklyn, New York, [21] where the CIA had once recruited prospects to join the cause of the mujahideen in the Afghanistan War in the eighties. [i] It was there that Nosair had become mesmerized by Abdullah Azzam, the hypnotic Islamic orator, scholar, and colleague of bin Laden's who frequently left Peshawar to raise funds in the United States for the mujahideen. [22] [LC]

At Nosair's apartment, police discovered bomb-making materials and instruction manuals on special warfare. They also found a list of potential assassination targets, and maps and photos of many of New York's landmarks -- including the World Trade Center. [23] Some of the materials tied Nosair to the famous Blind Sheikh from Egypt, Omar Abdel Rahman, who preached jihad against America, and who, it was later revealed, had ordered Nosair to kill Kahane. [24] Nosair, it became clear, stood at the center of an Islamist cell intent on waging war against America.

But thanks to bungling from both the CIA and the FBI, a serious investigation was not in the cards. The Blind Sheikh had been tied to the 1981 assassination of Egyptian president Anwar Sadat, but later in the eighties the CIA saw him as a recruiting tool for the mujahideen and may have protected him so that his shady past did not set off alarms among U.S. authorities. [25] According to Peter Bergen's Holy War Inc., even though the Blind Sheikh was known to be a leader of Egypt's militant Islamic Group, he had been issued a visa in 1987 and again in 1990. [26]

On the night of the Kahane assassination, Edward Norris, a detective with the New York Police Department's Seventeenth Precinct, thought two Arab cabdriver friends of Nosair's might be involved. But after briefly detaining the two men, the police were ordered to release them. "They really were anxious at that time to get on to the press and say, 'We have a murder. We have a gunman. The case is solved. There's no reason to be afraid,'" said John Miller, coauthor, with Michael Stone and Chris Mitchell, of The Cell. [27] [ii]

FBI officials also insisted "that Mr. Nosair had acted alone and was not part of a larger conspiracy." [28] Worse, they didn't even bother to examine the contents of Nosair's filing cabinets thoroughly once they took them from the police. When they finally got around to translating the Arabic documents in the files more than two years later [29] -- after the 1993 bombing of the World Trade Center -- they found that the papers included a sermon urging Muslims to attack America and "blow up their edifices." There were videotapes of the electrifying speeches of Abdullah Azzam. [30] They even discovered a document that appears to be one of the very first bearing the name of bin Laden's new organization: Al Qaeda.

The relevance of that term would, of course, later become clear. But at the time, Kahane's murder appeared to have been an isolated event, an assassination of one extremist by another. America was poised to go to war with Saddam Hussein and was alive with patriotic fervor. When the Gulf War began on January 16, 1991, much of the country stood behind President Bush. Night after night, millions of people were spellbound by the high-tech spectacle on CNN, unaware that Osama bin Laden's jihad against America had begun. In Meir Kahane, Al Qaeda had already claimed its first casualty on American soil.


As bin Laden's popularity grew, the House of Saud became increasingly threatened by him. At first, Saudi officials warned that they would seize his property and take punitive measures against the Saudi Binladin Group. [31] Soon, relations between bin Laden and the royal family reached the point where he had to leave the country. In Apri1 1991, after the end of the Gulf War, he first traveled to Pakistan [32] and later to Sudan, a paradise for militant fundamentalists ruled by a former member of the Muslim Brotherhood, the Sorbonne-educated Hassan al-Turabi. [33] Arriving with about $30 million from his inheritance, bin Laden launched a series of businesses to provide a cash flow for terrorist operations. There was the Islamic al-Shamal Bank, the al-Hijra construction company, a bakery, a tannery, a cattle-breeding firm, and several other companies. [34] He also built a coalition with the local jihadists.

Having defeated the Soviet Union, the Afghan Arabs saw themselves as triumphant warriors who were now immersed in one international struggle after another. The disintegration of Yugoslavia that year led to the killing of thousands of Bosnian Muslims. Ironically, one of the seminal moments in bin Laden's campaign against the United States would come in reaction against what was probably the most altruistic foreign venture by the administration of George H. W. Bush. In December 1992, U.S. troops landed in Somalia to work with the United Nations humanitarian mission to provide relief in the famine- ravaged country. No U.S. foreign venture was more devoid of ulterior motives. But as bin Laden saw it, "famine relief" was merely a pretext for an American attempt to control not just Somalia, but Sudan, Yemen, and Eritrea -- the entire Horn of Africa. [35]

In a rare interview, however, bin Laden denied that he had any plans for a global jihad. "The rubbish of the media and the embassies," he said. "I am a construction engineer and an agriculturalist. If I had training camps here in Sudan, I couldn't possibly do this job." [36] But in fact bin Laden had already decided that Al Qaeda should take on U.S. forces in Saudi Arabia, Yemen, and Somalia. [37]

One by one the attacks began. On December 29, 1992, a bomb exploded in a hotel in Aden, Yemen, where U.S. troops had been staying before going on to Somalia. The U.S. soldiers had left already, and two tourists were killed. [38]

In February 1993, in Jersey City, New Jersey, Ramzi Ahmed Yousef began assembling a host of restricted chemicals such as lead nitrate, phenol, and methylamine with magnesium, aluminum, ferric oxide, and nitric acid into a fifteen-hundred-pound bomb. [39] On February 26, Yousef, who was said to have been a houseguest of Osama bin Laden's in Pakistan, [40] and Ismail Najim, an associate who had flown up from Texas to take part in the operation, drove a rented white Ford Econoline van to the World Trade Center and parked it in the B-2 level of the underground garage. [41]

At 12:17 p.m., the device exploded. It killed six people and injured more than a thousand others, but failed to accomplish its intended mission of knocking down both of the Twin Towers. The terrorist cell behind the bombing included Kahane's assassin El Sayed Nosair [iii] and his accomplices, Mohammed Salameh and Mahmoud Abouhalima -- the two men who had briefly been detained by police but then released after the Kahane murder. [42] Also involved was the Blind Sheikh, Omar Abdel Rahman. [43] The Al-Kifah Refugee Center in Brooklyn was not just a hub for the conspirators, it was now the New York outpost of Osama bin Laden and Al Qaeda's operation. [44]


The bomb detonated in the underground parking garage at the World Trade Center on February 26, 1993 killed six people, resulted in injuries to a thousand more, and threw lower Manhattan into chaos. At the center of the terror cell was a bombmaker who had been in the Egyptian army. He was also a paid informer and provocateur for the FBl. Other participants in the terror operation had entered the country with the connivance of the CIA, despite the fact that normally they would not have been allowed in. The FBI was aware of every phase of the plot, but refused to exploit numerous opportunities to stop it. The first WTC bomb of 1993 went off with the full complicity of the FBl, which tried repeatedly to pass off the blame to the Sudanese mission to the United Nations. The Kean-Hamilton Commission has nothing to say about this.

A detailed narrative of these events has appeared under the title The Cell. It is a coverup, written by participants in the operation. This book ignores the central and most dramatic event of the entire affair, which was the publication of the tapes secretly made by FBl provocateur Emad Salem of his own conversations with his FBI controllers -- tapes which he wisely surmised he might need later as an insurance policy. Salem appears to have been passed from British intelligence to the FBI.

Even without the Salem tapes, The Cell presents a story of criminal incompetence within the FBI. The story starts with the November 1990 assassination in New York City of Rabbi Meir Kahane, an Israeli terrorist leader who had founded the Jewsih Defense League several decades earlier. The accused assassin of Kahane was El Sayyid Nosair, an Egyptian fanatic. But Nosair was not just a drifting fanatic: when the police searched his apartment, "there were training manuals from the Army Special Warfare School at Fort Bragg. There were copies of teletypes that had been routed to the Secretary of the Army and the Joint Chiefs of Staff. How had Nosair come up with those? Clearly, he had a source in a sensitive position in the US military." (Cell 45) Much more likely, his terrorist controller occupied a sensitive position in the US military, as any fool can see.

Nosair's Arabic-language files were said to contain the detailed plan of a series of future terrorist acts, including the 1993 WTC bombing. But the FBI was not interested in having these documents translated; it simply put them into storage and ignored them until it was too late. This vital evidence, according to our authors, "entered a black hole."

-- 9/11 Synthetic Terrorism Made in USA, by Webster Griffin Tarpley

Seven months later, in October 1993, came the episode that inspired the movie Black Hawk Down. Relying on Yemenite "Afghan Arabs" who had fought with him against the Soviets, and financing the operation with businesses he owned in Yemen, bin Laden backed the ambush that killed eighteen U.S. Army Rangers who were trying to capture two aides to a Somali warlord. By early 1994, bin Laden had set up at least three Al Qaeda training camps in northern Sudan with Islamic rebel trainees from six countries. In June 1995, bin Laden tried, unsuccessfully, to assassinate Egyptian president Hosni Mubarak. [45]

Now that bin Laden's jihad was under way, even his own family finally took action against him. In February 1994, Bakr bin Laden, who had succeeded Salem as head of the extended bin Laden family, sought to dissociate himself, his family, and the Saudi Binladin Group from his terrorist half brother. He sent a faxed message to the Saudi press that expressed the family's "regret, denunciation, and condemnation of all acts that Osama bin Laden may have committed, which we do not condone and which we reject." [46] Two months later, the Saudi government moved to revoke bin Laden's citizenship and freeze his Saudi assets because of his militancy. His passport was seized. In 1994, there was even a botched attempt by the Saudis to assassinate bin Laden. [47]

In many ways, the Saudis appeared to be taking aggressive action against bin Laden and the growing terrorist threat. But mere bureaucratic measures against bin Laden carried little weight against a demographic time bomb that was inexorably ticking away. In the early seventies when it was first awash in petrodollars, the Saudis had imported millions of foreign workers to do low-level jobs that most Saudis thought beneath them. By the mid-nineties, however, immigrants filled nearly 70 percent of all jobs in Saudi Arabia, [48] and unemployment in the kingdom had risen to 25 percent. [49] At the same time, the soaring birthrate meant that a growing population of Saudi youths was joining the labor market with few technical skills or employment options. To strengthen its frayed relationship to the ulema, the House of Saud funded the madrassas, schools with a strong Islamic fundamentalist ideology scattered throughout Muslim countries in the Middle East. The schools taught a new generation that Allah turned Jews and Christians into apes and pigs, that Judgment Day will not come "until the Muslims fight the Jews and kill them." As a result, many Saudi graduates had training that was more appropriate for joining Al Qaeda than for entering the professional world. [50]

At the same time, per capita income in Saudi Arabia had dropped to just one-third of what it had been during the oil boom of the seventies. [51] Even that understated the problem. Since many princes had scores of wives and even more children, the House of Saud itself was growing at a fantastic rate. Now thousands of princes expected huge monthly stipends. Given the grotesque disparity between the wealth of the royal family and the unemployed masses, it was not surprising that increasingly thousands of Saudis saw bin Laden as a powerful voice articulating the anger against the House of Saud and the United States.


The rise of militant Islam was just one factor in shaping a new era in U.S.-Saudi relations. In 1992, Bill Clinton won the presidency from George H. W. Bush. Bandar took Bush's defeat as a personal loss. The night before the election, at two in the morning, he wrote a letter to Bush expressing his feelings. "You are my friend for life, one of my family. Tomorrow you win either way. If you win, you deserve it, and if you lose you are in good company," he wrote, referring to Winston Churchill's having lost reelection after winning the war. [52]

When the results came in, Bandar was so despondent he told King Fahd that he wanted to resign. "It was like I lost one of my family, dead," he said. [53] But he stayed on and took solace in adding onto his thirty-eight-room home in McLean, Virginia, [54] with one extravagant addition after another to the house. An ardent fan of professional football, Bandar also followed the fortunes of the Dallas Cowboys, who were having an excellent season, and whose owner, Jerry Jones, had hosted Bandar at Cowboys' games. [55] [iv]

Now that the House of Bush had been remanded to the private sector, the Saudis did not forget its members. Prince Bandar was quite candid about how the game was played. "If the reputation then builds that the Saudis take care of friends when they leave office," he said, "you'd be surprised how much better friends you have who are just coming into office." [56]

The Saudis were also taking the long view. They reasoned that sooner or later, the Republicans would be back in office and one of the promising sons of George H. W. Bush or his allies might be elevated to power. In the meantime, there was money to be made. As it happened, the Carlyle Group, a new private equity firm in Washington, D.C., was becoming a home away from home for some of the leading figures of the Reagan-Bush era. It was just the kind of place where the Saudis would be able to give them their due.


[i] Despite the testimony of several eyewitnesses who said he pulled the trigger, Nosair was acquitted of shooting Kahane in a verdict that Judge Alvin Schlesinger said was "devoid of logic and common sense." The judge sentenced Nosair to seven and one-third to twenty-two years in jail for shooting two men and trying to hijack a taxi after the murder.
[ii] In the late nineties, Miller went to Afghanistan and became one of the few American journalists to interview bin Laden. He opened his conversation with the master terrorist by telling the translator, "For a guy who comes from a family known for building roads, he could sure use a better driveway up this mountain."
[iii] Astonishingly, Nosair had been acquitted of Kahane's murder in a state trial. Only later was he convicted of the crime in a 1995 federal terrorism case.
[iv] Bandar's relationship with the Dallas Cowboys football team and their head coach was one of the most bizarre but revealing episodes in the Americanization of this sentinel of Wahhabi Islam. Having been trained as a jet fighter pilot in Texas in 1970, Bandar grew to love American football and immediately became a devoted fan of "America's Team," as the Dallas Cowboys were known. After the Cowboys won the Super Bowl in 1993, to cement his close friendship with team owner Jerry Jones, Bandar gave Jones a platinum-and-sterling-silver Dallas Cowboys football helmet in a display box, inscribed, "You said you would do it, and you did it." It was signed, "Bandar."
An independent oilman from Arkansas, Jones no doubt was aware of Bandar's role in the royal House of Saud. Certainly, he also saw that Bandar was close friends with President George H. W. Bush. To the dismay of Cowboys coach Jimmy Johnson, Jones treated Bandar accordingly. At a time when Johnson had led the Cowboys from a 1-15 record to the Super Bowl championship, Jones became so attached to Bandar that he gave the prince the rare privilege of being allowed on the team's sidelines during the game, even though he had as many as thirty bodyguards. Johnson was irate. When Bandar was allowed into the team's locker room as well after the game, that only made matters worse between Jones and his coach.
In December 1992, after the Cowboys fumbled the ball in a game against the Chicago Bears, Coach Johnson looked up to see Bandar and his entourage nearby on the sidelines. Enraged by the distraction, Johnson marched up to the owner's box and erupted at Jones for allowing the Saudi prince to intrude on his turf. A year later, a similar event happened. After beating the Washington Redskins, Johnson closed the locker room and kept both Jones and Prince Bandar waiting outside. When they finally gained entrance, Johnson left as fast as possible. A month later, the Cowboys won their second consecutive Super Bowl with Johnson as coach. But by then the relationship between Johnson and Jones was frayed so badly that Johnson was forced out and resigned -- even though he had won two consecutive championships. Jerry Jones repeatedly denied that his friendship with Bandar had been a factor, but it was widely reported as a major irritant between the two men. In any case, for the Dallas Cowboys, the Jimmy Johnson era was over.


1. Douglas Jehl, "Holy War Lured Saudis as Rulers Looked Away," New York Times, December 27, 2001, p. A 1.
2. Yossef Bodansky, Bin Laden, p. 29.
3. Jehl, "Holy War Lured Saudis as Rulers Looked Away," p. A 1.
4. Ibid.
5. Bodansky, Bin Laden, p. 29.
6. Anonymous, Through Our Enemies' Eyes, p. 114.
7. Bodansky, Bin Laden, p. 29; and Arnaud de Borchgrave, "Osama's Saudi Moles," Washington Times, August 1, 2003, p. A 19.
8. Bodansky, Bin Laden, p. 30.
9. Robert Mackay, "U.S. Sending Aircraft, Troops to Saudi Arabia," UPI, August 7, 1990.
10. Elsa Walsh, "The Prince: How the Saudi Ambassador Became Washington's Indispensable Operator," New Yorker, March 24, 2003, p. 48.
11. Arab supporters of the U.S. military action in the Gulf War included Syria, Egypt, Bahrain, Saudi Arabia, the United Arab Emirates, Oman, and Qatar.
12. Tehran TV, November 18, 1990, Gulf/2000 archives.
13. New York Times, November 20, 1990, p. 12.
14. Judith Caesar, "Rumblings Under the Throne," Nation, December 17, 1990, p.762.
15. Anonymous, Through Our Enemies' Eyes, p. 115.
16. Ibid., p. 114.
17. Bodansky, Bin Laden, p. 250.
18. Ibid., p. 30.
19. Michael Specter and Laurie Goodstein, "Thousands of U.S. Jews Mourn Militant Kahane," Washington Post, November 7, 1990, p. 18.
20. Sam Donaldson, ABC Nightline, November 5, 1990.
21. Evan Thomas et al., "The Road to September 11," Newsweek, October 1, 2001, p. 38.
22. John Miller, Michael Stone, and Chris Mitchell, The Cell, p. 49.
23. Michael Daly, "Terror Clues in '90 Killing," Daily News (New York), May 29, 2002, p. 5; and Simon Reeve, "Blind Sheikh Behind New Terror Wave," Scotland on Sunday, November 23, 1997, p. 17.
24. Arieh O'Sullivan, "Osama bin Laden's Links to the Palestinians Widening," Jerusalem Post, September 13, 2001, p. 6; and John Miller, interviewed by Terry Gross, Fresh Air, National Public Radio, August 21, 2002.
25. Thomas et al., "The Road to September 11," p. 38.
26. Peter Bergen, Holy War, Inc., p. 67.
27. Miller, Fresh Air; and John Miller, "The Esquire Timeline," Esquire, October 2003, p. 80.
28. James C. McKinley, "Suspect in Kahane Slaying Kept List of Prominent Jews," New York Times, December 1, 1990, p. 29.
29. Daly, "Terror Clues in '90 Killing," p. 5.
30. Daniel Benjamin and Steven Simon, The Age of Sacred Terror, p. 235.
31. Bodansky, Bin Laden, p. 30.
32. Anonymous, Through Our Enemies' Eyes, p. 118.
33. Benjamin and Simon, The Age of Sacred Terror, p. 109.
34. Ibid., p. 111.
35. Bodansky, Bin Laden, p. 70.
36. Robert Fisk, "Anti-Soviet Warrior Puts His Army on the Road to Peace," Independent (London), December 6, 1993, p. 10.
37. "Osama bin Laden, a Chronology of His Life," PBS Frontline, wgbh/pages/frontline/shows/binladen/etc/cron.html.
38. There was another terrorist attack on American soil as a result of U.S. policy toward the Muslims, though it was never tied to bin Laden or Al Qaeda. On January 25, 1993, just five days after Bill Clinton was sworn in as president, a man with an AK-47 got out of his car near CIA headquarters in McLean, Virginia, and fired ten times at vehicles lined up to get into the agency. The gunman, a Pakistani named Mir Aimal Kansi, killed two agency employees and wounded three others. Kansi was executed in 2002 for the murders.
39. Miller, Stone, and Mitchell, The Cell, pp. 91-92.
40. Ibid., p. 123.
41. Ibid., p.94.
42. Miller, Fresh Air.
43. Miller, Stone, and Mitchell, The Cell, p. 123.
44. Colum Lynch and Vernon Loeb, "Bin Laden's Network: Terror Conspiracy or Loose Alliance?" Washington Post, August 1, 1999, p. A 1.
45. "Osama bin Laden," PBS Frontline.
46. February 19, 1994, Associated Press.
47. Charles Richards, "Times Have Changed for Terrorists Today," Ottawa Citizen, August 16, 1994, p. A 2.
48. "Unemployment Will Cause Unrest in Gulf," Reuters, February 5, 1995.
49. "Gulf Citizen, No Qualifications, Seeks Well-Paid Job," Economist, April 12, 1997, p. 41.
50. Lisa Beyer et al., "After 9/11: The Saudis: Friend or Foe," Time, September 15, 2003, p. 38; and interview with Richard Clarke.
51. Howard Schneider, "Rote Schooling in Saudi Arabia Leaves Students Ill-Suited to Work," Washington Post, June 12, 1999, p. A 13.
52. Walsh, "The Prince," p. 48.
53. Ibid.
54. Patricia Dane Rogers, "A Princely View: A Bird's-Eye Tour of the Saudi Ambassador's Residence," Washington Post, September 8, 1994, p. T 12.
55. David Whitford, "Entrepreneur of the Year," Inc., December 1993, p. 102.
56. Robert G. Kaiser and David Ottaway, "Oil for Security Fueled Close Ties; But Major Differences Led to Tensions," Washington Post, February 11, 2002, p. A 1.
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Re: House of Bush, House of Saud, by Craig Unger

Postby admin » Wed Nov 27, 2013 4:47 am

CHAPTER TEN: Masters of the Universe

Today, the Carlyle Group is such a well-known player in global commerce, boasting a roster of talent studded with world leaders, that it is easy to forget that the company was once merely a prescient idea. On a bright summer afternoon in 2003, David Rubenstein, the creator of that idea, sits behind his desk at 1001 Pennsylvania Avenue in Washington. [1] As founding partner and managing director of Carlyle, one of the world's biggest private equity firms, the fifty-two-year-old Rubenstein works out of an elegant but Spartan office. A scale model of a fancy corporate jet someone is trying to sell him occupies an otherwise barren and nondescript conference table. But it has been left there as an oversight, not to impress. Rubenstein's office is a study in anonymity. It has virtually no personal effects on display -- not even the requisite photos of his wife and three children. He inhabits it, and his somewhat rumpled pin-striped suit, as a driven man, an ascetic workaholic. He does not golf. He works. The Carlyle Group is not just his job. It is his life.

Rubenstein is now rich and powerful -- though he bristles at such notions -- but in some ways he has not changed much since he was a lowly $48,000-a-year domestic policy adviser in Jimmy Carter's White House. Back then, Rubenstein was the subject of one profile after another in which he was consistently characterized as the archetypal Beltway grind who was legendary for putting in eighteen-hour days and subsisting on vending-machine cuisine. He still uses his most famous quote from back then with reporters today: "Machine food is underrated." [3]

But the days of being a poorly paid, junk-food-ingesting policy wonk are long gone for Rubenstein. [4] For more than a decade, he has been consorting with multibillionaires and world leaders daily. In some measure, geography is metaphor, and as a result Rubenstein is deeply chagrined about the location of Carlyle's Washington offices midway between the White House and the Capitol, close to the center of power of the Western world. The reason is simple. Carlyle, a company that didn't even exist until 1987, in an industry that, in this form at least, is relatively new, has gone from zero to $16 billion in assets under management, making it one of the fastest-growing companies in the world. The people tied to Carlyle as partners, advisers, counselors, or directors of its companies have included the most powerful people in the world: former president George H. W. Bush, former secretary of state James Baker, former prime minister John Major of Great Britain, former secretary of defense Frank Carlucci, and former head of the Office of Management and Budget Richard Darman. There are or have been former heads of state from the Philippines, South Korea, and Thailand, former cabinet officials, ambassadors, heads of government regulatory agencies such as the Securities and Exchange Commission and the Federal Communications Commission, directors of stock exchanges, and the like. Even the current president of the United States, George W. Bush, was a director of a Carlyle company at one time.

All of which has led critics to conclude what may seem woefully obvious: Carlyle is spectacularly well-connected politically. Yes, the firm has made lots of smart business decisions, but ultimately it is Carlyle's seemingly unfettered access to power that makes it so distinctive. Carlyle has what everyone wants: the luxury of being able to make decisions -- multibillion-dollar decisions, at that -- with a reasonable certainty that it knows the outcome of its decisions in advance. If defense companies are on sale at depressed prices, for example, Carlyle knows there is a good chance that it can line up billions of dollars of military contracts for them. As a result, it can parlay its political connections into vast amounts of equity.

That's the conventional wisdom about the Carlyle Group. David Rubenstein abhors it. And when he meets the press, he goes to Herculean lengths to put that conceit to rest. Rubenstein once even invited a Washington Post reporter into the wood- paneled den of his Bethesda, Maryland, home and fairly shouted at him, "We're not that well connected!" At the time, Rubenstein was surrounded by candid photos of himself and his buddies, including one of him on a plane with George W. Bush; another of him with former president George H. W. Bush and his wife, Barbara; another with Mikhail Gorbachev; with Jimmy Carter; and of course, Rubenstein with his close personal friend the pope. [5]

On this particular day, however, Rubenstein tries a softer sell. "By focusing on Bush, James Baker, and John Major, the press has missed the real story about Carlyle," he says. "They would have you believe that James Baker is sitting in his office calling the chairman of General Motors and saying Carlyle wants you to buy this or buy that. It just doesn't happen that way."

What has really happened and continues to happen merits a chapter somewhere in the history of capitalism and the darker arts of influence peddling. Before Carlyle came along, the so-called revolving door in Washington worked something like this: As every new administration moved into Washington, a coterie of powerful Beltway politicians would move out from the public sector into the private sector, where they cashed in by renting their access to power for $500,000 a year or so as lawyers or lobbyists at huge law firms like Williams & Connolly or Akin Gump Strauss Hauer & Feld, and PR firms like Hill & Knowlton. Everyone did it -- Democrats and Republicans alike.

But after laboring over multibillion-dollar defense contracts, certain politicians began to realize that they could do rather better than a mere half million dollars or so a year. Much better. In an era of trillion-dollar federal budgets, half a million was chump change, proverbial shoe-shine money. How come the guys on Wall Street were Masters of the Universe when the men on Capitol Hill managed so much more money?

As a result, through Carlyle, the most powerful figures of the Reagan-Bush era decided not just to rent their access to the White House, to the Pentagon, to the regulatory agencies, but to transform it into corporate assets -- real equity in publicly held corporations -- stocks worth hundreds of millions of dollars. Carlyle was on its way to perfecting the art of what might be called "access capitalism." [6] [i]

To pull it off, Rubenstein first assembled a critical mass of great international icons in the eighties to form a shadow government of sorts that gave it political clout that was unparalleled among investment firms. These politicians who had forged political power out of capital, particularly in the energy and defense sectors, now could reverse the process and transform their political clout into capital. [ii]

Named after the elegant hotel on New York's fashionable Upper East Side, the Carlyle Group began modestly enough in 1987. Its first success was referred to half-jokingly as the Great Eskimo Tax Scam. At the time, an unusual tax loophole allowed companies in Alaska that were owned by Eskimos to sell their losses to other U.S. companies needing tax write-offs. According to the New Republic, in less than a year Carlyle "shuffled between $1 billion and $2 billion of dubious Eskimo losses into profitable American companies," taking fees of between $10 million and $20 million. [7]

But Rubenstein had more on his mind than Eskimo tax losses. This was the go-go era of leveraged buyouts, and for a couple of years in the late eighties, he participated in the zeitgeist of the LBO frenzy with mixed results. Ultimately, his real goal was far more grandiose -- to create a world-class merchant bank in Washington that could compete with the big Wall Street firms such as the Blackstone Group, Kohlberg Kravis Roberts, and ultimately, even the legendary Goldman Sachs.

As Rubenstein saw it, Carlyle would be different from the flash-and-dash of the eighties leveraged-buyout firms. It would be an institution. For the most part, the LBO firms of that heady era were run by men afflicted with the Master of the Universe Syndrome, men whose egos had become inflated after doing too many $10-billion deals, men who chortled with delight over having their own private Gulfstream G5 jets, or in being a member of Augusta National, the legendary Georgia golf course where the Masters is played each year.

Moreover, many of these firms were almost completely dependent on two or three superstars, but they tended to disintegrate once those stars left. "Most people who start these firms are essentially deal-doers who are not building institutions that will survive them," says Rubenstein. "So most private equity firms don't outlast the founders. We want to build an institution that would survive. Then, we will have created something significant."[8]

In terms of its distinctive corporate culture, Rubenstein admired the intensely competitive white-shoe firm of Goldman Sachs, whose ethos of sobriety and level headedness had helped it avoid some of the excesses of the eighties. But Rubenstein wanted to take Carlyle a step further than Goldman Sachs. His idea was to create a great reputation like Goldman's, a brand, but then to do something Goldman Sachs had never done, to market its brand and put its label on other funds.

It could create real estate, venture-capital, and high-yield funds, then do the same in Europe and Asia. This had been done with mutual funds, but never in the world of private equity. Carlyle would be the first. In the end, it assembled an astoundingly diverse international empire consisting of seventy thousand employees at 165 companies worth $16 billion. It created buyout, venture, and real estate funds in Asia, Europe, and North America. It had investments in aerospace and defense, energy and power, telecommunications and media, financial services and technology. Carlyle owned hotels, soft drink companies, trucking, health care, and real estate. There were holdings in Air Cargo, Inc., the Chicago Marriott hotel, Dr Pepper beverages, United Defense, Vought Aircraft, and much, much more. In defense and aerospace alone, it completed twenty-seven transactions worth $5.8 billion. [9]

Carlyle's first step was to hire former government officials who could help the firm make its reputation in sectors that were tied to the federal government. A company brochure put it best: "We invest in niche opportunities created in industries heavily affected by changes in governmental policies." [10] Its investment strategy was to focus "on industries we know and in which we have a competitive advantage," in particular "federally regulated or impacted industries such as aerospace/defense." [11] Later, once the company made its name, it would move into automotive, health care, transportation, technology, and other industries.

One of Carlyle's first big hires, at a time when it was still a tiny firm with about ten people, was Fred Malek. [12] A classic Washington insider, Malek had met the elder George Bush when Bush was a congressman in 1970. They became close when Bush ran the Republican Party during the Watergate scandal, [13] Malek worked as an aide to President Nixon at a time when the paranoid president suspected a Jewish cabal was working against him in the Labor Department. At Nixon's request, he had counted up the number of Jews employed in the Bureau of Labor Statistics. Malek had worked on George H. W. Bush's presidential campaign in 1988 but was forced to resign when the Jew-counting scandal finally became public. Malek then became part owner of the Texas Rangers baseball team with, among others, George W. Bush, who had just sold his interest in Harken Energy.

Malek's relationship with the elder Bush had lasted more than twenty years, and Bush stood by Malek even through the Jew- counting scandal, speaking to him several times a week. Through Malek, Carlyle began to bring in people who had real political connections.

The strategy of bringing in politically connected businessmen didn't always work. In 1989, Carlyle acquired Caterair, an airline catering company. [14] "[Malek] came to me and said, 'Look, there is a guy who would like to be on the board,'" Rubenstein told a group of Los Angeles investors. "'He's kind of down on his luck a bit. ... He'll be a good board member and be a loyal vote for the management.'" [15]

Rubenstein was not particularly impressed by Malek's friend, but as a favor, he agreed to put him on the board anyway. The new board member came to meetings for about three years and told a few corny jokes, but showed no interest whatsoever in the company. Finally, Rubenstein confronted him. "I'm not sure this is really for you," he said. "Maybe you should do something else. ... You don't know that much about the company."

"I'm getting out of this business anyway," the board member replied. "And I don't really like it that much. So I'm probably going to resign from the board." Rubenstein thanked him and didn't expect to see him again. His name was George W. Bush. [16] [iii]

Carlyle had better luck when another Republican colleague of Malek's came on board, former secretary of defense Frank Carlucci, who had served during the Reagan administration. Carlucci had one of the most wildly mixed reputations in all of Washington. As the Times of London put it, he was regarded by some Beltway insiders ''as honest, loyal, and extraordinarily efficient ... and by others to be a cunning, devious former CIA operative who was involved in lots of Third World skullduggery." [17] He told the reporter that he had been accused of plotting the 1961 assassination of Patrice Lumumba, who won independence for the Congo; the overthrow of Chilean president Salvador Allende; coups in Brazil and Zanzibar; and numerous other covert actions. Carlucci has denied all the accusations and none have been proven.

As detailed by reporters for the Wall Street Journal and the New York Times, Frank Carlucci, the director of Carlyle, as well as other former Bush administration officials, such as former Secretary of State James Baker who is also on the Carlyle payroll, have "made repeated pilgrimages to the bin Laden family's headquarters in Jeddah, Saudi Arabia. ... As commercial jets slammed into the World Trade Center, Frank Carlucci, James Baker, and others associated with Bush, were celebrating at the Ritz Carlton hotel in Washington, DC with members of the Bin Laden family (11). ... The Bush and bin Laden family, the Saudi royal family, Prince Bandar, as well as Frank Carlucci, James Baker, et al., as part of the Carlyle Group, would earn hundreds of millions of dollars because of the 9/11 attack.

-- America Betrayed, by R. Joseph, Ph.D.

James Baker visited the bin Ladens in 1998 and 1999 with [then] Carlyle CEO Frank Carlucci. ... Armitage and Carlucci are both board members of the influential Washington think-tank, the Middle East Policy Council. [This is the same Middle East Policy Council that receives funding from the bin Laden family.]

-- Crossing the Rubicon, by Michael C. Ruppert

Mr. Baker visited the bin Laden family in both 1998 and 1999, according to people close to the family. In the second trip, he traveled on a family plane. Mr. Baker declined comment, as did Mr. Carlucci, a past chairman of Nortel Networks Corp., which has partnered with Saudi Binladin Group on telecommunications ventures.

-- Aftermath of Terror -- Bin Laden Family Could Profit From a Jump in Defense Spending Due to Ties to U.S. Bank, by Daniel Golden, James Bandler and Marcus Walker

Associated with Meridian's Robert Booth Nichols in a Middle Eastern operation called FIDCO, a company that ran arms into and heroin out of Lebanon's Beqaa (Bekaa) Valley, was Harold Okimoto, a high-ranking member of the Yakuza. Okimoto had longed worked under Frank Carlucci (who served as Secretary of Defense and Deputy Director of the CIA before becoming Chairman of The Carlyle Group). Okimoto owned food concessions in casinos around the world—Las Vegas, Reno, Macao, and the Middle East. (Free drinks and anthrax while you play blackjack, anyone?)

-- When Osama Bin Laden Was Tim Osman, by J. Orlin Grabbe

Still on the Iran-contra list was Gen. Colin Powell, whom Bush appointed as Chairman of the Joint Chiefs of Staff. After Vice Admiral John Poindexter and Oliver North had departed from the Old Executive Office Building in November, 1986, Reagan had appointed Frank Carlucci to lead the NSC. Carlucci had brought along Gen. Powell. With Colin Powell as his deputy, Carlucci cleaned up the stables of Augeias of the OEOB-NSC complex in such a way as to minimize damage to Bush. Powell was otherwise a protege of the very Anglophile Caspar Weinberger, and of Carlucci, a man with strong links to Operation Democracy and to the Sears, Roebuck interests.

-- George Bush: The Unauthorized Biography, by Webster G. Tarpley and Anton Chaitkin

NED Board of Directors: Frank Carlucci, Chairman Emeritus, The Carlyle Group

-- NED Officers and Directors, by

As will be shown later, the National Endowment for Democracy is not only corporatist, but its board of directors is intended to function as a kind of informal Grand Council of Fascism in the totalitarian one-party state that Project Democracy seeks to create in the United States.

-- Project Democracy's Program, The Fascist Corporate State, by Webster Griffin Tarpley

Carlucci is affiliated with the Project for the New American Century, or PNAC, the neo-conservative thinktank.

-- Frank Carlucci, by NationMaster

The Process of Transformation is Likely to Be a Long One, Absent Some Catastrophic and Catalyzing Event Like a New Pearl Harbor

-- Rebuilding America's Defenses, by The Project for the New American Century

With the outbreak of war, Roosevelt appointed Batt vice-chairman of the War Production Board, whose chairman was Sears, Roebuck's Donald Nelson.

-- Trading With the Enemy, by Charles Higham

On June 10, 1954, Bush received a letter from Connecticut resident H. Smith Richardson, owner of Vick Chemical Company (cough drops, Vapo-Rub):

" ... At some time before Fall, Senator, I want to get your advice and counsel on a [new] subject--namely what should be done with the income from a foundation which my brother and I set up, and which will begin its operation in 1956....'' [fn14 ]

This letter presages the establishment of the H. Smith Richardson Foundation, a Bush family-dictated private slush fund which was to be utilized by the Central Intelligence Agency, and by Vice President Bush, for the conduct of his Iran-Contra adventures.

The Bush family knew Richardson and his wife through their mutual friendship with Sears Roebuck's chairman, Gen. Robert E. Wood. General Wood had been president of the America First organization, which had lobbied against war with Hitler Germany. H. Smith Richardson had contributed the start-up money for America First and had spoken out against the U.S. "joining the Communists'' by fighting Hitler. Richardson's wife was a proud relative of Nancy Langehorne from Virginia, who married Lord Astor and backed the Nazis from their Cliveden Estate.

-- George Bush: The Unauthorized Biography, by Webster Tarpley & Anton Chaitkin

At Charles Lindbergh’s suggestion, Douglas Stuart, Jr. asked General Robert E. Wood (Chairman of the Board of Sears, Roebuck & Co.) to lead America First.

-- Outline/Notes of "Sabotage! The Secret War Against America," by Michael Sayers & Albert E. Kahn by


-- Facts and Fascism, by George Seldes

8)(tie) Sears Bankruptcy Recovery Management Services
Type of Crime: Fraud
Criminal Fine: $60 million
13 Corporate Crime Reporter 7(1), February 15, 1999
A unit of Sears, Roebuck and Company pled guilty to bankruptcy fraud and agreed to pay a $60 million fine.

-- Top 100 Corporate Criminals of the Decade, by Russell Mokhiber

Like a molecule at full boil, the Captain moved about at high speeds in all directions. He traveled around the world in his own plane (he was a registered pilot and master of sea vessels), buying up LSD and stashing it, swapping different drugs, and building an underground supply. "I scattered it as I went along," he recalled. With his leather pouch full of "wampum" he rode the circuit, and those on the receiving end were always grateful. "We waited for him like the little old lady on the prairie waiting for a copy of the Sears Roebuck catalogue," said Dr. Oscar Janiger, a Los Angeles psychiatrist.

-- Acid Dreams, by Martin A. Lee

But to the pioneer Father Coughlin, Bishop Paul Peter Prang was as the Ford V-8 to the Model A. Prang was more sentimental than Coughlin; he shouted more; he agonized more; he reviled more enemies by name, and rather scandalously; he told more funny stories, and ever so many more tragic stories about the repentant deathbeds of bankers, atheists, and Communists. His voice was more nasally native, and he was pure Middle West, with a New England Protestant Scotch–English ancestry, where Coughlin was always a little suspect, in the Sears–Roebuck regions, as a Roman Catholic with an agreeable Irish accent.

-- It Can't Happen Here, by Sinclair Lewis

Wackenhut is the largest single company supplying security to U.S. embassies overseas; several of the 13 embassies it guards have been in important hotbeds of espionage, such as Chile, Greece and El Salvador. It also guards nearly all the most strategic government facilities in the U.S., including the Alaskan oil pipeline, the Hanford nuclear-waste facility, the Savannah River plutonium plant and the Strategic Petroleum Reserve. Wackenhut maintains an especially close relationship with the federal government in other ways as well. While early boards of directors included such prominent personalities of the political right as Captain Eddie Rickenbacker; General Mark Clark and Ralph E. Davis, a John Birch Society leader, current and recent members of the board have included much of the country's recent national-security directorate: former FBI director Clarence Kelley; former Defense secretary and former CIA deputy director Frank Carlucci: former Defense Intelligence Agent director General Joseph Carroll; former U.S. Secret Service director James J. Rowley; former Marine commandant P. X. Kelley; and acting chairman of President Bush's foreign-intelligence advisory board and former CIA deputy director Admiral Bobby Ray Inman. Before his appointment as Reagan's CIA director, the late William Casey was Wackenhut's outside legal counsel. The company has 30,000 armed employees on its payroll.

-- Inside the Shadow CIA, by John Connolly

The other person with whom Rogers claims to have discussed Kamal Adham was Sandra Charles, a former staffer on the National Security Council who left the White House at approximately the same time Rogers did in order to work for the International Planning and Analysis Center, a consulting firm headed by Frank Carlucci, the former Deputy Director of the CIA and Secretary of Defense. Like Bamieh, Charles had a background in the Middle East. (16)

-- The BCCI Affair, A Report to the Committee on Foreign Relations

The Carlyle Group, a private massive equity firm, the 12th largest defense business with an obscenely high profit margin, is a business "arrangement" between the Bush and Bin Laden families, wealthy Saudis, former British Prime Minister John Major, James Baker III, Afsaneh Masheyekhi, Frank Carlucci, Colin Powell, other former US Government administrators, and Madeleine Albright’s daughter. The Carlyle Group is the ‘gatekeeper’ to the Saudi investment community. It owns 70 percent of Lockheed Martin Marietta, the largest military contractor in the US, and because Carlyle is privately owned, has no scrutiny or accountability whatsoever. A journalist who calls himself ‘a skunk at the garden party’ described investigating the Carlyle Group, he said ‘it’s like shadow boxing with a ghost’. The Group hires as lobbyists the best known politicians from around the world, in order to influence the politics of war, and privately profit from their previous public policies. The conflict of interest is obvious: President George W. Bush is creating wars as his father, former President George Bush, is globally peddling weapons and "protection". Lockheed Martin Marietta now owns Sandia Laboratories, a private contractor that makes the trigger for nuclear weapons, with a Sandia laboratory facility across the street from Los Alamos and Livermore National Laboratories, where the nuclear bombs are made.

-- Depleted Uranium: The Trojan Horse of Nuclear War, by Leuren Moret

Frank C. Carlucci: Then: former secretary of defense, national security advisor; Now: chairman, Carlyle Group; ex-chairman, BDM

-- Slick Deals: Bush Advisers Cashed In on Saudi Gravy Train, by Maggie Mulvihill, Jack Meyers and Jonathan Wells

A collegiate wrestler at Princeton, class of 1952, with his slight frame and competitive spirit, Carlucci was, in the words of his father, "a tough little monkey." On the Princeton wrestling team, he met Donald Rumsfeld, with whom he forged a longtime friendship. Another classmate was none other than James Baker. [18] Both Carlucci and Rumsfeld went on to become secretaries of defense, Carlucci after having been brought in by Ronald Reagan as assistant to the president for national security affairs to clean up the Iran-contra scandal.

By the time Carlucci joined Carlyle in 1989, the Cold War was drawing to a close and the entire defense industry was contracting rapidly, thereby earning the disfavor of Wall Street. Dozens of large firms were for sale, their stock prices weak. Even Carlyle's critics acknowledge that Carlucci's decision to move into the defense sector at this time was a brilliant piece of contrarian strategy. Still, Carlyle was not the only firm bidding for defense companies, and if a buyout firm really wanted to make money, it had to avoid getting caught up in Wall Street feeding frenzies with lots of bidders jacking up the price. "Get into auctions -- that's the way to lose a lot of money," Rubenstein explained. [19]

Fortunately for Carlyle, Carlucci sat on the boards of no fewer than thirty-two companies and organizations [20] and thus enjoyed the inside track over an ordinary executive to reach a CEO interested in selling parts of his company. "Frank gave us the credibility to avoid full-scale auctions," Rubenstein says. [21] Thanks to the influential friends of Carlucci, Baker, and Darman, more than 60 percent of Carlyle's transactions through 1998 were handled on a proprietary basis rather than through auctions. [22] Whether it was as a board member, a friend, or a former customer, Carlucci had had a close relationship with many of the companies in question. As Frank Gaffney, a former Defense Department official, put it, "The one thing that people like Frank Carlucci know how to do is to work the system." [23]

And so, over the next decade, with Carlucci leading the way, one by one Carlyle began wolfing down bargains in the defense industry. In 1990, Carlyle bought BDM, a McLean, Virginia, military consulting firm that was run by a close friend of Carlucci's named Earle Williams, for $115 million in cash and $15 million in notes and other securities. [24] In 1992, while still under Carlyle's ownership, BDM bought the Vinnell Corporation, a professional and technical services company that, among other things, trained the seventy-five-thousand-man Saudi Arabian National Guard to protect the royal family and its oil installations. [iv]

In August 1992, Carlyle bought Vought Aircraft, which makes parts for the B-2 bomber and the C-17 transport plane, for $215 million. Two months later, Carlyle bought the electronics division of General Dynamics, GDE. Less than a year after that, Carlyle purchased the military electronics division of Phillips, Magnavox, for $400 million. In 1997, it bought United Defense, the enormous manufacturer of combat vehicles, artillery, naval guns, missile launchers, and munitions, for $850 million, and in 2000, Northrop Grumman's jet parts unit. [25]

Carlyle had come from nowhere to become one of the largest defense contractors in the world. By 1993, each of its partners was making $2 million to $3 million a year. [26] [v] And along the way, David Rubenstein and two other founding partners, Dan D' Aneillo and William Conway, were becoming enormously wealthy.


But that was just the beginning. Now that the Reagan-Bush era had come to an end, David Rubenstein had his eyes on another highly prized acquisition: James A. Baker III. Carlucci had brought great stature to Carlyle, but Baker was in another league altogether. Whether it was heads of state or CEOs, there wasn't a person in the world who would refuse a call from Baker. "I admired Jim Baker," says Rubenstein. "I thought since World War II, he was one of the two most successful people in a nonelective position -- the other being Henry Kissinger. He had held three jobs and he had done all of them spectacularly well. I knew he could give us credibility overseas, so we approached him." [27]

As a former White House chief of staff, secretary of the treasury and secretary of state, statesman, and confidant of George H. W. Bush, Baker was assessing what he was going to do for his next act. If he signed on, Carlyle could go global. It could take what it had done in defense and replicate it in other sectors, on other continents.

And so, in early 1993, not long after Baker left office, Rubenstein met him at his home in the exclusive Foxhall section of Washington. Even though Carlyle had come a long way with Carlucci, it was still a small firm with only about twenty-five people. "I'd say Baker was skeptical," Rubenstein recalls. "His attitude was, 'Who are you guys? You're not exactly Goldman Sachs.'"

If Baker was reticent about joining Carlyle, it was not because he was averse to cashing in on the Gulf War. At roughly the same time, in April 1993, he accompanied former president Bush and two of his sons, Marvin and Neil, on a trip to Kuwait. According to an article by Seymour Hersh in the New Yorker, Baker stayed in Kuwait for meetings in which he represented Enron, the Houston oil company, which was bidding to rebuild a Kuwaiti power plant. [vi] Even though Enron's bid was characterized as "fatally flawed," the article said, it was taken seriously by the powers that be in Kuwait because of "pressure" from the ruling al-Sabah family to compensate Baker for his services during the Gulf War. [28]

The trip demonstrated the kind of cachet Baker had that an ordinary businessman didn't. To woo the former secretary of state, Rubenstein went first to Richard Darman, who had served as Baker's deputy when Baker was Reagan's chief of staff and at the Treasury Department when Baker was its secretary. After one of the most dazzling non-elective careers in the history of American politics, Baker became one of just seven partners at Carlyle. "I have run five presidential campaigns," he told the Financial Times. "I have run the Treasury. I have run the White House twice, and I have run the State Department. I don't want to manage." [29] As usual, Baker took full advantage of his new opportunity: not only did he join Carlyle, but his law firm, Baker Botts, also won Carlyle as a prized client. [30] Darman was so entranced with the possibilities that Carlyle offered that in the end he joined the firm as well.

Carlyle was not the only investment firm to bring in high-powered politicians, of course. In 1988, David Stockman, Ronald Reagan's budget director, had joined the Blackstone Group. Years later, Henry Kissinger joined the firm of Hicks, Muse, Tate & Furst, which itself was closely connected to George W. Bush. But Carlyle was developing the practice of access capitalism into an art form.

Getting James Baker on board had been an extraordinary coup, but in 1995, Rubenstein topped even that by persuading former president George H. W. Bush to join Carlyle as a senior adviser. Later, former prime minister John Major joined as well. For good measure, Carlyle added prominent Democrats such as former Speaker of the House Tom Foley and Arthur Levitt, former head of both the Securities and Exchange Commission and the American Stock Exchange. [31] [vii]

Rubenstein argues that the role played by these high-profile officials in Carlyle has been wildly exaggerated by the press. Carlyle, he points out, has 320 deal makers -- nearly three times as many as the next largest firm. And once they had joined the firm, as Rubenstein tells it, these high-profile statesmen didn't really do that much. "We would have lunches or dinners with prospective investors," he says. "We would talk to investors and Baker would talk about the world and that would be it. He didn't negotiate deals. He would meet with prospective investors and not ask for money."

Likewise, Rubenstein says Bush was not directly involved in fundraising. "Bush's speeches are about what it's like to be a former president, and what it's like to be the father of a president. He doesn't talk about Carlyle or solicit investors."

Of course, just showing up was all that was necessary. [viii] particularly when Bush and Baker went to visit the House of Saud in Saudi Arabia on behalf of Carlyle.


Rubenstein takes umbrage when asked about the firm's relationship with the Saudis, which he characterizes as virtually nonexistent. "The implication is that we have so much Saudi business," he says. "Actually, we have no investments in Saudi Arabia and never have." [32]

Maybe. But a look at the many defense companies Carlyle has bought and sold shows that the investment firm has had a long and lucrative history with the Saudis. The Carlyle Group was not just the most prominent outpost for Bush and his allies in the private sector, it was also where the House of Saud and the House of Bush really did business.

Carlyle's first major transaction with the Saudis took place in 1991 when Fred Malek steered Prince Al Waleed bin Talal, a flamboyant thirty-five-year-old Saudi multibillionaire, [33] [ix] to the firm for a deal that would enable him to become the largest individual shareholder in Citicorp, which had seen a sharp fall in its stock price. At the time, Carlyle's partners said they were selected by Al Waleed because they knew the right people in the right places. Suddenly, Carlyle, a nonentity compared to the huge Wall Street firms, had a name. "Little-Known Carlyle Scores Big," read the headline in the New York Times. [34]

Al Waleed's investment would prove enormously profitable. By 1998, his $590 million in stock was worth as much as $7 billion. [35] Soon, the amity between the House of Saud and Carlyle became a two-way street. In bringing together Baker, Darman, Carlucci, and later, former president Bush, Rubenstein had reassembled the team that had helped set up the AWACS deal with Bechtel and Saudi Arabia in the early days of the Reagan-Bush era. A decade earlier they had turned on the spigot for tens of billions of dollars of arms sales to the Saudis.

Carlyle's companies still had to compete with rivals for Saudi defense contracts, but now they had extraordinary advantages. In addition to its familiarity with the corridors of power, Carlyle's trump card was that it could offer members of the royal family or other wealthy Saudis equity in the Carlyle funds that owned defense companies. That way, the Saudis could share in the profits instead of seeing the money leave the kingdom to go to the Bechtels of the world or to rival defense companies. "They knew that the Saudis were tired of relying on foreigners and having all their money leave the country," says an American oil executive with ties to the Saudi royal family. "That's where Carlyle made its claim to fame." [36] [x]

As world leaders who had defended the Saudis during the Gulf War, Bush, Baker, and Major were soon becoming star rainmakers for Carlyle, and the firm's practices allowed them to do so without sullying their hands by asking for money directly. On several occasions, Bush, Baker, and Major flew to Saudi Arabia on behalf of Carlyle to meet with and speak before members of the royal family and wealthy merchants such as the bin Ladens and the bin Mahfouzes. [37] "Carlyle wanted to open up doors," one observer told the Financial Times, "and they bring in Bush and Major, who saved the Saudis' ass in the Gulf War. If you got these guys coming in ... those companies are going to have it pretty good." [38]

As elsewhere, it was standard procedure for former president Bush to give speeches before potential investors. [39] After Bush's speeches, in which he never mentioned investing in Carlyle, CEO David Rubenstein and his fundraising team went in for the money. The Saudis could not have been more receptive.

According to a source close to the Saudi government, the royal family viewed investing in the Carlyle Group as a way to show their deep gratitude to President Bush for defending the Saudis in the Gulf War. "George Bush or James Baker would meet with all the big guys in the royal family," the source says. "Indirectly, the message was, 'I'd appreciate it if you put some money in the Carlyle Group.'" From the Saudi point of view, the source adds, "There is nothing wrong with this. You are basically marketing the relationship you have developed." [40]

And so Carlyle became the vehicle through which the highest officials of the Reagan-Bush era reaped their rewards. Prince Bandar himself, the Washington Post reported, was among those who invested. [41] In 1995, the bin Ladens joined in, investing $2 million in the Carlyle Partners II Fund, a relatively small sum that was widely reported to be part of a larger package. And according to Cherif Sedky, Abdulrahman and Sultan bin Mahfouz, two sons of Khalid bin Mahfouz's, became investors that year as well by making an investment "in the neighborhood of $30 million." [42] [xi] Carlyle put a first cousin of the bin Mahfouzes, a Saudi investment manager named Sami Ba'arma who oversaw their finances, on one of its boards. [43]

Now that key Saudis, who had the blessing of the royal family, shared in the profits, it was not difficult for Carlyle's defense companies to win contracts in Saudi Arabia. In the wake of the 1991 Gulf War, while under Carlyle ownership, defense contractor BDM won contracts for technical support services for the Royal Saudi Air Force [44] and computer systems in Kuwait. [45] In 1993, BDM opened an office in Riyadh and expanded its presence to support its growing interests in the kingdom. [46] In 1994, it won lucrative new contracts to provide technical and logistics support to the Saudi Air Force. [47]

In 1995, after a visit to the kingdom by Carlucci, Vinnell won a $163-million contract to modernize the Saudi Arabian National Guard. [48] According to Associated Press accounts, under a new contract with the Saudis, Vinnell, which was serving as part of the personal bodyguard unit for Crown Prince Abdullah bin Abdul Aziz, the designated heir to King Fahd, agreed to "share the proceeds, taking on a brother-in-law of the crown prince as a joint-venture partner. Saudi Arabia's princes often make government contracts a family affair." [49] In July 1995, BDM announced its earnings per share had increased 46 percent, in large measure due to the company's expansion in Saudi Arabia. [50] In all, BDM alone had more than $5 billion in contracts with the Saudis over two decades. [51]

In 1994, the Saudis spent $6 billion on fifty U.S.-made commercial airliners, the tail sections of which were made by Carlyle's Vought Aircraft. [52] United Defense, which Carlyle had bought in 1997, quietly operated joint ventures in Saudi Arabia. [53] Among many other items, United Defense manufactured the Bradley Fighting Vehicle, which forms the core of American mechanized forces, two thousand of which were used in the 1991 Gulf War. [xii] Through a joint venture with the Saudi government, United Defense provided training and maintenance for the Bradleys that were purchased by the Royal Saudi Land Forces after the Gulf War. [54]

As a private equity firm, Carlyle's goal was not long-term profits for the companies it acquired. Rather, its strategy was to buy companies cheaply, rebuild them to the highest levels of profitability possible, and sell them within three to five years -- at huge margins. Thanks in large part to the Saudi contracts, its defense portfolio performed handsomely. When they were sold off, the defense deals Carlucci had brought in to the firm reaped some $2 billion in profits. [55] This for a company that, according to Rubenstein, had no investments in Saudi Arabia.


[i] The term access capitalist was first used in a 1993 New Republic piece by Michael Lewis that was one of the first serious critiques of Carlyle.
[ii] Baker became a full partner in Carlyle, but former president George H. W. Bush did not. He was paid by the appearance -- what was reported to be $80,000 to $100,000 per speech. He was allowed to reinvest his earnings in Carlyle funds, though his investments did not end up in companies that do business with the U.S. government.
[iii] At the time, Caterair was carrying an enormous amount of debt financing and trying to cope with unexpected changes in the airline industry that had already led to more than $263 million in operating losses. As a result of its poor performance, the company became known as Craterair, and when Bush ran for governor of Texas in 1994, he dropped his board membership from his official campaign resume.

[iv] Readers may recall that Vinnell was called in to help put down the uprising known as the Mecca Affair in 1979.
[v] According to Chris Ullman, a spokesman for Carlyle, the firm's most recent evaluation, in 2001, put Carlyle's worth at approximately $3.2 billion. Ullman added that the firm's three founding partners, owned substantially more than 50 percent but less than 75 percent of that. Using the 2001 evaluation, that would mean that the average share for each of the three founding partners would be worth between $533 million and $800 million.
The remaining equity in Carlyle, if divided equally among the twenty other partners, would yield an average of $40 million to $80 million per partner. Ullman points out, however, that the shares are not divided equally among the partners, and he notes that Carlyle is highly illiquid.
[vi] Marvin Bush was representing a company selling electronic fences to Kuwait, and Neil was selling antipollution equipment to Kuwaiti oil contractors. All parties concerned insisted there was no conflict of interest. But another hero of the Gulf War, General Norman Schwarzkopf, shied away from business with Kuwait that could be characterized as war profiteering. "I told them no," he said. "... American men and women were willing to die in Kuwait. Why should I profit from their sacrifice?"
[vii] Carlyle's formula was so successful that several of its key figures left to start similar investment firms on their own. One of Carlyle's cofounders, Stephen Norris, left the firm to start Appian Group, with former secretary of state Lawrence Eagleburger as an adviser. Fred Malek went on to chair Thayer Capital Partners, and Alton Keel, the former NATO ambassador, left Carlyle to start Atlantic Partners.
[viii] Carlyle also had an advantage over its rivals when it came to pitching portfolio managers from state funds -- given that two governors were members of the Bush family. In March 1995, the University of Texas Board of Regents voted to invest $10 million in one of the Carlyle Group's funds, Carlyle Partners II, at a time when George W. Bush was the governor of Texas and had direct power over the board. In addition, the Florida State Board of Administration had placed a $200-million investment in Carlyle that had begun before Jeb Bush became governor of Florida, a relationship that continued during his administration.
[ix] Shortly after 9/11, Al Waleed offered to give $10 million to the World Trade Center victims' fund, but his gift was rejected by New York mayor Rudy Giuliani when Al Waleed suggested the United States reexamine its policy toward the Palestinians. Al Waleed had also been the subject of an earlier debacle. After taking his huge position with Citicorp, of which Diners Club was a subsidiary, he distributed Diners Club credit cards to his relatives, which is to say, the House of Saud. According to The House of Saud, by Said K. Aburish, a few months later Diners Club was faced with $30 million in charges it refused to honor. The reason was typical of the thinking of the House of Saud, asserted Aburish, in that "the recipients proceeded to use [the credit cards] without knowing that they had to pay for their purchases." As a result, the Diners Club ceased to operate in the kingdom of Saudi Arabia.
[x] The Carlyle Group also participated in what was called the Economic Offset Program, through which American defense companies selling arms to the Saudis gave back some of their revenues through contracts to Saudi businesses, many of which were connected to the House of Saud.
[xi] The Carlyle Group categorically denied that Prince Bandar or the bin Mahfouz family ever invested in Carlyle. When apprised of Carlyle's denial, Cherif Sedky stood by his original statement. "I assume that Carlyle has records of investments from somebody on the bin Mahfouz side, whether it is with Sami Ba'arma as a nominee or someone else," he said, in an email to the author.
[xii] United Defense also manufactured another weapons system named, astonishingly enough, the Crusader, as if they were oblivious to the implications of sending Crusaders into battle in the Islamic world. Given that United Defense had made billions of dollars selling tanks to the Saudis, it was not exactly a wise marketing ploy.


1. Interview with David Rubenstein.
2. Robert H. Williams, "Postscript," Washington Post, June 27, 1977, p. A 3.
3. Michael Lewis, "The Access Capitalists -- Influence-Peddling: The Next Generation; The Carlyle Group," New Republic, October 18, 1993, cover story.
4. Williams, "Postscript," p. A 3.
5. Greg Schneider, "Connections and Then Some; David Rubenstein Has Made Millions Pairing the Powerful with the Rich," Washington Post, March 16, 2003, p. F1.
6. Lewis, "The Access Capitalists."
7. Ibid.
8. Interview with David Rubenstein.
9. Carlyle website, http://www.thecarlylegroup.corn/eng/ind ... ry495.html.
10. Melanie Warner, "What Do George Bush, Arthur Levitt, Jim Baker, Dick Darman, and John Major All Have in Common?" Fortune, March 18, 2002, p. 104.
11. Tim Shorrock, "Crony Capitalism Goes Global," Nation, April 1, 2002.
12. Interview with David Rubenstein.
13. Christopher Connell, "Malek Juggles Jobs to Plan Economic Summit," Associated Press, Apri1 21, 1990.
14. Beth Ewen, "Malek Brings Cargo of Controversy to NWA," Minneapolis-St. Paul City Business, October 9, 1989, p. 1.
15. David Rubenstein, speech to the Los Angeles County Employees Retirement Association, .
16. David Ignatius, "Bush's Fancy Financial Footwork," Washington Post, August 6, 2002, p. 15.
17. "Profile on Frank Carlucci: From the Knives of the Congo to Darkest Pentagon," Times (London), November 8, 1987.
18. Lewis, "The Access Capitalists."
19. Ibid.
20. Ibid.
21. Interview with David Rubenstein.
22. Erica Copulsky, "Gadzooks! -- The Super LBO Players Increasingly Are Those That Are Expanding Their Reach into New Product Lines or Geographic Regions," Investment Dealers Digest, August 17, 1998.
23. Lewis, "The Access Capitalists."
24. Ibid.; and Alison Leight Cowan, "Carlyle Getting Part of Ford Aerospace," New York Times, September 19, 1990, p. D5.
25. Katie Fairbank, "Carlyle Builds Defense Portfolio," Dallas Morning News, June 18, 2000; and PR Newswire Association, October 27, 1994.
26. Leslie Wayne, "Elder Bush in Big G.O.P. Cast Toiling for Top Equity Firm," New York Times, March 5, 2001, p. A 1.
27. Interview with David Rubenstein.
28. Hotline, August 20, 1993; and Louis Dubose, "O Brother, Where Art Thou?" Austin Chronicle, March 16, 2001.
29. Alan Friedman, "Big Names at Little Known Investment House," Financial Times, September 30, 1993, p. 27.
30. Baker Botts website,
31. Michael Carroll, "Doing the Washington-Wall Street Shuffle," Institutional Investor, September 1996, pp. 48-66.
32. Interview with David Rubenstein.
33. Said K. Aburish, The Rise, Corruption and Coming Fall of the House of Saud, p. 82.
34. Kenneth Gilpin, "Little-Known Carlyle Scores Big," New York Times, March 26, 1991, p. D 1.
35. Nigel Dempster, "Desert Storm Costs Saudi Prince £76M," Daily Mail, August 6, 1998, p. 33.
36. Interview with Texas oil executive.
37. Interview with Chris Ullman, vice president, Carlyle Group; and Cherif Sedky, attorney for the bin Mahfouz family, via email.
38. ... +and+Saudi.
39. Interviews with Chris Ullman and David Rubenstein.
40. Interview with oil analyst.
41. Robert G. Kaiser, "Enormous Wealth Spilled into American Coffers," Washington Post, February 11, 2002, p. A 17.
42. Interview by email with Cherif Sedky.
43. Ibid.
44. Laura Litvan and Jay Mallin, "Race Is On for Kuwait Projects," Washington Times, March 5, 1991, p. A 1.
45. PR Newswire, June 29, 1993.
46. "BDM Seeks to Buy 25pc of ISE," Moneyclips Ltd., April 10, 1995.
47. PR Newswire, October 27, 1994.
48. PR Newswire, May 3, 1995.
49. Charles J. Hanley, "Saudi Guard Gets Quiet Help," Associated Press, March 22, 1997.
50. PR Newswire, July 20, 1995.
51. Martin Walker and David Pallister, "Saudi Bomb Targets U.S. Military Role," Guardian, November 14, 1995, p. 13.
52. Richard Oppel, "Aerospace Deals Could Aid Area," Dallas Morning News, February 17, 1994, p. 1 D.
53. "Corporate Profile for United Defense," Business Wire, February 27, 1998.
54. Shorrock, "Crony Capitalism Goes Global."
55. Warner, "What Do George Bush, Arthur Levitt, Jim Baker, Dick Darman, and John Major All Have in Common?" p. 104.
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Re: House of Bush, House of Saud, by Craig Unger

Postby admin » Wed Nov 27, 2013 5:00 am


Lucrative as the House of Bush's relationship was with the Saudis through Carlyle, it did not come without a price. After all, the ruling Saudis were still the custodians of Wahhabi Islam, and now its most militant adherents, led by Osama bin Laden, were on the warpath. At precisely 11:30 a.m. on November 13, 1995, just before the midday call to prayers in Riyadh, a car bomb exploded outside the offices housing the Military Cooperation Program, a nondescript structure just off Thirty Street, which has been described as Riyadh's answer to Rodeo Drive. [1] The explosion killed seven people -- five of them Americans -- and wounded sixty others, among them several American advisers with Vinnell, the mysterious military consulting firm that trained the Saudi Arabian National Guard (SANG). The rather anonymous-looking building was staffed in part by nonuniformed Americans and its offices were shared by SANG and Vinnell.

As the Bush secretary of defense during Desert Shield/Desert Storm (1990-91), Cheney also directed special operations involving Kurdish rebels in northern Iraq. The Kurds' primary source of income for more than 50 years has been heroin smuggling from Afghanistan and Pakistan through Iran, Iraq, and Turkey. Having had some personal experience with Brown and Root, I took note when the Los Angeles Times observed that on March 22, 1991, a group of gunmen burst into the Ankara, Turkey, offices of the joint venture, Vinnell, Brown and Root and assassinated retired Air Force Chief Master Sergeant John Gandy.

-- Crossing the Rubicon, by Michael C. Ruppert

The bombing could not definitively be pinned on bin Laden, but his fingerprints were everywhere. The techniques behind it -- a powerful car bomb with smaller antipersonnel devices, the types of fuses and explosives -- were identical to those used in his terrorist training camps in Sudan and in Pakistan. [2] Bin Laden himself described the attack as "praiseworthy terrorism." [3] Several militant Islamic fundamentalist groups -- apparently using bogus names -- claimed credit for it and cited him as their major influence.

In striking their most serious blow against the House of Saud since the Mecca Affair in 1979, militant Islamists had hit a target of extraordinary symbolic value -- an American-staffed, private military facility at the heart of the supposedly impregnable al- Saud family, a building that represented the ties between the House of Saud and its mighty American defenders. And in addition, knowingly or not, the bombers had attacked a company linked to George H. W. Bush and James Baker, who had sent the infidel Americans to Saudi Arabia in the first place.

In response to a terrorist attack so pregnant with meaning, both the House of Saud and the House of Bush took the same course of action: they acted as if it had no significance whatsoever. Prince Bandar categorically declared that Saudi "dissidents did not cause the car bombing." [4] Later, he explained, "Islamic radicals are very, very small and looked upon in this country as outcasts. ... Islamic extremists are not a threat to the stability of the country." [5] Likewise al-Hayah, a Saudi publication owned by another son of Prince Sultan, Khalid bin Sultan, and something of a mouthpiece for the defense minister, asserted, "No one believes that the blast has internal connotations." [6]

The House of Bush took the same tack. In an appearance on CBS's This Morning, James Baker blandly told newscaster Paula Zahn, "You see a lot of terrorism in that part of the world, but very little of it in Saudi Arabia. ... We'll just have to wait and see who's responsible." [7] Baker was interviewed because of his weighty experience in the Middle East. But strikingly, in his CBS appearance, he was not identified as a partner in Carlyle, which owned Vinnell's parent company, BDM. Nor did he acknowledge that he had any relationship whatsoever to the company that had been bombed. Likewise, Carlyle itself refrained from issuing a statement or an expression of condolences to the families of the victims, even though several of Vinnell's employees had been wounded in the attack. [8] Carlyle's companies had billions of dollars in business with the Saudis. Its interests were best served by keeping a low profile. Discretion was the order of the day.


The Clinton administration, however, did not have the luxury of ignoring the Riyadh bombing. For nearly two decades, America had quietly served as the military guardian of Wahhabi Islam. But how could that protection continue now that the more militant neo Wahhabis had declared war on America?

In fact, the Clinton administration's fight against terrorism had actually begun even before the Riyadh bombing. In June 1995, Clinton signed a presidential directive reorganizing the management of federal agencies in the event of a terrorist attack. [9] In October, he ordered the Departments of Justice, Treasury, and State, the CIA, and the National Security Council to integrate their efforts against money laundering for terrorists. [10] And immediately after the attack in Riyadh, President Clinton sent a dozen FBI agents to Saudi Arabia and insisted on being informed of the investigation into "this hideous act." [11]

Initially, Clinton counterterrorism officials naively saw bin Laden as merely a financier of terror. [12] "At first we thought that by watching him we would find out who the real bad guys were, because they would be coming to him for money," says Steven Simon, the senior director for transnational threats on the National Security Council in the Clinton administration. [13]

But the attacks escalated. Just six days after the Riyadh bombing, on November 19, 1995, the Egyptian embassy in Pakistan was bombed, killing sixteen people and wounding sixty. [14] The bombing was said to have been the handiwork of bin Laden's Egyptian colleague Ayman al-Zawahiri. A year earlier, Pakistani prime minister Benazir Bhutto had extradited Ramzi Yousef, a conspirator in the 1993 World Trade Center bombing, and more than a dozen Egyptian militants, to the United States and Egypt respectively. [15] Authorities believe that Bhutto's campaign against terrorism was the motive behind the bombing.

On June 25, 1996, a truck bomb with five thousand pounds of explosives rocked the Khobar Towers military housing complex in Dharhan, Saudi Arabia, killing dozens of people, including nineteen American soldiers, and wounding more than five hundred others. The blast left a crater thirty-five feet deep and eighty-five feet across. Again, bin Laden was suspected. [16] [i]

Soon the Clinton administration realized that bin Laden had radically redefined the way terrorism worked. He was not just underwriting bombings, he was also running huge training camps for terrorists and had set up a network to finance them. With his Al Qaeda operatives, he could ship massive quantities of arms across international borders and use suicide bombers to engage in sophisticated feats of asymmetrical warfare. He was even trying to obtain materials for nuclear weapons and to develop chemical arms. [17] Moreover, he and his network embodied a new, transnational entity, an Islamic fundamentalist army that was state-free. With bin Laden in the saddle, no longer were terrorists dependent on state sponsors. In Sudan, and later in Afghanistan, it was he who helped out the government financially not the other way around.

As a result, the administration's approach to fighting terrorism changed dramatically. "Clinton immediately understood the transnational nature of terrorism," says Will Wechsler, who served as director for transnational threats on Clinton's National Security Council. [18] The CIA, which heretofore had focused solely on a country-by-country approach to terrorism, created its first "virtual" station, the UBL [ii] station, targeting Osama bin Laden and Al Qaeda. [19] Richard Clarke, a career civil servant with a rare facility for navigating difficult bureaucracies, was appointed chairman of the Coordinating Sub-group (CSG) to centralize control of various interagency groups -- in effect becoming the nation's first counterterrorism czar. National Security Council "threat" meetings were held three times a week. Clinton put billions into stockpiling antidotes and vaccines against a possible bioterrorism attack.

In early 1996, the Clinton administration pulled the U.S. embassy staff out of Sudan and urged all other Americans to leave the country. It demanded that the Sudanese turn over information on bin Laden's finances, give it access to terrorist training camps, and that the Sudanese expel bin Laden. Conservative critics often attack the Clinton administration for missing an opportunity to capture bin Laden when the Sudanese allegedly offered to turn the terrorist over to the United States in March 1996. But in fact, the Sudanese had offered to send him back to Saudi Arabia, not to the United States. However, as Daniel Benjamin and Steven Simon, both of whom served on Clinton's National Security Council, report in The Age of Sacred Terror, there was absolutely no likelihood that the Saudis would take him. "Riyadh had stripped bin Laden of his citizenship in 1994 for a reason. It would do everything it could to keep him out of the kingdom, where he would have become a magnet for opponents of the monarch. As the scion of one of Saudi Arabia's wealthiest clans, bin Laden was untouchable. U.S. officials approached the Saudis, but were turned down cold. ... The issue came up again several times over the next few years, but the kingdom's aversion to taking custody of bin Laden remained a stumbling block." [20] Bin Laden ended up leaving Sudan in 1996 for Afghanistan, where the Taliban served as his host.


But Clinton was up against more than just Osama bin Laden. At times, partisan resistance from Republicans and Saudi Arabia's lack of cooperation thwarted crucial counterterrorism measures. An early example was the administration's bill to bar foreign countries and banks from U.S. financial markets unless they cooperated with investigations into money laundering. The legislation was bitterly opposed by the banking industry, which objected to the new constraints it would impose on financial institutions, and as a result it was killed by the chairman of the Senate Banking Committee, Phil Gramm, a Republican from Texas, who called the counterterrorism efforts "totalitarian." [21] The right-wing Gramm added that he killed the bill because he was a "civil libertarian," a label that was wildly incongruous with his political history.

Worse, Clinton never had the warm relationship with the Saudis that Bush enjoyed, especially once he began pressuring them to clamp down on terrorism. [22] [iii] Wary of having a visible American presence on the streets of Riyadh after the November 1995 bombing, the Saudis conducted their investigation behind closed doors. Five months later, they announced that four suspects had been arrested. But before American authorities could interrogate them, the Saudis beheaded the four men. [23]

After the Khobar Towers bombing in 1996, Clinton's national security adviser, Sandy Berger, repeatedly met with Prince Bandar to press for better Saudi cooperation with the FBI. [24] But the Saudis still refused to allow the FBI access to the suspects or relevant materials and tried to blame Iran for the bombing. Berger got nowhere. According to Benjamin and Simon, Bandar's unending evasions were so frustrating that Berger described them as "Groundhog Day" rituals, a reference to the Bill Murray movie in which one day repeats itself endlessly.

At the same time Prince Bandar was stalling Berger, however, he had secretly established a back channel to FBI director Louis Freeh. A 1993 Clinton appointee, Freeh had never enjoyed a good relationship with the White House, partly because of the bureau's disastrous failure in counterterrorism. [25] According to Benjamin and Simon, Bandar eagerly exploited Freeh's well-known antipathy toward Clinton to "undercut U.S. efforts to pursue the investigation. " [26]

Notwithstanding Berger's repeated efforts to get Saudi help, Bandar told Freeh again and again that the White House had absolutely no interest in the investigation whatsoever. But President Clinton kept after the Saudis. When he met with Saudi crown prince Abdullah in 1998, [iv] Clinton warned Abdullah that Saudi American relations would suffer if the Saudis did not cooperate on the Khobar Towers investigation. [27] Nevertheless, Bandar continued to tell Freeh that he was the only one in Washington who cared about the Americans who had died in Khobar Towers.

In response, Freeh did something highly irregular. He reached out to former president Bush, knowing full well how Bush was revered by the Saudis, and asked Bush to be his secret emissary to get the Saudis to cooperate with the investigation. [28] Later, Bandar invited Freeh to his estate in northern Virginia and told him the FBI would be allowed to watch through a one- way mirror while Saudis interrogated the suspects. According to Elsa Walsh of the New Yorker, Freeh credited this sudden breakthrough not to the Clinton administration's efforts, but to former president George H. W. Bush. [29]

Whether it was Bush's phone call or pressure from Clinton that actually triggered the Saudi cooperation is not entirely clear. But one thing was certain: the House of Saud preferred Bush, not Clinton, in part because the Democratic administration was violating the unwritten rule about Saudi-American relations; Don't ask any questions about what really goes on in Saudi Arabia. [30]


As subsequent events and revelations have made clear, the Saudis had reason to fear the inquiries of the Clinton administration. There was a lot to hide. In the eighties, the House of Saud had encouraged donations to charities that funneled tens of millions of dollars to bin Laden's Afghan Arabs during the Afghanistan War. But over the years, as Al Qaeda evolved from Afghan Arab freedom fighters into sophisticated anti-American terrorists, Osama bin Laden had effectively hijacked countless millions to fund terrorism. As a report sponsored by the Council on Foreign Relations later put it, "These widely unregulated, seldom audited, and generally undocumented practices have allowed unscrupulous actors such as al-Qaeda to access huge sums of money over the years." [31]

The funds regularly flowed through Saudi Arabia's biggest bank, Khalid bin Mahfouz's National Commercial Bank. According to court documents filed in a $1-trillion lawsuit by more than four thousand relatives of the victims of 9/11 against hundreds of wealthy Saudis and others who had allegedly aided bin Laden, "A bank audit of NCB in 1998 showed that over a ten year period, $74 million was funneled by its Zakat Committee to the International Islamic Relief Organization, a Muslim charity headed by Osama bin Laden's brother in law." [32] Congressional testimony by Vincent Cannistraro, former chief of operations for the CIA's Counterterrorism Center, which was also cited in the court case, adds that much of "the money is paid as 'protection' to avoid having the enterprises run by these men attacked" by Al Qaeda terrorists. [33] Money transfers through NCB were allegedly used to finance a number of bin Laden's terrorist acts, including the attempted assassination of Egyptian president Hosni Mubarak in 1995. [34] Mubarak was constantly at war with Islamic militants in his own country and in Sudan.

The National Commercial Bank was not the only institution tied to the bin Mahfouz family alleged to have aided terrorist funding. In 1991, Khalid bin Mahfouz had created the Muwafaq (Blessed Relief) Foundation, hoping, according to a spokesman, "to establish an endowment like the Rockefeller Foundation to give grants for disaster relief, education, and health." [35] His son, Abdulrahman bin Mahfouz, had become a director of it. However, the U.S. Treasury Department later concluded that Muwafaq transferred "millions of dollars from wealthy Saudi businessmen to bin Laden." [36] [v]

Even though the bin Laden family claimed to have cut off ties with their errant terrorist sibling, that was not clearly the case for the entire extended family. According to Carmen bin Laden, an estranged sister-in-law of Osama's, several members of the family may have continued to give money to Osama. [37] At least one member of the family, Osama's brother-in-law Mohammed Jamal Khalifa, was a central figure in Al Qaeda and was widely reported to be linked to the 1993 World Trade Center bombing and was alleged to have funded a Philippine terrorist group.

Two other relatives were key figures in a charitable foundation linked to Osama. The American branch of the World Assembly of Muslim Youth (WAMY) was directed by Abdullah bin Laden, who lived in Falls Church, Virginia, near Washington, D.C. His brother Omar bin Laden was also on WAMY's board. WAMY members have denied that the organization has been involved in terrorist activities. But the charity, which published writings by Islamic scholar Sayyid Qutb, one of bin Laden's intellectual influences, was cited by Indian officials and the Philippine military for funding terrorism in Kashmir and the Philippines. "WAMY was involved in terrorist support activity," says a security official who served under George W. Bush. "There's no doubt about it." [38] FBI documents marked "Secret" and coded "199," indicating a national security case, show that Abdullah bin Laden and Omar bin Laden were under investigation by the FBI for nine months in 1996 and that the file was reopened on September 19, 2001, eight days after the 9/11 attacks. [39]

Then there was the Saudi royal family itself. According to court documents in the 9/11 families' lawsuit, after the Gulf War in 1991, Saudi defense minister Prince Sultan, the father of Prince Bandar, supported and funded several Islamic charities, including the International Islamic Relief Organization, that allegedly provided funds to Osama bin Laden and Al Qaeda totaling at least $6 million. [40] Sultan's attorneys acknowledge that for sixteen consecutive years he approved annual payments of about $266,000 to the International Islamic Relief Organization, a Saudi charity whose U.S. offices were raided by federal agents. [41] [vi]

Finally, there was Prince Bandar. Saudi royalty, including Bandar and his wife, frequently came to the aid of Saudis who had financial trouble when they were abroad. As first reported by Michael Isikoff of Newsweek, in 1998 when Osama Basnan, a Saudi living in California, pleaded for financial assistance from the Saudi embassy in Washington because his wife was suffering from a thyroid condition, Prince Bandar wrote a check for $15,000. In addition, his wife, Princess Haifa bint Faisal, began sending the couple a stipend of roughly $2,000 a month. [42] According to the Baltimore Sun, over a four-year period the sum given by Bandar and his wife came to roughly $130,000. [43] As it turned out, Basnan was said to be an Al Qaeda sympathizer and signed the money over to another Saudi who had moved to the United States, Omar al-Bayoumi. Al- Bayoumi also had Al Qaeda connections -- and he had other things in mind for Bandar's funds. In turn, al-Bayoumi subsidized two other newly arrived Saudis, Nawaf Alhazmi and Khalid Almidhar, two of the men who helped hijack American Airlines Flight 77, which crashed into the Pentagon in the September 11 plot. What had happened was undeniable: Funds from Prince Bandar's wife had indirectly ended up in the hands of the hijackers.

In all these instances, the Saudi royals and the Saudi merchant elite argue, sometimes persuasively, that they did not knowingly aid terrorists or their sympathizers. Given Osama bin Laden's hatred of the royal family and their wealthy merchant allies, it would be counterintuitive to think they would do so. "Who do you think Osama bin Laden really wants to destroy most?" argues Saudi oil analyst Nawaf Obaid. "It's the royal family and billionaires like bin Mahfouz. It's laughable to think that they would intentionally aid bin Laden." [44]

"People say we pay [Al Qaeda] off, but that's simply not the case," adds Nail al-Jubeir, a spokesman for the Saudi embassy in Washington, D.C. "Why would we support people who want to overthrow our own government?" [45] The problem, al- Jubeir explains, was in not having tough regulatory measures to govern the flow of money through these charities, a task that was especially difficult as money circulated through international channels. It was, he adds, essentially a case of innocent contributions gone wrong.

It should certainly be said that the allegations against the Saudi merchant elite and various members of the House of Saud are precisely that -- allegations. Charges that many of them knowingly facilitated the transfer of funds to terrorists have been brought in court and have not been proven.

In fact, in November 2003, the suits against Prince Turki and Prince Sultan were thrown out when U.S. District Court judge James Robertson ruled that there was not sufficient evidence to suggest that the Saudi princes had intentionally funded 9/11. "Plaintiff's allegations that Prince Turki or Prince Sultan funded those who carried out the September 11th attacks would stretch the causation requirement ... not only to the farthest reaches of the common law but perhaps beyond, to terra incognita," Robertson wrote. [46]

"My own view is that extraordinary claims require extraordinary evidence," says Will Wechsler. But, he adds, "The search for the sin of commission makes people overlook the vast sin of omission, which is definitely true. These guys did not pay any serious attention to this issue. They did not give us all the cooperation we needed. There was no real political will to stop this. That's clear." [47]

In fact, whenever the United States tried to investigate these charitable donations or looked at financial institutions such as the National Commercial Bank, the House of Saud performed a well-rehearsed rendition of Captain Renault in Casablanca proclaiming himself "Shocked! Shocked!" that funds were flowing to terrorists. According to counterterrorism czar Richard Clarke, when U.S. counterterrorism officials tried to trace terrorist funding through Islamic charities, the Saudis inevitably came back with one of two answers. "They said we need more information from you, or that they had looked and hadn't found anything. " [48]

Clarke suggests that the lack of cooperation from the Saudis occurs because they have responded to Al Qaeda in different ways. Some actively support the terrorists while some cooperate with Al Qaeda in the hope that the group will leave them alone. Others merely resent American interference in what they see as their own domestic issues. "Some of them were clearly sympathetic to Al Qaeda," Clarke says. [49]

But the larger point is that the complex, impenetrable, and unregulated system of Islamic charities actually enabled the House of Saud to have it both ways. Through their generous charitable donations, they could both establish their bona fides as good Muslims and even buy "protection" from militants. And thanks to the unregulated nature of the charities, they could do so in a way that gave them plausible deniability to the West.

In addition, many things suggest that the House of Saud was not nearly so naive as it professed to be. Despite its pronouncement that the 1995 Riyadh attack was not the work of dissidents, the Saudis clearly knew better. Privately, Minister of Intelligence Prince Turki had even told Egyptian authorities that bin Laden's Afghan Arabs were behind the attack, probably with the help of accomplices who had infiltrated the Saudi National Guard. [50]

In fact, a few days after the bombing, threatening letters had been faxed to the private fax numbers of several high-level Saudi officials, including Prince Turki and Interior Minister Prince Nayef. [51] The implications were staggering. The fax numbers were for the exclusive use of the highest-ranking members of the royal family. The National Guard's sole mission was to protect the House of Saud. Terrorists had penetrated the House of Saud's last line of defense -- and the royal family clearly knew it. Moreover, there were thousands of princes in the family, and many of them were said to be privately delighted by the bombings: "A lot of the royal princes remained sympathetic to bin Laden, even after his citizenship was stripped," says Robert Baer, a former CIA case officer in the Middle East and the author of Sleeping with The Devil. "Quite a few of the junior princes hate the U.S." [52]

Some of the senior royalty may have felt the same way. According to Yossef Bodansky's Bin Laden; The Man Who Declared War on America, it was widely speculated that no less a figure than Prince Salman bin Abdul Aziz, the powerful governor of Riyadh, had advance knowledge of the 1995 bombing and allowed it to take place to solidify his political position. A brother of King Fahd and Prince Sultan's, and a member of the Sudairi Seven, Prince Salman may have hoped to use the growing Islamist violence and his putative ability to control it to advance his fortunes -- perhaps even all the way to the throne. [53]

When it came to dealing with the West, of course, the House of Saud revealed none of this internecine complexity, preferring to project the image of a stable monarchy that ruled a patriotic populace that honored its legitimacy and authority. Despite pressure from Clinton, in the end the Saudis simply declined to press any charges whatsoever against bin Laden for the 1995 Riyadh bombing and the Khobar Towers bombing on 1996. On November 5, 1998, Saudi interior minister Prince Nayef bin Abdul Aziz said, "It has been reported that the two explosions in Riyadh and Khobar were planned by Osama bin Laden. This is not true."

Nayef went further, asserting, with astonishing logic, that because the kingdom had revoked his citizenship, bin Laden was no longer a Saudi and therefore the Saudis no longer had any interest in the activities masterminded by the world's most wanted terrorist. "He does not constitute any security problem to us and has no activity in the kingdom," said Nayef. "Regarding his external activity, we are not concerned because he is not a Saudi citizen." The House of Saud failed to have bin Laden extradited from Afghanistan, where he was a guest of the Taliban, and declined to prosecute him legally. [54]

And so, the double game continued -- though by now, through his repeated bombings, bin Laden had upped the ante. Through the late nineties, cash flowed virtually unrestricted into bin Laden's and Al Qaeda's coffers as they escalated their jihad against the West. In counterterrorism circles, it was widely said that the Saudis had made deals with militant groups such as the Muslim Brotherhood and Hamas, agreeing to fund them in return for a promise not to wreak havoc on Saudi soil. [55] [vii] It was not unreasonable to ask if they were doing the same with Al Qaeda. This was the Saudi veil that the Clinton administration had to penetrate if it was to get a handle on terrorist funding.

Over time, the Clinton administration slowly began to decipher the web of international Islamic religious foundations funneling money to Al Qaeda. In 1998, according to government officials, at the behest of the Clinton administration, the Saudi government audited bin Mahfouz's National Commercial Bank and found that $3 million in bank funds that had been given to Muwafaq (Blessed Relief) allegedly ended up in bin Laden's hands. [56] [viii]

Richard Clarke pounded the table in National Security Council meetings demanding to know about Islamic charities and foundations that may have been funding Al Qaeda. [57] But the administration was not able to move fast enough.

At 5:30 a.m. on August 7, 1998, Bill Clinton was awakened unexpectedly by National Security Adviser Sandy Berger. [58] It was the eighth anniversary of the arrival of U.S. troops in Saudi Arabia leading up to the Gulf War -- or, as bin Laden would have it, the occupation of Islam's holiest sites by the Jewish and Christian Crusaders. To mark the occasion, Osama bin Laden had struck his most violent blows yet against the United States, setting off massive car bombs in front of the U.S. embassy in Dar es Salaam, Tanzania, at 10:30 a.m. local time, and then at the U.S. embassy in Nairobi, Kenya, 450 miles away, just five minutes later.

The carnage was unparalleled in the history of terrorism. In Nairobi, the explosion gutted half the U.S. embassy, leveled a nearby secretarial school, incinerated dozens of people in buses passing by, and left more than a dozen pedestrians dismembered. In Dar es Salaam, the entrance to the U.S. embassy was in ruins. Altogether, about 260 people were killed. Roughly five thousand people were wounded in the twin attacks. Many of the victims were African Muslims.

The magnitude of the explosions and the fact that they had taken place simultaneously suggested an operation of enormous complexity and sophistication. Nearly a ton of military-type explosives was used in each bombing. This huge quantity had been shipped from Pakistan to Tanzania and Kenya, where it was stored in safe houses. Scores of people were involved in a highly compartmentalized operation. [59] Counterterrorism analysts knew immediately who was behind it. For the first time, the eyes of the world turned on Osama bin Laden as master terrorist and public enemy number one.

The operation was extraordinary not just because of the increased ferocity and sophistication of the bombings. There was now a grandiose scope and extraordinary clarity to bin Laden's hallucinatory vision, a paranoid fantasy straight out of the Crusades that called forth the image of heroic Muslims battling a Judeo-Christian alliance to control the holy places of Mecca, Medina, and Jerusalem. In 1996, bin Laden had issued a declaration of jihad specifying that in response to "one of the greatest disasters in the history of Islam," [60] his goals were to drive American forces from the Arabian Peninsula, overthrow the House of Saud, liberate Muslim holy sites, and support Islamic revolution all over the world. [61] In 1998, bin Laden had elaborated on his ruling by issuing another fatwa in the spirit of the Crusades. "We -- with God's help -- call on every Muslim who believes in God and wishes to be rewarded to comply with God's order to kill the Americans and plunder their money wherever and whenever they find it," he declared. [62]

His philosophy mandated that all Muslims take part in brutal terrorist acts. It rationalized the killing not just of American soldiers, but of civilians as well; the killing of not just Americans, but of devout Muslims as well; and the killing not just of Muslim soldiers, but of civilians, women and children included. As bin Laden explained it, the duty of Muslims was "to kill the Americans and their allies -- civilian and military ... in any country in which it is possible." [63]

If necessary, he added, he would even sacrifice the lives of his own children. "Imagine it was my own children [who] were taken hostage," bin Laden said. "And that shielded by this human shield, Islam's enemies started to massacre Muslims. I would not hesitate, I would kill the assassin even if to do that I had to kill my children with my own hands. ... Sometimes, alas, the death of innocents is unavoidable. Islam allows that." [64]

Clinton vowed to strike back. "These acts of terrorist violence are abhorrent, they are inhuman," he said. "We will use all the means at our disposal to bring those responsible to justice."

Less than two weeks after the attacks on the U.S. embassies in East Africa, on August 20, 1998, Clinton launched a two- pronged strike against Al Qaeda targets in Afghanistan and Sudan. The rationale for attacking Afghanistan was incontrovertible. Bin Laden had been encamped there, escaping not long before the U.S. attack. The justification for attacking Sudan was slightly more complicated. Bin Laden still had operations there, including the El-Shifa pharmaceutical factory in Khartoum, which, U.S. intelligence showed, was manufacturing chemical weapons for Al Qaeda. As a result, Clinton ordered a devastating Cruise missile attack against El-Shifa that destroyed the factory.

It may be impossible to corroborate beyond a shadow of a doubt the assertion that the El-Shifa factory was actually producing chemical weapons, but there is strong evidence that the Clinton administration had in fact chosen a legitimate target. The most persuasive case for it was made by Dan Benjamin and Steven Simon in their book, The Age of Sacred Terror. According to the authors, a soil sample obtained by the CIA from El-Shifa showed that the factory was producing EMPTA, which has no commercial use whatsoever, but is an extraordinarily rare chemical used as a precursor for the fabrication of VX. [65] VX is a lethal chemical weapon, a single drop of which can cause death within fifteen minutes of being placed on the skin. [66]

Moreover, additional evidence justifying the El-Shifa bombing was in the testimony of Jamal Ahmed al-Fadl, the first witness for the prosecution in the trial for the bombings of the two embassies in East Africa in 1998. Al Fadl, a Sudanese Islamist who joined Al Qaeda in 1989 and was one of its first members, testified that Al Qaeda did manufacture chemical weapons in Khartoum, which was noted in the New York Review of Books in an article by Benjamin and Simon. [67] [ix]

Unfortunately, Clinton's strike against bin Laden came while the president was enmeshed in the Monica Lewinsky sex scandal. Just three days before he struck El-Shifa, on August 17, the president had appeared before a grand jury investigating his sexual relationship with the young intern. Caught in a political whirlpool, Clinton was weakened further by a cultural event: several months earlier Wag the Dog, a movie starring Robert De Niro and Dustin Hoffman, had been released, about a foreign war fabricated by the White House to cover up a presidential sex scandal.

Whether or not politics was imitating art, the juxtaposition of the movie and Clinton's dilemma was irresistible. Partisan politicians and the press had a field day. From right-wing talk radio hosts to the toniest magazines in the land, virtually every media outlet in the English-speaking world picked up the Wag the Dog theme. Radio talk-show host Rush Limbaugh demanded to know how many innocent people were killed in bombing "an aspirin factory." [68] Christopher Hitchens of Vanity Fair and the Nation alone raised the subject in more than half a dozen columns he wrote. [69] Republican senator Dan Coats of Indiana accused Clinton of "lies and deceit and manipulations and deceptions." [70] Former CIA officials criticized the legitimacy of El- Shifa as a target. [71] Thousands of articles asserted that the administration had destroyed an innocent target, a factory that made medication for poor people, not deadly nerve gas, that the factory was struck not for reasons of national security, but to distract the public from the Lewinsky affair.

These were not just partisan attacks; they spanned the political spectrum and included supposedly liberal icons in the media such as the New Yorker, the New York Times, and CBS's Dan Rather. [72] A profile in the Washington Post characterized the owner of the El-Shifa factory, Saleh Idriss, as a rags-to-riches son of a tailor who "wasn't making nerve gas for terrorists, just ibuprofen for headaches" [73] and did not allow that there might be more to consider. Idriss had worked at both BCCI and the National Commercial Bank of Saudi Arabia, and the article described him as a protege of Khalid bin Mahfouz's. [x] But it failed to point out that, as ABC News had in fact already reported, sources said bin Mahfouz had been "accused of using his bank to funnel money to charities and companies that are fronts for bin Laden's organization." [74] Nor did it mention that the plant's general manager lived in bin Laden's Khartoum home or that the area was swarming with Al Qaeda operatives. [75] [xi]

Regardless of the legitimacy of the target, a large measure of the failure of Clinton's battle against terrorism was the fault of the president himself. By getting involved with Monica Lewinsky, he had given his enemies exactly what they were looking for. The ensuing impeachment hearings provided a ready-made, ongoing forum for an epic circus that far, far surpassed any concerns Americans had for national security. Next to the lascivious spectacle of a search for a semen-stained dress, the terrorist threat of Al Qaeda was nothing more than a weak sideshow starring an unfamiliar and bizarrely dressed Arab with a weird and exotic name. At a time when Wall Street was euphoric over dot-com mania, and the economy was booming as never before, the American zeitgeist had no room for faraway fears.

Worse, now that Clinton's attempt to protect Americans from chemical weapons had been ridiculed, his counterterrorist efforts, however noble their intentions, were crippled. The Lewinsky affair had so depleted Clinton's political capital that there was no support for strong military measures in Afghanistan. At a time when national security was a genuine issue, the administration was also widely criticized for trying to get bin Laden, because in doing so, they had "mythologized" him and helped build him into a hero among Muslims. Yet Clinton continued to fight bin Laden. He cut off relations with the Taliban government in Afghanistan that harbored bin Laden. He pressured the Saudis to negotiate with the Taliban to extradite bin Laden, and he pressured the Saudis to audit the National Commercial Bank's funding of terrorism. But as a result of Monicagate, few Americans understood the nature of the terrorist threat.


The House of Saud was clearly none too happy with the Clinton administration's efforts to probe Saudi ties to terrorism, and the Sauds much preferred their longtime American friends the House of Bush. Their relationship now spanned roughly two decades, in both the private and public sectors, and neither side had any reason to think that their close ties would not continue for years to come.

In the summer of 1998, for example, just before the East African embassy attacks, Bandar visited George H. W. Bush and his family at Walker's Point in Kennebunkport, on the peninsula jutting out from the rugged Maine coast. [76] For former first lady Barbara Bush, the visit was an unexpected but delightful surprise, with Bandar cooking up a storm in the kitchen.

By this time, the Bushes could provide Prince Bandar with a ray of hope that his frustrations with the Clinton administration would soon be over. The president's son, Texas governor George W. Bush, was positioning himself as the leading Republican presidential candidate for 2000. Karl Rove, once his father's aide, was putting together one of the most efficient fundraising machines ever. Within a month of getting started, Bush had raised hundreds of thousands of dollars, two of the primary big contributors being the massive oil giant Enron and Baker Botts, James Baker's law firm.

Bandar's visit was soon followed by the carnage in Kenya and Tanzania. But for former president Bush and Baker, it was business as usual. In November, Bush flew to Saudi Arabia and met with members of the bin Laden family representing the Saudi Binladin Group. Likewise, in January 2000, Bush again met with Crown Prince Abdullah and the bin Laden family, not long after the United Nations had passed sanctions against their terrorist sibling Osama. At the time, Carlyle was working with SBC Communications, the Texas-based communications giant, in an unsuccessful attempt to nail down the acquisition of 25 percent of the Saudi phone system. In addition, during his trips to Saudi Arabia, James Baker met with Khalid bin Mahfouz on several occasions. [77]

Officially, Bush was not really doing business with the Saudis -- or so a spokeswoman said. "President Bush has never conducted business with Saudi citizens or government officials on behalf of anyone, including the Carlyle Group," says Jean Becker, chief of staff to former president Bush. "He has delivered some speeches at Carlyle functions in Saudi Arabia and other countries, but has not engaged in private business conversations with anyone in Saudi Arabia or elsewhere." [78] As for whether Bush had concerns about doing business with the Saudis in light of all the terrorist bombings, a spokesman for the Carlyle Group said that Bush had "no responsibilities for investor relations." But in fact, what that meant was that Carlyle had created an elaborate deniability mechanism for Bush. The relationship was such that in the end, with Bush and Baker making appearances before potential Saudi investors, the Saudis placed $80 million in the firm. [79] It is unclear how much of that sum was raised following meetings attended by Bush or James Baker.

Meanwhile, as Bill Clinton's second term was coming to an end, the House of Saud was eagerly looking forward to a Bush restoration. If that happened, it could be fairly said that their friends in the House of Bush would be unlikely to probe too deeply into the Saudi role in the terrorist threat.


[i] By this time, the extended bin Laden family clearly had interests on both sides of the terrorist wars. The family profited from the attacks when the House of Saud gave the Saudi Binladin Group a $150-million contract to rebuild the Khobar Towers facility.
[ii] Osama is sometimes spelled Usama, hence the designation UBL.
[iii] The Saudi-Clinton relationship began with, and was typified by, a halfhearted, last-minute attempt by Prince Bandar to win over Clinton even before he entered the White House. In 1989, Clinton, then the governor of Arkansas, tried to help the University of Arkansas raise $23 million to launch a Middle East studies program and approached Prince Turki, who had been a classmate of his at Georgetown University. Turki came up with $3 million. But that still left $20 million, so in 1991 Clinton approached Prince Bandar.
However, at the time Bandar was preoccupied with the Gulf War and twice canceled appointments with the little-known Arkansas governor. At a third appointment, Bandar saw Clinton, but gave him short shrift, and for two years there was no response to Clinton's request. Bandar had other things on his mind. Then, suddenly, in the summer of 1992, Clinton emerged as the Democratic presidential nominee. As the economy soured, incumbent George H. W. Bush began plummeting in the polls. In October, just a few weeks before Clinton won the presidency, Bandar miraculously got word that the $20-million request had been approved.
[iv] King Fahd collapsed in August 1998, and as his health deteriorated, Crown Prince Abdullah, already Fahd's designated heir, gradually became the de facto ruler of Saudi Arabia.
[v] In response to allegations tying the bin Mahfouz family to terrorism, Cherif Sedky, an attorney for the family, emailed the author the following statement: "The entire Bin Mahfouz family categorically and unreservedly condemns terrorism in all of its manifestations. At no time has any member of the family contributed to any terrorist organization, nor has the family ever had reason to believe that funds it has given over the years to a wide variety of charities, including Muwaffaq (Blessed Relief), have been used other than for the charitable purposes intended."
[vi] In response to charges that Prince Sultan had knowingly funded terrorists, Casey Cooper, an attorney for Prince Sultan at James Baker's law firm, Baker Botts, says, "The allegations have no merit." He adds that Prince Sultan authorized the grants as part of his official governmental duties and did not knowingly fund terrorism.
[vii] The House of Saud was not merely paying lip service to the Palestinian jihad. In fact, the Popular Committee for Assisting the Palestinian Mujahideen, headed by Prince Salman bin Abdul Aziz, the governor of Riyadh, gave over $4 billion to Palestinian groups fighting Israel.
[viii] Bin Mahfouz's attorney denied that any such audit took place.
[ix] For al-Fadl's testimony, see an excerpt from the transcript of his trial in note 67.
[x] According to bin Mahfouz's attorney, Cherif Sedky, Idriss served as deputy general manager of the National Commercial Bank from 1996 to 1998. Sedky adds, "Mr. Idriss was involved in coordinating the activities of the various lawyers representing KBM (Khalid bin Mahfouz) and the bank during the BCCI litigation." Idriss had other ties to the bin Mahfouz family. He was a shareholder in a company called WorldSpace and introduced it to the bin Mahfouz family. Subsequently, bin Mahfouz's sons, through a company called Stonehouse Capital, held a large amount of debt in WorldSpace. "Saleh Idriss and KBM are business acquaintances and have done business together from time to time, although the El-Shifa plant in Sudan was not a matter in which KBM had any interest," says Sedky.
[xi] Idriss later sued the U.S. government over the bombing of his factory and hired as his attorney George Salem, a prominent Arab American and Republican fundraiser. According to the Washington Post, Salem also represented the Holy Land Foundation for Relief and Development.


1. Christopher Dickey and Gregory Vistica, "Attack on the House of Saud," Newsweek, November 27, 1995, p. 44.
2. Yossef Bodansky, Bin Laden, p. 138.
3. Anonymous, Through Our Enemies' Eyes, p. 199.
4. Anthony H. Cordesman, Saudi Arabia: Guarding the Desert Kingdom, p. 42.
5. Bruce W. Nelan et al., "Gulf Shock Waves," Time, July 8, 1996, p. 20.
6. Bodansky, Bin Laden, p. 138.
7. CBS This Morning, November 13,1995.
8. Interview with Chris Ullman, vice president, Carlyle Group.
9. Sidney Blumenthal, The Clinton Wars, p. 656.
10. Tim Weiner and David Johnston, "Roadblocks Cited in Efforts to Trace Bin Laden's Money," New York Times, p. A 1.
11. George Gordon, "Clinton Sends In FBI," Daily Mail, November 14, 1995, p.15.
12. Daniel Benjamin and Steven Simon, The Age of Sacred Terror, p. 242.
13. Interview with Steven Simon.
14. Bodansky, Bin Laden, p. 245.
15. Kathy Gannon, Associated Press Worldstream, May 31, 1996.
16. Sig Christenson, "Bin Ladens Building U.S. Troops' Housing," San Antonio Express-News, September 14, 1998, p. 7 A.
17. "Osama bin Laden, a Chronology of His Life," PBS Frontline, ... /cron.html .
18. Interview with Will Wechsler.
19. Benjamin and Simon, The Age of Sacred Terror, pp. 242-45.
20. Ibid., p. 246.
21. Weiner and Johnston, "Roadblocks Cited in Efforts to Trace Bin Laden's Money," p. A 1.
22. David B. Ottaway, "Been There, Done That: Prince Bandar, One of the Great Cold Warriors, Faces the Yawn of a New Era," Washington Post, July 21, 1996, p. F 1.
23. Benjamin and Simon, The Age of Sacred Terror, p. 242.
24. Ibid., p. 301.
25. A decentralized, risk-averse bureaucracy, the FBI has a culture that does not appreciate taking orders from policy makers. In addition, FBI agents are trained to react after a crime has been committed, not to investigate situations that might foster terrorism. The FBI's horrendous failure to see the assassination of Meir Kahane as part of a larger terrorism problem typified the problems with its approach. Astonishingly, it had not even bothered to translate Arabic documents that pointed out future targets such as the World Trade Center. In addition, under Freeh the FBI had endured fiascos in handling crises at Ruby Ridge, at Waco, and in the investigation of Timothy McVeigh in the Oklahoma City bombing.
26. Benjamin and Simon, The Age of Sacred Terror, p. 301.
27. Ibid., p. 302.
28. Robert Siegel interview with Elsa Walsh, All Things Considered, National Public Radio, May 7, 2001.
29. Benjamin and Simon, The Age of Sacred Terror, p. 302.
30. Ottaway, "Been There, Done That," p. F 1.
31. William F. Wechsler and Lee S. Wolosky, Terrorist Financing, report of an Independent Task Force sponsored by the Council on Foreign Relations, p. 13; and Bodansky, Bin Laden, p. 304.
32. Litigation for the Victims of 9/11, U.S. District Court for the District of Columbia, 1:02CV01616(JR) Second Amended Complaint, p. 564, ... ments.html .
33. Ibid., p. 563.
34. Jack Kelley, "Saudi Money Aiding bin Laden," USA Today, October 29, 1999.
35. Interview with Cherif Sedky.
36. U.S. Department of Treasury press release, October 12, 2001, part of court papers in the Litigation for the Victims of 9/11, p. 583.
37. "Bin Laden's Sister-in Law Speaks," UPI, October 24, 2001.
38. Craig Unger, "Saving the Saudis," Vanity Fair, October 2003.
39. Documents were given to the author by David Armstrong, an investigator for the Public Education Center, the Washington, D.C., foundation that obtained the documents.
40. Litigation for the Victims of 9/11, p. 612.
41. Unger, "Saving the Saudis"; and interview with Casey Cooper.
42. Michael Isikoff et al., "The Saudi Money Trail," Newsweek, December 2, 2002, p.28.
43. Mark Matthew, "Saudis Admit Money Trail Leads to Envoy," Baltimore Sun, November 25, 2002.
44. Interview with Nawaf Obaid.
45. Interview with Nail al-Jubeir.
46. Washington Post, November 15, 2003, final ed.
47. Interview with Will Wechsler.
48. Interview with Richard Clarke.
49. Ibid.
50. "Turki Appeals for Egypt's Help," Intelligence Newsletter, November 23, 1995.
51. Bodansky, Bin Laden, p. 173.
52. Interview with Robert Baer.
53. Bodansky, Bin Laden, p. 139.
54. Ibid., p. 304.
55. Middle East Media Research Institute, ... 3#_ednref2 .
56. David Jackson et al., "Saudi's Cash Funds Terrorism, U.S. Says: Ex-Chicagoan's Assets Are Frozen," Chicago Tribune, October 28, 2001, p. 1.
57. Interview with Will Wechsler.
58. George Gedda, "Clinton Vows Justice for Terrorists," Associated Press, August 7, 1998.
59. Bodansky, Bin Laden, p. 258.
60. "Riyadh Accused of Detaining Shiite Clerics as Sunnite Dissident Calls for Jihad Against U.S. Troops," Mideast Mirror, vol. 10, no. 172, September 4, 1996.
61. "Hunting bin Laden," PBS Frontline, ... /cron.html .
62. Litigation for the Victims of 9/11, Third Amended Complaint, p. 213, ... plaint.pdf .
63. Shaykh Usamah Bin-Muhammad Bin-Ladin; Ayman al-Zawahiri, amir of the Jihad Group in Egypt; Abu Yasir Rifa'i Ahmad Taha, Egyptian Islamic Group; Shaykh Mir Hamzah, secretary of the Jamiat-ul-Ulema-e-Pakistan; Fazlur Rahman, amir of the Jihad Movement in Bangladesh, "Jihad Against Jews and Crusaders," World Islamic Front Statement, February 23, 1998, .
64. Anonymous, Through Our Enemies' Eyes, p. 197
65. Benjamin and Simon, The Age of Sacred Terror, p. 355.
66. Ibid., p. 353.
67. Daniel Benjamin and Steven Simon, "A Failure of Intelligence," New York Review of Books, December 20, 2001. Jamal Ahmed al-Fadl's testimony:

Q. Did you ever travel to the section of Khartoum called Hilat Koko [a facility near El-Shifa] with any member of al Qaeda?

A. Yes, I did.

Q. Tell us about the time you went to Hilat Koko with Abu Hajer al Iraqi, what you discussed.

A. I learn that in this building they try to make chemical weapons with regular weapons. ...

Q. Returning to your conversation with Abu Hajer al Iraqi, did he discuss with you who it was that was trying to make the chemical weapons in the area there of Hilat Koko?

A. He tell me the al Qaeda group try to help Islamic National Front to do these weapons, to make these weapons [italics added in New York Review].

Q. Okay. So I'm asking you, do you know that chemical weapons are used to kill people?

A. Yes, that's what I hear from them.

Q. You know that, for example, they use gas to kill people, right?

A. Yes.

Q. And whoever is in the area where that gas goes runs the risk of being killed?

A. Yes.

68. Peter Worthington, "An Honourable Man Would Resign," Toronto Sun, December 22, 1998, p. 16.
69. Benjamin and Simon, The Age of Sacred Terror, p. 361.
70. Ibid., p. 359.
71. Interview with Frank Anderson; and Vernon Loeb, "A Dirty Business; Because of a Cupful of Soil, the U.S. Flattened This Sudanese Factory," Washington Post, July 25, 1999, p. Fl.
72. Benjamin and Simon, The Age of Sacred Terror, p. 363.
73. Loeb, "A Dirty Business," p. F 1.
74. Benjamin and Simon, The Age of Sacred Terror, p. 363.
75. James Zogby, "The Attack on Sudan," Mideast Mirror, August 16, 1999; and James V. Grimaldi, "An Arab American Charitable Connection That Might Be Too Close for Comfort," Washington Post, December 17, 2001, p. E6.
76. Barbara Bush, Reflections, p. 234.
77. E-mail from Cherif Sedky.
78. E-mail from Jean Becker.
79. Interviews and emails with David Rubenstein and Chris Ullman.
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Re: House of Bush, House of Saud, by Craig Unger

Postby admin » Wed Nov 27, 2013 5:10 am


CHAPTER TWELVE: The Arabian Candidate

In the presidential race of 2000, George W. Bush had the advantage of instant name recognition across the land. His birthright included a spectacular Republican fundraising apparatus. [i] And, as heir to an extraordinary brain trust, he had the ultimate Washington insiders and oil industry executives at his side -- his father, a former president; James Baker, one of the most powerful nonelected officials in American history; Donald Rumsfeld, a former secretary of defense; Condoleezza Rice, who had served on the elder Bush's National Security Council and was a director of Chevron; [ii] and Dick Cheney, the former secretary of defense who had become CEO of Halliburton, the giant oil services company.

But for all its advantages, the Bush political legacy was also a mixed blessing. It carried the liability of being a nationally known political brand that had failed. Among the senior Bush's chief contributions to the American political lexicon was a solemn declaration that had come to be synonymous with broken political promises -- "Read my lips -- no new taxes." Who else had been derided on the cover of national magazines as a "wimp"?

To make George W. Bush's task more complicated, the 2000 campaign was taking place at the end of a prosperous eight-year Democratic reign. The Monica Lewinsky sex scandal, as embarrassing and damaging as it was for Clinton, had played out during a mood of national economic euphoria. It was an era of dot-com millionaires, bulging 401Ks, frenzied online day traders, and SUVs driven by soccer moms. Twenty-two million new jobs had been created during the Clinton years. Unemployment had fallen to its lowest levels in decades. The Dow Jones average was flirting with 12,000. Nasdaq had broken 5,000. It was a period of unparalleled peace and prosperity. America seemingly ruled the world as never before. With Vice President Al Gore the uncontested Democratic nominee, the challenge for the GOP was clear. Bush had to make the case, as one Republican media consultant joked, that because things had never been better, it was time for a change. [1]

The task of reinventing and marketing this flawed brand fell to Karl Rove, Bush's longtime friend, confidant, and handler who had earned the sobriquet Bush's Brain. His solution was to create a Rorschach test candidate so that moderates, conservatives, and independents would see in Bush exactly what they wanted to see. Bush's theme of "compassionate conservatism" meant whatever one wanted it to mean. To Wall Street Republicans, who couldn't care less about social issues crucial to the antiabortion, antigay, pro gun Christian right, Bush was his father's son, a genial and appealing moderate who would be good for business. To the powerful cadres of the radical Christian right, Bush's vow to restore honor and integrity to the White House, his promise that his deepest commitment was to his faith and his family, meant that he was unmistakably one of them.

But few voters realized, for example, how dissimilar the Texas governor was from his father. Not content merely to bring back the ancien regime of the Reagan-Bush era, George W. wooed key conservative constituencies that the elder Bush had failed to bring into his camp. One was the powerful Christian right. [2] Given his difficulties winning the trust of born-again evangelicals during the 1988 presidential campaign, the elder Bush had given his son the task of working with the campaign's liaison to the Christian right, an Assemblies of God evangelist named Doug Wead. [3] When evangelists asked Vice President Bush trick questions designed to reveal whether he was really one of the flock, he almost always stumbled. But his son was a natural. According to Wead, if asked what argument George W. would give to gain entry to heaven, he would say, "I know we're all sinners, but I've accepted Jesus Christ as my personal savior." [4]

Bush had become so attuned to all the nuances of the evangelical subcultures that virtually no one questioned the sincerity of his acceptance of Christ. But even if one did, as author Joan Didion has noted, it did not matter. [5] The larger point was that Bush had replaced his father's visionless pragmatism with the Manichaean certitudes of Good and Evil. Where the elder Bush was, as one colleague put it, "utterly devoid of conviction" on almost any subject, [6] his son was forging a neo Reaganite vision that jibed with an evangelical sense of destiny. Dubya's bond with the Christian right was a crucial part of what distinguished him from his father.

As Bush contemplated his candidacy, he repeatedly met with evangelical leaders, and in October 1999, he addressed the powerful but secretive Council for National Policy, a body that had attracted the who's who of the evangelical movement. [7] [iii] The organization's founding president was Dr. Tim LaHaye, author of the best-selling Left Behind series of novels, prophetic military-religious thrillers that extol the Rapture, the moment when true believers in Christ will be "raptured" into heaven.

At the time, the Christian right had focused largely on domestic issues concerning values and morality -- abortion, homosexuality, gun control, prayer in the schools, and so on. But LaHaye and his millions of followers -- the eleven books in his series have sold 55 million copies -- added a new foreign policy dimension to its agenda, specifically with regard to the Middle East. According to LaHaye, the armies of the Antichrist would soon have their final battle with Christ and "witness the end of history" after a series of conflicts in the Middle East -- not unlike those taking place today. [8] This belief that the events in the Middle East were part of God's plan, that Christ would return only after Israel truly controlled the Holy Land, put the Christian right on course for a low-profile liaison with a highly unlikely political ally: hardline, pro Israeli, neoconservative defense policy intellectuals.


The neocons, who had also bedeviled his father, were the other constituency with whom Bush quietly mended fences. In the late eighties and early nineties, one may recall, defense policy makers Richard Perle and Paul Wolfowitz, who had close ties to the Israeli right, had criticized George H. W. Bush first for his pro-Saddam policies and later for not ousting Saddam after the Gulf War. In 1992, the notorious Defense Planning Guidance paper written by Wolfowitz argued for military action in the Middle East as part of a larger plan to rid the world of rogue states -- but the Bush White House had rejected it as too militaristic.

In 1998, Perle and Wolfowitz, along with sixteen other prominent neoconservatives from a group called the Project for a New American Century (PNAC), lobbied President Clinton to remove Saddam Hussein and his regime from power. [9] But rather than overthrow Saddam, Clinton continued a policy of containment through periodic air strikes.

By the time George W. Bush put together his team of advisers in 1999, however, several of its key members, including his brother, Florida governor Jeb Bush, Dick Cheney, and Donald Rumsfeld, as well as Perle and Wolfowitz, had signed on to the Project for a New American Century. Untutored as he was in foreign policy, Bush's own positions on crucial issues in the Middle East were not yet fully formed. But now the hard-line neocons had his ear, and picking up from Wolfowitz's Defense Planning Guidance paper, they put forth a grandiose vision for American foreign policy of the next century. The language used in their reports was the language of world domination. One such PNAC report referred admiringly to Wolfowitz's infamous work as a "blueprint for maintaining global U.S. preeminence, precluding the rise of a great power rival, and shaping the international security order in line with American principles and interests," [10] and asserted that its judgments were still sound.

That Bush was amenable to some of the same Middle East policies that his father had rejected was not widely known to the public -- but it was not entirely secret either. In November 1999, Perle, by then an adviser to Bush, told the Pittsburgh Post-Gazette that the candidate was drafting a speech calling for Saddam Hussein's removal from power. He added that Bush's speech would be critical of Clinton and would say, "it's time to finish the job. It's time for Saddam Hussein to go." [11] According to Perle, Bush also planned to say that it was understandable that his father's administration had underestimated the Iraqi leader's ability to stay powerful. When the presidential race got under way in 2000, however, no such statements about Iraq were forthcoming.


For all the firepower behind Bush's candidacy, his nomination was not a foregone conclusion. On February 1, 2000, insurgent Arizona senator John McCain won the crucial opening primary in New Hampshire, beating Bush by an astonishing 19 percentage points. An authentic Vietnam war hero who had been a longtime prisoner of war, McCain had cast himself as a crusading pied piper leading his horde of McCainiacs around the country on a bus he called the Straight Talk Express.

McCain's challenge brought out Bush's true colors. The next major primary state was South Carolina, one of the most conservative in the Union, and Bush retaliated aggressively by painting the conservative McCain as a liberal. He blitzed the state with brutal attack ads on TV, on radio, in print, and by telephone. He appeared before thousands of evangelicals at Bob Jones University, the fundamentalist college that had banned interracial dating. He declined to endorse the Republican governor's opposition to flying the Confederate flag above the statehouse. [12]

Thousands of voters got phone calls asserting that McCain's wife had mob ties, that McCain had illegitimate children, that he had a "black" child, that there had been an abortion in the McCain family. [13] A group of Bush supporters called Republicans for Clean Air spent $2.5 million on commercials attacking McCain and distorting his record on the environment. Ads went out saying McCain opposed breast cancer research even though his sister was fighting the disease. [iv]

Astonished by the ferocity of the attacks, McCain told a reporter, "They know no depths, do they? They know no depths." [14] But Bush's tactics proved successful. On February 19, he trounced McCain 53 percent to 42 percent in South Carolina. Three weeks later, on the March 7 "Super Tuesday" primaries, Bush won California, Ohio, Georgia, Missouri, and Maryland to all but lock up the Republican nomination.

If the vitriol from the Bush campaign did not poison the body politic across the United States, it was because when it came to the care and feeding of the press, no candidate that season surpassed George W. Bush. As he traveled about the country by bus, plane, and train, Bush joshed with reporters about their romances, handed out nicknames to pet journalists, put his arm around them, slapped them on the back, and passed out cookies and treats. In a documentary she did for HBO, Journeys with George, NBC television producer Alexandra Pelosi said that after the Bush staff bought her four birthday cakes, and her network bought her none, "I started to wonder, who am I working for?"

She wasn't the only journalist who was being wooed. "We were writing about trivial stuff because he charmed the pants off us," explained Richard Wolffe, who covered the campaign for London's Financial Times. [15] Whenever Bush journeyed to the back of the press bus, explaining earnestly how much he loved a good bologna sandwich, making corny jokes, giving a young woman an orange and telling her, "You are the orange of my eye," reporters "went weak in the knees," Wolffe added. Thanks to such warm relations with the media, Bush repeatedly turned his liabilities into assets. A poor public speaker who made one verbal gaffe after another, Bush played the self-deprecating common man under fire by the know-it-all intellectuals. [16] [v] Intimate with the Wise Men of Washington since childhood, scion to one of the greatest political dynasties in American history, Bush was even able to sell himself as an outsider to power. "My zip code is 78701," Bush said on Face the Nation, referring to his Austin, Texas, address. "It's not Washington, D.C. If you were to call me on the telephone, it would be area code 512, not 202." [17]

At one campaign stop after another, Bush delivered the same canned speeches asserting that his priorities were his faith and his family -- and reporters dutifully did his bidding. "I have not learned one single thing about his policies or him," said Wayne Salter, a Dallas Morning News reporter who had covered Bush for years in Texas and followed him during the primaries. "We are lemmings. We follow [the Bush campaign] like lemmings and do exactly what they say." [18]

On the rare occasion that they did not obey and dared to probe beneath the surface, reporters learned the hard way the high price to be paid: they would be denied access to the candidate -- access that was the lifeblood of a Washington journalist's career. When Alexandra Pelosi asked Bush if he was certain that every prisoner executed on his watch as Texas governor was guilty, Bush, who had coyly flirted with her throughout the campaign, suddenly became brusque, gave a terse answer, and later chastised her for violating the rules of engagement. "I'm not answering your questions," he told her afterward. "You came after me the other day. You went below the belt." [19]

And so Pelosi backed off. "All of our careers are tied to George Bush," she said. Like the rest of the press corps, she had realized that tangling with him was bad for business. "If I throw him a hardball, he'll push me into the outfield. And it's my job to maintain my network's relationship to the candidate." [20]

As a result, the scripted, fabricated reality put together by Rove and his team was disseminated by the media virtually unchallenged. In the bright lights of the mass media, tens and tens of millions of Americans saw Bush as the candidate of the common man, a Washington outsider, a moderate, a centrist, a compassionate conservative. The more complex reality wasn't part of the picture. Few saw him as he was, a candidate of Big Oil, the ultimate insider, and a radical conservative who was closely tied both to the evangelical right and to hawkish neoconservative defense policy makers. In Harper's, Joe Conasoh raised compelling questions about Bush's rise to riches and his ties to the oil industry. A handful of small liberal publications followed suit. And the Intelligence Newsletter, a tiny publication with a keen eye on the intelligence community but a weaker grasp of what animates American politics, reported on Bush's close ties to the Saudis. [21] [vi]

But those were rare exceptions. Even the bombings in Kenya and Tanzania had not put terrorism on the radar screen of the American electorate. No major media outlet asked about Bush's ties to the Saudis or the Carlyle Group [vii] and how that might affect dealing with the forces of terror.


If the Saudis had been happy with the presidency of George H. W. Bush -- and they were -- they must have been truly ecstatic that his son was the Republican candidate for president. Indeed, the relationship between the two dynasties had come a long way since the seventies when Khalid bin Mahfouz and Salem bin Laden had flown halfway around the world to buy a secondhand airplane from James Bath, George W. Bush's old friend from decades before. Even bin Mahfouz's subsequent financing of the Houston skyscraper for James Baker's family bank or the Saudi bailout of Harken Energy that helped George W. Bush make his fortune were small potatoes compared with what had happened since.

The Bushes and their allies controlled, influenced, or possessed substantial positions in a vast array of companies that dominated the energy and defense sectors. Put it all together, and there were myriad ways for the House of Bush to engage in lucrative business deals with the House of Saud and the Saudi merchant elite.

The Saudis could give donations to Bush-related charities. They could invest in the Carlyle Group's funds or contract with one of the many companies owned by Carlyle in the defense sector or other industries.

James Baker's law firm, Baker Botts, represented both the giant oil companies who did business with the Saudis as well as the defense contractors who sold weapons to them. Its clients also included Saudi insurance companies and the Saudi American Bank. It negotiated huge natural gas projects in Saudi Arabia. It even represented members of the House of Saud itself. And the firm's role was not limited to merely negotiating contracts. When global energy companies needed to devise policies for the future, when government bodies required attention, Baker Botts was there.

And the Saudis were also linked to Dick Cheney through Halliburton, the giant Texas oil exploration company that had huge interests in the kingdom. [22] [viii]

How much did it all come to? What was the number? Where did the money go? With the understanding that the sums were paid by both individuals and entities to both individual and entities, for diverse purposes at different times, it is nonetheless possible to arrive at a reckoning that is undoubtedly incomplete but which by its very size suggests the degree and complexity of the House of Bush-House of Saud relationship.

In charitable contributions alone, the Saudis gave at least $3.5 million to Bush charities -- $1 million by Prince Bandar to the George H. W. Bush Presidential Library and Museum, $1 million by King Fahd to Barbara Bush's campaign against illiteracy, $500,000 by Prince Al Waleed to Philips Academy, Andover, to finance a newly created George Herbert Walker Bush Scholarship Fund, and a $1-million painting from Prince Bandar to George W. Bush's White House. [23]

Then, there were the corporate transactions. As mentioned earlier, in 1987, a Swiss bank linked to BCCI and a Saudi investor bailed out Harken Energy, where George W. Bush was a director, with $25 million in financing. At the Carlyle Group, investors from the House of Saud and their allies put at least $80 million into Carlyle funds. While it was owned by Carlyle, BDM, and its subsidiary Vinnell, received at least $1.188 billion in contracts from the Saudis. Finally, Halliburton inked at least $180 million in deals with the Saudis in November 2000, just after Dick Cheney began collecting a lucrative severance package there.

In all, at least $1.476 billion had made its way from the Saudis to the House of Bush and its allied companies and institutions. [ix] It could safely be said that never before in history had a presidential candidate -- much less a presidential candidate and his father, a former president been so closely tied financially and personally to the ruling family of another foreign power. Never before had a president's personal fortunes and public policies been so deeply entwined with another nation.

And what were the implications of that? In the case of George H. W. Bush, close relations with the Saudis had at times actually paid dividends for America -- certainly in terms of the Saudi cooperation during the Gulf War, for example. But that carried with it a high price. The Bushes had religiously observed one of the basic tenets of Saudi-American relations, that the United States would not poke its nose into Saudi Arabia's internal affairs. That might have been fine if the kingdom was another Western democracy like, say, Great Britain or Germany or Spain. By the late nineties, it was clear that Saudi Arabia, as much as any other country in the world, was responsible for the rise of Islamic fundamentalist terrorism. Now that Islamists were killing Americans in the Khobar Towers bombing and in Kenya and Tanzania, America's national security was at stake. What had previously been considered a purely domestic issue for the Saudis -- the House of Saud's relationship to Islamist extremists -- was now a matter of America's national security. Hundreds had already been killed by Saudi-funded terrorists, yet former president Bush and James Baker continued their lucrative business deals with the Saudis apparently without asking the most fundamental questions.

Now, of course, George W. Bush was closing in on the White House. It remained to be seen how, if elected, he would deal with the Saudis and the global terrorist threat. Federal election laws prohibit foreign nationals from funding American political candidates. But the Saudis were not like last-minute holiday shoppers. They had begun buying their American politicians years in advance.


The close relationship between the two great dynasties was not the only factor that might interfere with Bush's acting against the growing terrorist threat. Republicans had just woken up to the fact that there were roughly 7 million Muslims in America [24] [x] -- a huge pool of voters who had largely been ignored by both political parties. To remedy that, Bush campaign strategist Grover Norquist came up with an aggressive plan to win them over by making alliances with groups run by Islamic fundamentalists. He invented the notion of a Muslim-American electoral bloc.

A bearded, stocky, Harvard-educated intellectual who described himself as a "winger" of the radical right, Norquist gained notoriety in the nineties as the right-hand man of Speaker of the House Newt Gingrich when Gingrich's power was at its zenith. When Gingrich's star fell, Norquist moved on and hitched his wagon to two of the most powerful conservatives in Washington, Tom DeLay, the House majority whip, and Dick Armey, the majority leader. Norquist's secret was that he had managed to link the moneymen of the big lobbying groups on K Street in Washington to the hard-core ideological right.

As the president of Americans for Tax Reform, Norquist was a founding member of the Islamic Institute, a nonprofit foundation promoting Muslim political movements. His Muslim partner, Khaled Saffuri, was deputy director for the American Muslim Council (AMC) and had an extensive network of contacts with other Muslim-American leaders.

On the surface, Norquist's stratagem to win the Muslim-American vote had a powerful political appeal. Muslims had voted two to one for Clinton in 1996, [25] but Norquist argued that they could easily be won over to the Republican side. It is axiomatic that come election time, every American presidential candidate rallies wholeheartedly behind Israel. But the Republicans could make the case that Bush's ties to the oil lobby made him more receptive to Arab and Muslim concerns. In addition, his father had been relatively tough on Israel and had in 1991 threatened to suspend loans to Israel in an effort to stop ongoing Israeli settlements in Palestinian territories. [26] "That was a sense the Bush people played up: 'I'm my father's son,' and people liked that," said James Zogby, the head of the Arab American Institute, who served as a Gore adviser during the campaign. Finally, and perhaps most important, when Al Gore picked a Jewish running mate, Joe Lieberman, Muslims became much more receptive to Republicans.

One problem with Norquist's strategy, however, was that Muslim Americans are not a homogeneous ethnic group. Many are African Americans who converted to Islam. Many are immigrants from Pakistan, India, Iran, Africa, and the Middle East. Less than 20 percent of American Muslims are of Arab descent. Among Arab Americans there are Arabs who immigrated before the rise of Islamic fundamentalism and who are usually moderate, and there are Muslims who came recently and are more likely to be Islamic fundamentalists. There are many different Islamic sects, and each has a different agenda. Finally, even though the vast majority of Muslim Americans are moderates who are well integrated into American society, many of the biggest and most powerful Muslim organizations in the United States are run by Wahhabi Islamic fundamentalists.

The inordinate influence of Wahhabi Islam in the American Muslim community dates back to the eighties, when the Saudis saw an opportunity to gain sway over the burgeoning new Islamic community in the United States by establishing what author Steven Schwartz calls the "Wahhabi lobby." In many ways, Schwartz says, to win political power in America, the Saudis chose to replicate the model created by influential Jewish and Israeli lobbying groups. With Saudi backing, American Muslims started organizations like the Council on American Islamic Relations (CAIR), which was similar to the Anti- Defamation League; the American Muslim Council (AMC), which was modeled on the American Jewish Committee; the Muslim Public Affairs Council (MPAC), which was similar to the American Israel Public Affairs Committee, and so on. [27]

As Schwartz pointed out in congressional testimony, the generous Saudi support of Islam in the United States could easily be documented on the official website of the Saudi embassy. [28] [xi] In 1995, the Saudi government reported $4 million in donations to construct a mosque complex in Los Angeles, named after Ibn Taymiyyah, one of the forefathers of Wahhabism. The same year, the website reported a $6-million donation for a mosque in Cincinnati, Ohio. In 1999, the Saudis helped CAIR buy land for its Washington, D.C., headquarters. In 2000, the kingdom contributed to Islamic centers and mosques in Washington, Los Angeles, Fresno, Denver, and Harrison, New York. In all, Schwartz estimated that over many years the Saudis have given at least $324 million to mosques and Islamic groups in the United States. As a result, out of thousands of mosques in the United States -- estimates range from twelve hundred to as high as six thousand -- as many as 80 percent have come under Wahhabi control. [29] According to Schwartz, that means having authority over property, buildings, appointment and training of imams, the content of preaching, the distribution of Friday sermons from Riyadh, and of literature distributed in mosques and mosque bookstores.

Innocent as such charitable contributions may sound, in fact they were effectively a continuation of the same global apparatus that had created and funded Al Qaeda. Far from being confined to the Middle East, such charitable funding went to Muslims all over the world -- including the United States. This was money that went not just to fund terrorist activities but to support thousands of mosques, schools, and Islamic centers that were dedicated to the jihad movement in non-Muslim countries.

Just how rigorous Schwartz was in arriving at his figure of $324 million in Saudi funding is unclear, but other sources suggest his estimate is not an exaggeration. According to U.S. News and World Report, since 1975, the Saudis have allocated a total of $70 billion to this international campaign. [30] That makes the Saudi program, according to Alex Alexiev of the Center for Security Policy, a Washington think tank, the biggest worldwide propaganda campaign in history -- far bigger than Soviet propaganda efforts at the height of the Cold War.

As Schwartz noted, even in the United States the money went to charities "many of which have been linked to or designated as sponsors of terrorism." [31] Al-Kifah Refugee Center, the Brooklyn branch of which was the locus of the 1993 World Trade Center bombing conspiracy, was effectively such a U.S. outpost for Al Qaeda. Even events sponsored by supposedly mainstream national Muslim groups could be overtly anti-Semitic. At a 1998 rally sponsored by CAIR and the American Muslim Council, for example, five hundred people sang a song with the lyrics "No to the Jews, descendants of the apes."

As a result, Norquist's Muslim strategy was sometimes criticized -- usually from the right -- for giving credibility to Muslim groups that seemed harmless, but were in fact supporting extremist interests. [xii] Outspoken critics of the policy included conservative writers and commentators such as Frank Gaffney, Cal Thomas, Michelle Malkin, Kenneth Timmerman, and David Keene. [32] According to Mona Charen, "The names of the Saudi fronts are benign, but a cursory examination of the leaders reveals their radicalism. Eric Vickers, executive director of the American Muslim Council, has refused to denounce any terror group practicing suicide bombing in the Middle East and has even declined to denounce Al Qaeda, calling it a 'resistance movement.'" [33] If there were any doubt, AMC's website made its position about Islamist terrorism quite clear, warning its Muslim readers that when the Feds came to investigate terrorism, "Don't talk to the FBI." [34]

According to Mustafa Elhussein, secretary of a center for Muslim intellectuals known as the Ibn Khaldun Society, "There is a great deal of bitterness that such groups have tarnished the reputation of mainstream Muslims" because "self-appointed leaders ... spew hatred toward America and the West and yet claim to be the legitimate spokespersons for the American Muslim community." [35] Elhussein believes not only that they should "be kept at arm's length from the political process, but that they should be actively opposed as extremists."

Nevertheless, with Norquist working behind the scenes, Bush aggressively pursued the Islamists in hopes of winning their endorsements. In appearances on TV, Bush and fellow campaign staffers referred not just to churches and synagogues as places of worship, but to mosques as well. Again and again, Governor Bush sought out meetings with Muslim leaders -- often without looking into their backgrounds. He invited the founder of the American Muslim Council, Abdurahman Alamoudi, to the governor's mansion in Austin. In the mid-1990s, Alamoudi had played an important role in recruiting as many as a hundred "Islamic lay leaders" for the U.S. military. The Wall Street Journal reported that he had arranged for "an arm of the Saudi government" called the Institute of Islamic and Arabic Sciences to train "soldiers and civilians to provide spiritual guidance when paid Muslim chaplains aren't available." The Journal added that there were indications that "the school ... disseminates the intolerant and anti Western strain of Islam espoused by the [Saudi] kingdom's religious establishment." A self-proclaimed supporter of Hamas and Hezbollah, Alamoudi reportedly attended a terrorist summit in Beirut later in 2000 with leaders of Hamas, Hezbollah, and Al Qaeda. [36] [xiii] But such a militant background did not keep Alamoudi away from Norquist and Bush. According to an article by Frank Gaffney, Alamoudi wrote two checks for $10,000 each, one an apparent loan, to help found Norquist's Islamic Institute. [37] [xiv]


On March 12, 2000, Bush and his wife, Laura, met with more Muslim leaders at a local mosque in Tampa, Florida. [38] Among them was Sami Al Arian, a Kuwaiti-born Palestinian who was an associate professor of engineering at the University of South Florida. George and Laura Bush had their photo taken with him at the Florida Strawberry Festival. Laura Bush made a point of complimenting Al-Arian's wife, Nahla, on her traditional head scarf and asked to meet the family. Nahla told the candidate, "The Muslim people support you." Bush met their lanky son, Abdullah Al Arian, and, in a typically winning gesture, even nicknamed him Big Dude. [39] In return, Big Dude's father, Sami Al-Arian, vowed to campaign for Bush and he soon made good on his promise in mosques all over Florida.

But Al-Arian had unusual credentials for a Bush campaigner. Since 1995, as the founder and chairman of the board of World and Islam Enterprise (WISE), a Muslim think tank, Al-Arian had been under investigation by the FBI for his associations with Islamic Jihad, the Palestinian terrorist group. [40] Al-Arian brought in Ramadan Abdullah Shallah, the number-two leader in Islamic Jihad, to be the director of WISE. A strong advocate of suicide bombings against Israel, Shallah was allegedly responsible for killing scores of Israelis in such attacks. [41]

Al-Arian also brought to Tampa as a guest speaker for WISE none other than Hassan Turabi, the powerful Islamic ruler of Sudan who had welcomed Osama bin Laden and helped nurture Al Qaeda in the early nineties.

Al-Arian has repeatedly denied that he had any links to Islamic terrorism. But terrorism experts have a different view. "Anybody who brings in Hassan Turabi is supporting terrorists," said Oliver "Buck" Revell, the FBI's former top counterterrorist official, now retired and working as a security consultant. [42]

Nor were those Al-Arian's only ties to terrorists. According to American Jihad by Steven Emerson, in May 1998 a WISE board member named Tarik Hamdi personally traveled to Afghanistan to deliver a satellite telephone and battery to Osama bin Laden. [43] In addition, Newsweek reported that Al-Arian had ties to the 1993 attack on the World Trade Center. Among his claims to fame, the magazine said, Al-Arian had "made many phone calls to two New York-area Arabs who figured in the World Trade Center bombing investigation." [44]

There were also Al Arian's own statements. In 1998, he appeared as a guest speaker before the American Muslim Council. [45] According to conservative author Kenneth Timmerman, Al-Arian referred to Jews as "monkeys and pigs" and added, "Jihad is our path. Victory to Islam. Death to Israel. Revolution! Revolution! Until victory! Rolling, rolling to Jerusalem!"

That speech was part of a dossier compiled on Al-Arian by federal agents who have had him under surveillance for many years because of suspected ties to terrorist organizations. In a videotape in that file, Al Arian was more explicit. When he appeared at a fundraising event, Timmerman says, he "begged for $500 to kill a Jew." [46] [xv]

Finally -- a fact that Bush could not have known at the time -- Al-Arian would be arrested in Florida in February 2003 on dozens of charges, among them conspiracy to finance terrorist attacks that killed more than one hundred people -- including two Americans. The indictment alleged that "he directed the audit of all moneys and property of the PIJ [Palestinian Islamic Jihad] throughout the world and was the leader of the PIJ in the United States." [47] The charges refer to the Islamic Jihad as "a criminal organization whose members and associates engaged in acts of violence including murder, extortion, money laundering, fraud, and misuse of visas, and operated worldwide including in the Middle District of Florida." Al-Arian was still facing prosecution in December 2003. [xvi]

Astonishingly enough, the fact that dangerous militant Islamists like Al-Arian were campaigning for Bush went almost entirely unnoticed. Noting the absence of criticism from Democrats, Bush speechwriter David Frum later wrote, "There is one way that we Republicans are very lucky -- we face political opponents too crippled by political correctness to make an issue of these kinds of security lapses." [48]

Those who were most outraged were staunch Bush supporters and staffers like Frum. "Not only were the al-Arians not avoided by the Bush White House, they were actively courted," Frum wrote in the National Review more than two years later. "Candidate Bush allowed himself to be photographed with the Al-Arian family while campaigning in Florida. ... The Al-Arian case was not a solitary lapse. ... That outreach campaign opened relationships between the Bush campaign and some very disturbing persons in the Muslim-American community." [49]

Nevertheless, Norquist continued to build a coalition of Islamist groups to support Bush. On July 31, 2000, the Republican National Convention opened in Philadelphia with a prayer by a Muslim, Talat Othman, in which Othman offered a duaa, a Muslim benediction. [50] It was the first time a Muslim had addressed any major U.S. political gathering. A third-generation American and a businessman from Chicago of Muslim-Arab descent, Othman was chairman of the Islamic Institute. He had also been the board member of Harken Energy representing the interests of Abdullah Taha Bakhsh, the Saudi investor who had helped Bush make his fortune by bailing out Harken in the late eighties.

When the convention ended on August 3, after George W. Bush had formally been nominated for president, between his family's extended personal and financial ties to the House of Saud and his campaign's ties to Islamists, it could be said that he was truly the Arabian Candidate.


Not that Bush was alone in pursuing Muslim voters. Gore occasionally mentioned Muslims as well and met with Muslim leaders at least three times. But because of their unshakable ties to Israel, the Democrats rarely got more than a mixed reception. Hillary Clinton, who was then running for Senate, had won goodwill for endorsing a Palestinian state in 1998. But when she returned a $50,000 donation from the American Muslim Alliance, saying their web site had offensive material, Muslims saw her as pandering to Jewish voters in New York. [51] Later in the summer, the Democrats invited Maher Hathout, the senior adviser at the Muslim Public Affairs Council, to give a prayer at the Democratic National Convention. But the Gore team was always a step behind. [52]

Meanwhile, Norquist associate Khaled Saffuri had been named national adviser on Arab and Muslim affairs for the Bush campaign. In September, Saffuri joined Karl Rove in his car as Rove was catching a ride to the airport and explained to him that the vote of Arab Americans -- both Muslims and Christians -- was still within Bush's grasp if he just said the right things. [53] Rove, apparently, was happy to listen to Saffuri's suggestions.

As the campaign headed into the homestretch, the two candidates were neck and neck, but Bush, with his disarming, self- deprecating charm, was winning on issues of style. "I've been known to mangle a syll-obble or two," he told reporters. By contrast, Gore was stuffy and self-conscious. Mocked for repeatedly using the term lockbox to suggest that funding for Social Security and Medicare should be untouchable, Gore was caricatured, not without reason, as a finicky policy wonk. But the level of American political discourse was such that the media obsessed over trivial questions such as whether a character in the movie Love Story had been based on Gore and whether he was concealing a bald spot.

On Tuesday, October 3, 2000, the first debate with Gore was a triumph over expectations for Bush, with his reputation for verbal missteps. Next to the vice president, who came off as a stiff, self-conscious, supercilious pedant, Bush appeared charming and at ease with himself. Afterward, thousands of articles appeared all over the country criticizing Gore for making irritating sighs and winces while Bush was speaking.

Two days after the debate, on October 5, Bush was in Michigan to meet with GOP activist George Salem and several other Arab Americans to help him prepare for the second debate with Gore. [54] Along with Florida, Michigan was one of two crucial swing states with a big Muslim electorate. An attorney at the politically wired law firm of Akin Gump Strauss Hauer & Feld, Salem had played key roles for the 1984 Reagan Bush campaign and the 1988 Bush-Quayle campaign, and helped Bush raise $13 million from Arab Americans for the 2000 presidential campaign. In addition to being active in Arab-American affairs, Salem was the lawyer for Saleh Idriss, the owner of the El-Shifa pharmaceutical factory in Sudan, who was suing the U.S. government over the bombing of his factory, which had allegedly made chemical weapons for Al Qaeda. [xvii] Now he was advising the son as he had once advised the father.

Salem made clear to Bush that two issues that would animate Muslim-American voters were the elimination of racial profiling at airports to weed out terrorists and the use of "secret evidence" against Muslims in counterterrorism investigations. The campaign against secret evidence -- i.e., the use of classified information in a court case -- was a pet project of Sami Al-Arian, the Florida Islamist campaigning for Bush, [55] in part because Al-Arian's brother-in-law, Mazen Al-Najjar, had been detained on the basis of secret evidence for nearly four years. [xviii]

On Wednesday, October 11, the second presidential debate took place in Winston-Salem, North Carolina. The topic was foreign policy, a field in which Gore was thought to have a major advantage over a Texas governor who had rarely ventured abroad. The first questions had to do with when it would be appropriate to use American military force, especially with regard to the Middle East.

One might surmise that Bush's answers would be congruent with policy papers being drawn up by his advisers. Just a few weeks earlier, in September, the Project for a New American Century, with which so many key Bush advisers were associated, [xix] had released a new position paper, "Rebuilding America's Defenses," which dealt with precisely those questions and articulated a bold new policy to establish a more forceful U.S. military presence in the Middle East. The PNAC plan acknowledged that Saddam Hussein's continued presence in Iraq might provide a rationale for U.S. intervention, but it also asserted that it was desirable to have a larger military presence in the Persian Gulf -- whether or not Saddam was still in power and even if he was not a real threat. "The United States has for decades sought to play a more permanent role in Gulf regional security. While the unresolved conflict with Iraq provides the immediate justification, the need for a substantial American force presence in the Gulf transcends the issue of the regime of Saddam Hussein," [56] the paper said.
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Re: House of Bush, House of Saud, by Craig Unger

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PART 2 OF 2 (CH. 12 CONT'D.)

The policy was so radical that even its authors realized that it would be impossible to implement "absent some catastrophic and catalyzing event -- like a new Pearl Harbor." [57] In the pre-9/11 world, voters had not exactly been demanding war in the Middle East or any such radical change in foreign policy. As the presidential campaign neared its last stages, such issues had not even been put before the American electorate. Nor was such a policy likely to playwell with the Muslim voters Bush was courting. So when it was Bush's turn to answer, he gave a far more moderate response. He repeatedly asserted that it was essential for the United States to be "a humble nation." "Our nation stands alone right now in the world in terms of power," he said. "And that's why we've got to be humble and yet project strength in a way that promotes freedom. ... If we're an arrogant nation, they'll view us that way, but if we're a humble nation, they'll respect us."

More specifically, Bush dismissed the prospect of toppling Saddam because it smacked of what he called "nation building." He chided the Clinton administration for not maintaining the multilateral anti-Saddam coalition that his father had built up in the Gulf War. [58] [xx]

To the tens of millions of voters who had their eyes trained on their televisions, Bush had put forth a moderate foreign policy with regard to the Middle East that was not substantively different from the policy proposed by Al Gore, or, for that matter, from Bill Clinton's. Only a few people who had read the papers put forth by the Project for a New American Century might have guessed a far more radical policy had been developed.

After the Middle East had been discussed, moderator Jim Lehrer asked the two candidates a follow-up question from the previous presidential debate about whether they would support laws to ban racial profiling by police. The question referred to recent instances of racism directed at African Americans, but Bush saw his opening. "There is [sic] other forms of racial profiling that goes on in America," he said. "Arab Americans are racially profiled in what's called secret evidence. People are stopped, and we got to do something about that."

Bush was apparently somewhat confused. He had conflated two separate issues -- interrogating Arab Americans at airports because people of Middle Eastern descent might be terrorists, and using secret evidence in court in prosecutions against alleged terrorists. But his onstage listeners did not seem to notice, nor did they point out that Bush's newly found civil libertarian stance ran counter to tendencies he had espoused in the past. Bush was renowned for being at odds with the American Civil Liberties Union. But now Bush was stealing a page right out of the ACLU playbook, arguing in effect that the use of secret evidence violated the constitutional right to due process of law. In fact, the ACLU had said the same thing in different words, asserting, "The incarceration and deportation of legal residents and others on the basis of secret evidence is a practice reserved for totalitarian countries, not the United States." [59]

Bush's sudden about-face left the Democrats dumbfounded. But they were not about to attack him for adopting a civil libertarian position -- even though he was campaigning with people who were later charged with supporting terrorism. Al Gore scurried to adopt the same position against secret evidence but too late. Bush had been the first candidate to utter the code words -- "racial profiling" and "secret evidence" -- that unlocked Muslim-American support. "Within a few seconds I got thirty-one calls on my cell phone," said Usama Siblani, publisher of an Arab-American newspaper in Michigan. "People were excited." [60] The American Muslim Political Coordination Council (AMPCC), an umbrella organization of Muslim political groups, said Bush had shown "elevated concern" over the matter. [xxi]

George Salem was elated. "It is unprecedented in U.S. presidential debate history for a candidate for president of the United States to reference such support for Arab-American concerns, and to single out Arab Americans for attention," he said. [61]


The day after the debate, however, October 12, as the USS Cole was docked in Aden, Yemen, for refueling, a white fiberglass skiff with two men and five hundred pounds of a powerful plastic explosive approached the navy destroyer and exploded, killing seventeen American sailors. [62] Counterterrorism czar Richard Clarke had no doubt that bin Laden was behind it and hoped to retaliate even though time was running out for the Clinton administration. [63]

In the presidential campaign, however, even the slaughter of seventeen more Americans did not make terrorism a major issue. Quietly, the Bush campaign was courting a number of Saudi-sponsored organizations and individuals such as the American Muslim Council and Sami Al-Arian that were tied to the very same Islamic fundamentalist charities, such as the Holy Land Foundation and the SAAR network of Islamic charities, that counterterrorism officials were trying to investigate. But American voters would never learn that.

What they heard instead was a response by Bush that suggested he had compassion for those who had lost their lives: "Today, we lost sailors because of what looks like to be a terrorist attack." But as Bush continued, his response clearly showed he did not yet understand the new era of terrorism: "Terror is the enemy. Uncertainty is what the world is going to be about, and the next president must be able to address uncertainty. And that's why I want our nation to develop an antiballistic missile system that will have the capacity to bring certainty into this uncertain world." None of Al Qaeda's terrorist attacks had involved missiles, of course, and Bush's proposal of an antiballistic missile system suggests that he failed to understand that Al Qaeda's terrorism was fundamentally different from conventional warfare.

Meanwhile, in response to the three garbled sentences Bush had uttered about Arab Americans in the second debate, endorsements from Muslim groups rolled in for Bush. On Thursday, October 19, a Michigan umbrella group of more than twenty Arab-American groups came out for Bush. The Detroit Free Press reported, "What turned them to Bush, they said, was that he specifically mentioned Arab Americans in the second presidential debate and their concerns about airport profiling and the use of secret evidence." [64]

Four days later, the American Muslim Political Coordination Council called a press conference in Washington and announced its endorsement of George W. Bush. The head of the group, Agha Saeed, explained why: "Governor Bush took the initiative to meet with local and national representatives of the Muslim community. He also promised to address Muslim concerns on domestic and foreign policy issues." [65]

As an umbrella organization speaking for several major national Muslim groups, its endorsement meant thousands and thousands of votes to Bush on November 7 -- especially in Florida, where Al-Najjar's imprisonment was very much a live issue. The cliche was that every vote counted, and this time it would have fresh meaning in the closest and most controversial election in American history.


In the end, the outcome of the election would be decided by Florida's electoral college votes. And in Florida the result was so close, and so riddled with irregularities, that a recount was necessary. The battle over the recount soon worked its way to the U.S. Supreme Court. In an election with such a razor-thin margin, any one of dozens of factors can be held responsible. Ralph Nader's third-party candidacy had taken votes from Al Gore. Various efforts had been made to dissuade black voters from getting to the polls. The "butterfly" ballots of Palm Beach County were so confusing that they went uncounted. The "hanging chads" and "dimpled chads" -- rectangular bits of paper that were not completely punched out of the punch-card ballots -- led to counting irregularities.

But in the thousands of postmortems about the election, one factor was largely overlooked. According to an exit poll of Muslims in Florida conducted by the American Muslim Alliance, 91 percent voted for Bush, 8 percent for Ralph Nader, and only 1 percent for Al Gore. Likewise, the Tampa Bay Islamic Center estimated that fifty-five thousand Muslims in Florida voted and that 88 percent of them favored Bush. [66] All of which meant that the margin of victory for Bush among Florida Muslims was many, many times greater than his tiny statewide margin of victory of 537 votes.

With the Bush restoration in full swing, GOP partisans eagerly claimed whatever credit they might reasonably take for the Bush victory, and Grover Norquist was no exception. "George W. Bush was elected President of the United States of America because of the Muslim vote," he wrote in the right-wing American Spectator. "... That's right," he added, "the Muslim vote." [67]

Like every other group that contributed to Bush's victory, the Islamists realized that the tiny margin of victory in Florida had increased their leverage. Agha Saeed, the AMPCC chairman, said, "It won't be long before political analysts realize that Muslim voters have played a historic role." And Sami Al-Arian, the engineering professor at the University of South Florida who had referred to Jews as "monkeys and pigs," asserted that the role of the Muslim vote in Florida was "crucial, even decisive." [68]

Even the party regulars agreed. As Tom Davis, the chairman of the National Republican Congressional Committee, put it, without the Muslim endorsements "Florida would have been reversed." [69] In other words, without the mobilization of the Saudi-funded Islamic groups, George W. Bush would not be president today.


[i] Giant energy-industry law firms such as Vinson & Elkins and Baker Botts put in $202,850 and $116,121 respectively; high- flying Enron, the corrupt oil giant, contributed $113,800. The oil and gas industry contributed $1,929,451 to Bush -- thirteen times as much as it gave to Democratic nominee Al Gore. Altogether, the energy sector contributed $2.9 million to Bush and only $325,000 to Gore.
[ii] During her tenure at Chevron, Rice even had an oil tanker named after her. When Bush appointed her to be national security adviser, Chevron quietly renamed the ship Altair Voyager.
[iii] Members included Senator Jesse Helms; Congressmen Dick Armey and Tom DeLay; the Reverend Jerry Falwell; Oliver North; Phyllis Schlafly of the Eagle Forum; the Reverend Donald Wildmon of the American Family Association; the Reverend Pat Robertson of The 700 Club and the Christian Coalition; Ralph Reed of Century Strategies; and Christian Reconstructionist Rousas John Rushdoony.
[iv] McCain had voted against a cancer research project as part of a larger spending bill that he said contained wasteful spending, but he had supported many other bills funding cancer research.
[v] Bush became something of a laughingstock among East Coast liberals for endless gaffes that became known as Bushisms -- all of which only endeared him further to his constituency. "I know how hard it is for you to put food on your family," he told New Hampshire voters. In South Carolina, he asserted, "Rarely is the question asked: Is our children learning?" and "We must all hear the universal call to like your neighbor just like you like to be liked yourself." He referred to Kosovars as Kosovian, Greeks as Grecians, and the East Timorese as East Timorians.
When it came to economics, Bush asserted, "A tax cut is really one of the anecdotes to coming out of an economic illness." And in Iowa, he explained to voters the dangers of foreign policy: "When I was coming up, it was a dangerous world, and you knew exactly who they were. It was us versus them, and it was clear who them was. Today, we are not so sure who the they are, but we know they're there."
[vi] It said that the Bush campaign could run into trouble because "among the figures Bush dealt with indirectly when he ran oil companies was Saudi banker Khaled Bin Mahfouz who, Intelligence Newsletter has learned, is currently under house arrest in a hospital in Taef at the behest of the American authorities. The latter are looking into contributions Mahfouz is said to have made to welfare associations close to terrorist Ussama [sic] Bin Laden." (Bin Mahfouz's lawyer Cherif Sedky denies that bin Mahfouz was in fact under house arrest.)
[vii] According to a search on the Nexis Lexis database, only three articles in the entire country raised the issue during the whole campaign, one by Gene Lyons in the Little Rock Democrat-Gazette, one by John Judis in the American Prospect, and one by David Corn and Paul Lashmar in the Nation.
[viii] The Saudis did contribute to George H. W. Bush's presidential library, but on that score they were truly bipartisan, having made donations to every presidential library created over the last thirty years.
[ix] For a more complete breakdown of Saudi investments, contracts, and contributions to companies, foundations, and charities owned by the Bushes and their associates, see Appendix C on page 295. It should be noted that the above number is a conservative estimate of the total business done between the Saudis and companies related to the interests of the Bush family and their associates. The figure does not include undisclosed legal fees for deals with the Saudis done by Baker Botts, nor does it include contracts between large publicly held companies, such as the major oil companies, and the Saudis. The actual total will never be known and may well be substantially greater.
[x] There is considerable disagreement as to how many Muslims there are in the United States. Some estimates place the number as low as 3.5 to 4 million, while others go as high as 12 million. A report by the Council on American-Islamic Relations and other organizations in April 2001 put the number at 7 million, and a Cornell University study also came up with the same figure.
[xi] The information on Saudi funding of mosques in the United States has since been removed.
[xii] Subsequent to 9/11, through Operation Greenquest, an attempt to stop the flow of money to terrorists, the U.S. Treasury Department took action against a number of Islamic charities accused of funneling money to terrorists, including the Global Relief Foundation, the Benevolence International Foundation, and the Holy Land Foundation for Relief and Development.
[xiii] In September 2003, Alamoudi was arrested after arriving from a trip to the Middle East in which he allegedly tried to transport $340,000 from a group tied to Libyan leader Muammar Qaddafi. Prosecutors also said Alamoudi was at the center of several northern Virginia-based Islamic charity groups, including the International Relief Organization, under investigation for allegedly financing terrorism. Finally, in December 2003, the Wall Street Journal revealed that Alamoudi had helped back a program at the Institute of Islamic and Arabic Sciences in America to train Islamist imams for the U.S. military and that even well after 9/11, in 2002, the Pentagon had hired them. The Journal reported that the institute had a number of troubling ties to terrorism and that, according to congressional investigators, one of its clerics was a spiritual adviser to two of the September 11 hijackers.
[xiv] Alamoudi was welcomed at the White House by both President Bill Clinton and George W. Bush for his work for Muslim causes.
[xv] In an article in the Tampa Tribune, Al-Arian later explained, "In the heat of the moment, one may not use the best expressions, especially during impromptu presentations. I had such regrettable moments. However, on many occasions, some of my speeches were mistranslated or totally taken out of context."
[xvi] In December 2003, clerks at a federal courthouse in Tampa accidentally destroyed search warrants in the Al-Arian case. The documents contained affidavits from federal agents that supported 1995 searches of Al-Arian's home and offices and were among thousands of documents shredded sometime between 1998 and 2002. As this book went to press, there were serious questions as to whether the destruction of the documents might affect his prosecution.
[xvii] Salem also represented the Holy Land Foundation for Relief and Development, a foundation that has been tied to terrorism.
[xviii] INS judge R. Kevin McHugh ultimately ruled in Al-Najjar's favor, asserting, "Although there were allegations that the ICP and WISE [the two organizations in question] were fronts for Palestinian political causes, there is no evidence before the Court that demonstrates that either organization was a front for the Palestinian Islamic Jihad. To the contrary, there is evidence in the record to support the conclusion that WISE was a reputable and scholarly research center and the ICP was highly regarded" (emphasis added). This same ruling was upheld by a three-judge panel in Washington, D.C., and Attorney General Janet Reno, who all had access to the secret evidence.
[xix] PNAC signatories who became key figures in the administration of George W. Bush included Vice President Dick Cheney, Secretary of Defense Donald Rumsfeld, Deputy Secretary of Defense Paul Wolfowitz, National Security Council staffer Elliott Abrams, and Zalmay Khalilzad, special presidential envoy for Afghanistan.
[xx] Bush reasserted this point of view in the final presidential debate. "It's going to be important to rebuild that coalition to keep the pressure on [Saddam]," he said. "There may be some moments when we use our troops as peacekeepers, but not often. I'm not so sure the role of the United States is to go around the world and say, 'This is the way it's got to be.'" Cheney echoed Bush's position, saying that the United States should not act as though "we were an imperialist power, willy-nilly moving into capitals in that part of the world."
[xxi] Among the groups operating under the AMPCC are the American Muslim Alliance (AMA), American Muslim Council (AMC), Council on American-Islamic Relations, and Muslim Public Affairs Council (MPAC).


1. Stuart Stevens, The Big Enchilada, p. 146.
2. Bush had gotten religion in 1985 when the Reverend Billy Graham visited the Bushes at their summer home in Kennebunkport, Maine. "He planted a seed in my heart and I began to change," he said. "... I realized that alcohol was beginning to crowd out my energies and could crowd, eventually, my affections for other people. To put it in spiritual terms, I accepted Christ"; and Lois Romano and George Lardner Jr., "1986: A Life-Changing Year; Epiphany Fueled Candidate's Climb," Washington Post, July 25, 1999, p. A 1.
3. Joan Didion, "Mr. Bush & the Divine," New York Review of Books, November 6, 2003
4. Ibid.
5. Ibid.
6. Interview with source who worked with Bush in the Reagan-Bush administration.
7. Didion, "Mr. Bush & the Divine"; and Skipp Porteous, "Bush's Secret Religious Pandering," adapted from Penthouse, November 2000.
8. Didion, "Mr. Bush & the Divine."
9. Letter to President William J. Clinton, January 26, 1998, signed by Elliott Abrams, Richard L. Armitage, William J. Bennett, Jeffrey Bergner, John Bolton, Paula Dobriansky, Francis Fukuyama, Robert Kagan, Zalmay Khalilzad, William Kristol, Richard Perle, Peter W. Rodman, Donald Rumsfeld, William Schneider Jr., Vin Weber, Paul Wolfowitz, R. James Woolsey, and Robert B. Zoellick, .
10. "Rebuilding America's Defenses, Strategy, Forces and Resources for a New Century," Project for a New American Century, ... fenses.pdf .
11. Ann McFeatters, "Bush Drafting Call for Saddam's Ouster," Pittsburgh Post Gazette, November 24, 1999.
12. Sidney Blumenthal, The Clinton Wars, p. 721.
13. Ibid.; and Dana Milbank, Smashmouth, p. 197.
14. Mark Sherman and Ken Herman, "McCain Blasts Bush Ad Blitz 'That Knows No Depths,'" Atlanta Journal and Constitution, March 5, 2003.
15. Journeys with George, HBO documentary directed by Alexandra Pelosi.
16. Jacob Epstein, "The Complete Bushisms," Slate,
17. Stevens, The Big Enchilada, p. 121.
18. Journeys with George.
19. Ibid.
20. Ibid.
21. Intelligence Newsletter, March 2, 2000.
22. Craig Unger, "Saving the Saudis," Vanity Fair, October 2003.
23. Time, September 15, 2003;; Chicago Tribune, July 4, 2003; and Associated Press, July 18, 2003, final ed.
24. Alexander Rose, "How Did the Muslims Vote in 2000?" Middle East Quarterly, vol. 8, no. 3 (Summer 2001), ; the U.S. Census does not put together data on Muslims, and estimates of the population of Muslims in the United States range from 6 million to 12 million; and Cornell University study on American Muslims, April 2002, ... merica.htm .
25. Rose, "How Did the Muslims Vote in 2000?"
26. Eric Boehlert, "'Betrayed' by Bush," Salon, Apri1 3, 2002.
27. Stephen Schwartz, The Two Faces of Islam, p. 233.
28. Testimony of Stephen Schwartz, Director, Islam and Democracy Program, Foundation for the Defense of Democracies, before the Senate Judiciary Committee Subcommittee on Terrorism, Technology and Homeland Security, June 26, 2003.
29. Ibid.
30. David E. Kaplan, "The Saudi Connection," U.S. News and World Report, December 15, 2003, ... terror.htm .
31. Testimony of Stephen Schwartz.
32. Frank Gaffney Jr., "A Troubling Influence,", December 2003, ... ?ID==11209.
33. Mona Charen, "Saudi Tendrils," Creators Syndicate, February 18, 2003, ... 0218.shtml .
34. Ibid.
35. Rose, "How Did the Muslims Vote in 2000?"
36. Jeff Jacoby, "The Islamist Connections," Boston Globe, February 27, 2003, p. A 15; and Glenn Simpson, "Muslim School Used by Military Has Troubling Ties," Wall Street Journal, December 3, 2003.
37. Gaffney, "A Troubling Influence."
38. Bob McKeown, Dateline NBC, October 28, 2001.
39. Mike Allen and Richard Leiby, "Alleged Terrorist Met With Bush Adviser, Al Arian Part of Muslim Outreach," Washington Post, February 22, 2003, p. A 10.
40. Ibid.
41. Juan Gonzales, "Call Stirs Fears of Jihad Air Terror," Daily News (New York), July 19, 1996, p. 30.
42. Michael Fechter, "Ties to Terrorists," Tampa Tribune, May 28, 1995, p. 1.
43. Steven Emerson, American Jihad, p. 122.
44. Peter Katel and Mark Hosenball, "Foreign Thugs, U.S. Soil: Did Islamic Jihad Have a Covert Base in Florida?" Newsweek, May 6, 1996, p. 35.

Foreign Thugs, U.S. Soil
Did Islamic Jihad Have A Covert Base In Florida?
From the magazine issue dated May 6, 1996

LOOKING BACK ON IT, THOSE WHO knew Ramadan Abdullah Shallah in Tampa say he was either a mild-mannered college instructor with no strong views on the Middle East -- or a very secretive man who was concealing a double life. Either way, it was a shock when Shallah, after spending three quiet years around the University of South Florida, turned up in Syria last fall as the new head of Islamic Jihad. The fiery speech he gave at the funeral of his predecessor, who was probably killed by Israeli agents, was disturbing as well: "Peace does not mean anything if the cursed and cancerous entity which is Israel is not eradicated."

Embarrassed USF officials initially said they had no confirmation that the soft-spoken, 38-year-old, British-trained economist they hired is in fact the same person as Islamic Jihad's new leader. But he was, and he may have served as the organization's No. 2 man the whole time he lived in the Tampa area. A senior Justice Department official calls Shallah "a poster child" for the administration's antiterrorism bill, which Bill Clinton signed last week. Among other changes, the new law makes it easier to deport foreign nationals suspected of being members of terrorist groups, even based on classified evidence.

Shallah is now beyond the reach of United States law, but the investigation of Islamic Jihad activities in Tampa is getting stranger. Last week university officials were forced to virtually shut down the school's main campus in response to a bomb threat demanding that the "biased, racist, liberal American press" apologize to Shallah. A week earlier authorities had revealed that one of Shallah's colleagues, engineering professor Sami al-Arian, made many phone calls to two New York-area Arabs who figured in the World Trade Center bombing investigation. Al-Arian, now on sabbatical, has denied any connection to terrorism. But immigration officials are opposing his attempt to become a naturalized U.S. citizen.

The Feds are seeking to shut down suspected U.S.-support networks for other foreign terrorist groups as well. Mousa Muhammad Abu Marzook, an admitted "midlevel" political activist for the Palestinian radical group Hamas, has been held in a New York jail since agents nabbed him at Kennedy Airport last July. The Gaza-born businessman holds a green card allowing him U.S. residence and denies any involvement with terrorist activities. But U.S. officials are seeking to extradite him to Israel, based on Israeli allegations that he authorized the recruitment and training of terrorists and sent cash to the Middle East to finance arms deals. Sympathizers say Marzook is being singled out for harsh treatment because he is an Arab. The case could take years to resolve--but it is part of Washington's new determination to deny safe haven to those who support terrorism overseas.

45. Kenneth Timmerman, "Arrested Prof Was Guest at Bush White House," WorldNetDaily, Insight Magazine, February 21, 2003, ... E_ID=31172 . See also Emerson, American Jihad, p. 225.

Arrested prof was guest of Bush at White House
Al-Arian had photo taken with president despite suspicion of links to terror groups

Posted: February 21, 2003, 5:46 pm Eastern, by Kenneth R. Timmerman
© 2008 News World Communications Inc.


A controversial professor who was arrested by federal agents in Tampa, Fla., yesterday had sufficient political connections to be invited to the White House in late May or early June 2001, three months before the al-Qaida attacks on the World Trade Center and the Pentagon, and to have a photograph taken with President George W. Bush, Insight has learned.

The professor, Sami Amin Al-Arian, was suspended from the University of South Florida, or USF, following the Sept. 11 carnage because of alleged ties to Palestinian terrorists. He reportedly had been under investigation by federal agents in the summer of 2001 when he was cleared by White House staff and the Secret Service to enter the presidential complex.

Just weeks later, Al-Arian's son, who then worked for former Rep. David Bonier, D-Mich., was dragged by Secret Service agents from a White House meeting on June 28 because of security concerns. The incident caused a flap for Bush, and his aides later apologized to appease Muslim critics.

A Palestinian born in Kuwait, the USF professor arrested in Tampa was taken into custody by the FBI along with three others following their indictment by a federal grand jury on 50 counts of terrorist-related charges involving 14 years of alleged activities on behalf of Palestinian Islamic Jihad, or PIJ, an officially cited terrorist organization. The PIJ has claimed responsibility for numerous suicide murders in Israel, including killings of American citizens.

The "meet and greet" session at the White House with Bush in late May or early June 2001 was not the first time Al-Arian had managed to get close to the president. During the 2000 election campaign, the USF professor and alleged U.S. money man for terrorists attended a Bush fund-raiser in Florida where he was photographed with the presidential candidate despite Secret Service protection for the GOP contender.

"Look, Sami Al-Arian was based in Tampa and probably paid money, like anybody else, to attend a fund-raiser," Khaled Saffuri of the Islamic Institute in Washington tells Insight. "If he did something wrong, he'll get his punishment."

The Justice Department alleges that the elder Al-Arian has been the chief fund-raiser and organizer for the PIJ in the United States since 1988, and used his position at the University of South Florida to gain visas to enter the United States for members of the terrorist organization. James Jarboe, FBI special agent in charge of the Tampa field office, told reporters yesterday that the "arrests underscore the vigilance of the FBI's Joint Terrorism Task Force [JTTF] to dismantle and disrupt those who support terrorism." The arrests "also reflect the continued cooperation among the FBI and other federal, state and local law-enforcement agencies as they work together in the JTTF," he added.

One of Al-Arian's colleagues at the University of South Florida, Ramadan Abdullah Shallah, left the U.S. precipitously, according to the indictment, after the head of the PIJ was assassinated by an alleged Israeli hit squad in 1996. Shallah surfaced several days later in Damascus, Syria, to become the new secretary general of the terror group. Shallah was among those indicted along with Al-Arian.

The indictment, unsealed at a news conference by Attorney General John Ashcroft, alleges that Al-Arian and his co-conspirators continued to raise funds and organize support networks for the terrorist attacks of the Palestinian Islamic Jihad even after Sept. 11.

The PIJ killings continued. On Nov. 4, 2001, two American citizens, Shoshana Ben-Yishai,16, and Shlomo Kaye, 15, were among the victims of a PIJ shooting attack on a bus in the French Hill area of Jerusalem, say the indictment documents. Again on June 5, 2002, the indictment documents allege, Al-Arian's co-conspirators "murdered 17 people and wounded approximately 45 in a suicide car bombing of a bus in the vicinity of Megiddo Junction near Afula, Israel."

Al-Arian worked closely with the American Muslim Council, the Council on American-Islamic Relations and other groups with close ties to the government of Saudi Arabia, home to a majority of the suicide murderers alleged to be responsible for the Sept. 11, 2001, skyjackings that killed thousands in New York City, at the Pentagon and in a field in Pennsylvania.

Al-Arian also worked closely, according to Insight sources, with top Republican lobbyist Grover Norquist, the foundin
g chairman of the Washington-based Islamic Institute.

On April 5, 2001, the national Coalition to Protect Political Freedom, a far-left group headed by Al-Arian, gave Norquist an award for his work in opposing the use of secret evidence. Norquist told Insight last year that he was "proud" of the award, even though the Coalition was affiliated with the National Lawyer's Guild, a former Soviet-era front organization.

The Islamic Institute's current president, Khaled Saffuri, tells Insight that he "never, ever, helped Sami Al-Arian get into the White House," nor did his friend and business associate Norquist. "Grover didn't know anything about [such] meetings. We learned about them like everyone else."

An associate of Norquist who requested anonymity told Insight he was aware of Al-Arian's problems with the FBI and had even warned the White House about inviting him. "When I saw his name on the invitation list, I told the White House it was going to cause a problem," he told Insight. "The White House has to stand up for their decision. We [Norquist and his groups] had nothing to do with it."

Al-Arian is notorious for his radical anti-American and anti-Semitic statements, leaving several high-level officials in the Bush administration wondering how he could have been cleared by federal law-enforcement officers to enter the White House. All such guests are screened by the Secret Service in conjunction with other federal agencies for any outstanding criminal warrants, investigations or illegal activities. They may, however, be cleared "on higher authority."

His record, however, should have been a red light to anyone. In 1998, as a guest speaker before the convention of the American Muslim Council, Al-Arian spoke of Jews as "monkeys and pigs," adding: "Muhammad is leader. The Quran is our constitution. Jihad is our path. Victory to Islam. Death to Israel. Revolution! Revolution! Until victory! Rolling, rolling to Jerusalem!" That speech, according to Insight sources, is part of a large dossier compiled on Al-Arian by federal agents who have had him under surveillance for many years because of suspected ties to terrorist organizations. In a videotape obtained by the FBI, Insight sources reveal, Al-Arian appeared at a fund-raising event for a "mainstream" U.S. Muslim organization where he "begged for $500 to kill a Jew."

The 150-page indictment released by the Justice Department describes dozens of murders by PIJ terrorists. Al-Arian is alleged in the indictment to have raised money for many of these attacks, wiring money to terrorist cells using accounts in Israel and in the West Bank.

Al-Arian has repeatedly denied he is affiliated with any terrorist organizations, particularly after his suspension at the school following an appearance on the Bill O'Reilly show on Fox New Channel, "The O'Reilly Factor." He also has denied knowing that Shallah and other alleged terrorists with whom he worked were connected to terrorist groups. He has said he only is interested in the free exchange of ideas among intellectuals. "It's all about politics," Al-Arian told reporters as he was led away by FBI agents in Tampa.

A number of American Muslim groups, including CAIR, issued statements following the arrests and news conferences, ignoring specifics of the alleged crimes but claiming Muslims were being singled out unfairly by federal law enforcement during heightened tensions involving the Middle East and a possible war with Iraq.

"We are very concerned that the government would bring charges after investigating an individual for many years without offering any evidence of criminal activity," said Omar Ahmad, the chairman of CAIR, in a statement e-mailed to news organizations.

"This action could leave the impression that Al-Arian's arrest is based on political considerations, not legitimate national-security concerns," Ahmad said, echoing sentiments by other Muslim groups, including the Muslim American Society, which claimed in a statement that the arrest of Al-Arian "conforms to a pattern of political intimidation" by the federal government.

The University of South Florida filed a lawsuit late last summer seeking to terminate Al-Arian following his suspension the year before, based on the belief of the USF administration that the suspended professor had abused his position at the university to "cover improper activities." The university accused Al-Arian of raising funds for terrorist groups and bringing terrorists into the United States under academic cover. USF also has accused Al-Arian of supporting groups that have terrorist ties.

Al-Arian is accused with fellow co-defendants of "concealing their association with the PIJ [while seeking] to obtain support from influential individuals in the United States and under the guise of protecting Arab rights."

White House officials had no immediate comment concerning how Al-Arian gained access to Bush on at least two occasions despite known security concerns.

Kenneth R. Timmerman is a senior writer for Insight.

46. Timmerman, "Arrested Prof Was Guest at Bush White House"; and Frank Gaffney, "What's Wrong with This Picture?" Washington Times, February 27, 2003.
47. United States of America v. Sami Al-Arian et al., U.S. District Court, Middle District of Florida, Tampa Division, .
48. David Frum, "The Strange Case of Sami Al-Arian," National Review, .
49. Ibid.
50. Nora Boustany, "One Man, Making a Difference," Washington Post, August 2, 2000.
51. Rose, "How Did the Muslims Vote in 2000?"
52. Ibid.
53. Gaffney, "A Troubling Influence."
54. Rose, "How Did the Muslims Vote in 2000?"
55. Sami Al-Arian, "A Worthy Struggle," Tampa Tribune, August 18, 2002, p. 1.
56. "Rebuilding America's Defenses," Project for a New American Century.
57. Ibid.
58. Jake Tapper, Salon, March 11, 2003; David Sanger, "A Special Report; Rivals Differ on U.S. Role in the World," New York Times, October 29, 2000, p. A 1; and Glenn Kessler, "U.S. Decision on Iraq Has Puzzling Past; Opponents of War Wonder When, How Policy Was Set," Washington Post, January 12, 2003.
59. Timothy Edgar, ACLU legislative counsel, "Secret Evidence Measure Resoundingly Defeated," .
60. Rose, "How Did the Muslims Vote in 2000?"
61. Ibid.
62. Ian Brodie, "US Crew Waved as Suicide Bomb Boat Drew Near," Times (London), October 23, 2000.
63. Judith Miller, Jeff Gerth, and Don Van Natta Jr., written by Ms. Miller, "Many Say U.S. Planned for Terror but Failed to Take Action," New York Times, December 31, 2001, ... 1070859600 .
64. Detroit Free Press, October 20, 2000.
65. "American Muslim PAC Endorses George W. Bush for President," .
66. Rose, "How Did the Muslims Vote in 2000?"
67. Grover Norquist, "The Natural Conservatives: Muslims Deliver for the GOP," American Spectator, June 2001.
68. Rose, "How Did the Muslims Vote in 2000?"
69. Ibid.
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Re: House of Bush, House of Saud, by Craig Unger

Postby admin » Wed Nov 27, 2013 5:16 am


CHAPTER THIRTEEN: Lost in Transition

Even before the Supreme Court decision awarded the presidency to the Republicans, the Bush team began behaving as if it had won. The election took place exactly ten years after the buildup of American troops in Saudi Arabia for the Gulf War, and to mark both that occasion and the impending Bush restoration, former president Bush and James Baker had proposed a hunting trip in Spain and England. The original guest list included the usual suspects from the Gulf War -- the senior Bush; James Baker; Dick Cheney; General Norman Schwarzkopf, the commander of U.S. forces during the war; former national security adviser Brent Scowcroft; and, of course, Prince Bandar, whose enormous estate in Wychwood, England, had been an ancient royal hunting ground used by Norman and Plantagenet kings. [1]

The relationship between Baker and the elder Bush had been frayed as a result of the failed reelection campaign of 1992, but the two long-time friends had patched things up as the presidency of George W. Bush became increasingly probable. When he arrived in Austin, Texas, on Election Day, Baker went to Dick and Lynne Cheney's hotel suite to listen to the results. [2] However, by the next morning, Wednesday, November 8, Al Gore was contesting the Florida vote, so Baker was enlisted to lead the legal battle to win the presidency for Bush. As a result, both he and Cheney skipped the European hunting trip.

But the lavish gathering went on as planned. On Thursday, November 9, a private chartered plane from Evansville, Indiana, picked up former president Bush in Washington en route to Madrid, where the hunting trip was to begin. Already on board was a contingent from Indiana. One member was Bobby Knight, the highly successful but extraordinarily temperamental basketball coach who had just been fired from Indiana University. [3] Other hunters on the trip were powerful coal industry executives from the Midwest -- Irl Engelhardt, the chairman and CEO of St. Louis's Peabody Energy, the world's largest coal company; and Steven Chancellor, Daniel Hermann, and Eugene Aimone, three top executives of Black Beauty Coal, a Peabody subsidiary headquartered in Evansville, Indiana.

During the campaign, Bush had proposed caps on the carbon dioxide emissions that scientists believe cause global warming, a regulatory measure that coal executives had not welcomed. But among them, the coal executives had contributed more than $700,000 to Bush and the Republicans. [4] They still had high hopes of participating in energy policy in a Bush administration and loosening the regulatory reins around the industry. Even though the recount battle was just getting under way in Florida, the Bush family was back in action, mixing private pleasure and public policy.

Once in Spain, Bush, Knight, and the executives were joined by Norman Schwarzkopf and proceeded to a private estate in Pinos Altos, about sixty kilometers from Madrid, to shoot red-legged partridges, the fastest game birds in the world. Bush impressed the hunting party as a fine wing shot and a gentleman -- the seventy-six-year-old former president was not above offering to clean mud off the boots of his fellow hunters. Throughout the trip, Bush kept in touch with the election developments via email. By Saturday, November 11, a machine recount had shrunk his son's lead in Florida to a minuscule 327 votes. "I kind of wish I was in the U.S. so I could help prevent the Democrats from working their mischief," he told another hunter in his party. [5]

On Tuesday, November 14, Bush and Schwarzkopf arrived in England, where Brent Scowcroft joined them and they continued their game hunting on Bandar's estate. [6] They kept a close eye on the zigs and zags of the recount battle. As a power play to demonstrate his confidence to the media, the Democratic Party, and the American populace, George W. Bush announced the members of his White House transition team even before the Florida vote-count battle was over.

Bandar eagerly anticipated seeing the Bush family back in Washington. Dick Cheney, Colin Powell, and Donald Rumsfeld were men Bandar already knew quite well. Others who would have access to a new President Bush his father, James Baker, Brent Scowcroft were also old friends.

Moreover, a Bush restoration would also strengthen Bandar's position in Saudi Arabia. During the twelve years of the Reagan-Bush era, Bandar had enjoyed unique powers -- partly because of his close relationship to Bush, partly because he always had King Fahd's ear. But during the Clinton era, Bandar had lost clout. Never an insider in the Clinton White House, he had disliked what he called the "weak-dicked" foreign policy team of the Clinton administration. [7] Bandar had also lost ground in Riyadh because Crown Prince Abdullah, who had effectively replaced the ailing King Fahd, had never been particularly fond of Bandar. But now, on his estate in England, Bandar was once again wired into the real powers that be, and assuming that Bush won, he would be back in a position that no other prominent foreign official could come close to.


The anticipatory mood of the Bush-Bandar hunting trip contrasted sharply with what was going on in the White House, where, during the last days of the Clinton administration, the central figures in the battle against terrorism were frustrated beyond all measure. In the wake of the bombing of the USS Cole just a few weeks earlier, counterterrorism czar Richard Clarke -- officially, head of the Counterterrorism Security Group of the National Security Council -- felt acutely that the threat of Islamist terror was greater than ever. But since the Clinton administration was leaving office, it was unclear what he would be able to do about it.

A civil servant who had ascended to the highest levels of policy making, Clarke was a true Washington rarity. As characterized in The Age of Sacred Terror, he broke all the rules. He refused to attend regular National Security Council staff meetings, sent insulting emails to his colleagues, and regularly worked outside normal bureaucratic channels. Beholden to neither Republicans nor Democrats, the crew-cut, white-haired Clarke was one of two senior directors from the administration of the elder George Bush who were kept on by Bill Clinton, and abrasive as he was, he had continued to rise because of his genius for knowing when and how to push the levers of power.

Obsessed with the fear that bin Laden's next strike would take place on American soil, after the USS Cole bombing Clarke had prepared a proposal for a massive attack on Osama bin Laden and Al Qaeda in Afghanistan. But Clarke's plan faced one major obstacle. On Tuesday, December 12, the U.S. Supreme Court ruled by a vote of 5 to 4 that the recount of the disputed votes in Florida could not continue. In effect, it had awarded the presidency of the United States to George W. Bush.

Eight days later, on December 20, 2000, Clarke presented his plan to his boss, National Security Adviser Sandy Berger, and other principals on the National Security Council. But with only a month left in the Clinton administration, Berger felt it would be ill-advised to initiate military action just as the reins of power were being handed over to Bush. [8]

At the same time, Berger was obligated to make clear to the Bush team that bin Laden and Al Qaeda posed a national security threat that required urgent and aggressive action. As a result, in the early days of January 2001, Berger scheduled no fewer than ten briefings by his staff for his successor, Condoleezza Rice, and her deputy, Stephen J. Hadley. [9] Berger decided that it was not necessary for him to go to most of the briefings, but he made a point of attending one he felt was absolutely crucial. "I'm coming to this briefing to underscore how important I think this subject is," he told Rice. [10] At that meeting Clarke presented the incoming Bush team with an aggressive plan to attack Al Qaeda.

The meeting began at 1:30 p.m. on Wednesday, January 3, 2001, in Room 302 of the Old Executive Office Building, a room full of maps and charts that had become home base for Clarke and his chief of staff, Roger Cressey. [11] With Rice present, Clarke launched into a PowerPoint presentation on his offensive against Al Qaeda. Bush administration officials have denied being given a formal plan to take action against Al Qaeda. But the heading on slide 14 belies that denial. It read, "Response to al Qaeda: Roll back." Specifically, that meant attacking Al Qaeda's cells, freezing its assets, stopping the flow of money from Wahhabi charities, and breaking up Al Qaeda's financial network. It meant giving financial aid to countries fighting Al Qaeda such as Uzbekistan, Yemen, and the Philippines. It called for air strikes in Afghanistan and Special Forces operations. The Taliban had been in power in Afghanistan since 1996, and because they were providing a haven for and being supported by Osama bin Laden, Clarke proposed massive aid to the Northern Alliance, the last resistance forces against them.

Most significantly of all, Clarke called for covert operations "to eliminate the sanctuary" in Afghanistan where the Taliban was protecting bin Laden and his terrorist training camps. [12] The idea was to force terrorist recruits to fight and die for the Taliban in Afghanistan, rather than to allow them to initiate terrorist acts all over the world. The plan was budgeted at several hundred million dollars, and Time reported, according to one senior Bush official, it amounted to "everything we've done since 9/11." [13]

After the session, Berger underscored the challenge the next administration faced. "I believe that the Bush administration will spend more time on terrorism generally, and on Al Qaeda specifically, than any other subject," he told Rice.

It seems fair to say that until this point Condoleezza Rice had not taken Islamist terrorism seriously as a threat. Less than a year earlier, in a lengthy article in Foreign Affairs, Rice had voiced her contempt for the Clinton administration's foreign policies, and expressed her views on America's strategic foreign policy concerns. [14] Her brief references to terrorism in the article suggest she saw it as a threat only in terms of the state-sponsored terrorism of Iran, Iraq, Libya, and other countries that predated the transnational jihad of bin Laden and Al Qaeda. And in her speech before the Republican National Convention, Rice had not mentioned terrorism at all. Rather she had suggested that America's most difficult foreign policy challenges would come from China. [15]

After the briefing, Rice, who was about to become Clarke's boss, admitted to him that the dangers from Al Qaeda appeared to be greater than she had realized. Then she asked him, "What are you going to do about it?" According to Clarke, "She wanted an organized strategy review. " [16] But she did not give Clarke a specific tasking.

During the changeover from an old administration to a new one, incoming officials frequently fall victim to "death by briefing" by each component of the government. Thus well-intentioned, carefully prepared plans from one administration may be sacrificed in turf wars or be lost in transition as a new administration takes office. Some members of the Bush team saw setting up a new missile defense system as their highest priority. For his part, Secretary of Defense Donald Rumsfeld wanted to overhaul the entire structure of the military. As a result, Bush, Cheney, and Rumsfeld all wanted to go after Iraq. Clarke's proposal sat there and sat there and sat there.

Nothing happened.


Meanwhile, the intricate private networks the Bushes had painstakingly assembled over four decades came alive again in the public sector with astonishing speed. Never before had the highest levels of an administration so nakedly represented the oil industry. Between them, the president, vice president, national security adviser, and secretary of commerce had held key positions in small independent oil companies (Arbusto, Bush Exploration, and Harken Energy), major publicly traded companies (Halliburton and Chevron), and one huge independent Texas oil company (Tom Brown). Secretary of the Army Thomas White was a former high-ranking Enron executive, and Robert Zoellick, the U.S. trade representative, was a member of Enron's advisory board. Others, including Karl Rove and Lewis "Scooter" Libby, Dick Cheney's chief of staff, owned large blocks of Enron stock when they joined the new Bush administration. [17]

But it was not just the oil industry that had access to the White House. Campaign contributors such as coal executives Irl Engelhardt and Steve Chancellor, both among the men who had gone hunting with George H. W. Bush in Spain, were named to Bush's Energy Transition Team. [i] Rewarding campaign contributors with direct access to White House policy makers was suddenly the rule, not the exception. According to the Center for Responsive Politics, Engelhardt and Chancellor were among 474 people named by the Bush campaign to serve as key policy advisers during the presidential transition who contributed a total of more than $5.6 million to federal candidates and party committees during the 2000 elections. Ninety-five percent of those campaign contributions went to Bush, other GOP candidates, or the Republican Party. [ii]

All in all, if one looked at George W. Bush's new administration and the people he had brought in from his father's, the extraordinary confluence of power in the public and private sectors created an enormous potential for conflicts of interest and colored serious policy questions -- especially with regard to energy policy and the Middle East. Tens of billions of dollars were at stake. The Bush administration could help decide which companies would be awarded lucrative defense contracts, how to resolve regulatory questions regarding the energy industry, whether sanctions should prohibit trade with oil-producing terrorist states such as Iran, Iraq, and Libya, and a host of other multibillion-dollar issues. Did the long history of incestuous relationships give friends, relatives, and political allies of the Bushes an inside track on winning defense contracts? Would they affect regulation of the energy industry, the Bush administration's position on trade sanctions against Iran and Iraq, or oversight of industry giants such as Enron? Given the Bush family's relationship with the House of Saud, not to mention its new alliance with Islamist groups in America, how closely would the new administration examine the rise of Islamist terrorism?

As the day approached when George W. Bush would be sworn into power, the Saudis and the Bushes decided that the occasion called for a joint celebration. On Friday, January 19, the night before the inauguration, the Baker Botts law firm threw a party for the elder George Bush and Prince Bandar at the Ronald Reagan Building, the mammoth international trade center just a few blocks from the White House. Not long afterward, unprompted, one of Bandar's aides at the Saudi embassy told a visitor, "Happy days are here again." [18]

Now that the Bush team had retaken the White House, its friends in the private sector had more clout than ever. Just after the inauguration, in early February, Rumsfeld met with fellow Princeton wrestling teammate Frank Carlucci, also a former secretary of defense, who had led the way for the Carlyle Group's massive defense acquisitions. Carlucci said the meeting did not constitute a conflict because he was not lobbying his old friend. [19] "I've made it clear that I don't lobby the defense industry," Carlucci stated. But at the time, Carlyle still had several projects under consideration by the Pentagon that were potentially worth billions in contracts, and Carlucci, James Baker, Richard Darman, and other Bush allies might profit from them. [iii] Most notable among these projects was United Defense's $11-billion contract for the Crusader tank, a gigantic Cold War-inspired weapon that was widely seen as obsolete, but which managed to stay in the budget. [20] [iv]

Bush's allies were also well positioned to take advantage of the new administration's close ties to the Saudis. On February 5, just two weeks after the inauguration, Baker Botts announced that it had established a new office in Riyadh, presumably to better service its Saudi clients. "The kingdom has opened its doors to Western clients," explained managing partner Richard Johnson, "so we need to have a presence in the region." [21] Later that year, the firm acquired another powerful friend in the region when Bush named the new ambassador to Saudi Arabia -- Robert Jordan, the Baker Botts attorney who had represented Bush during the SEC's investigation into the Harken Energy insider trading allegations against him. In addition to representing such oil giants as ExxonMobil, ARCO, BP Amoco, and Halliburton, all of which did business with the Saudis, Baker Botts enjoyed the confidence of corporate clients whose businesses could be affected by the administration's policies. Highest on this list were the Carlyle Group and Dick Cheney's company, Halliburton, both of which had hundreds of millions of dollars in business with the Saudis.

Reporters have widely noted that Halliburton also stood to benefit from the friendly new administration. Almost immediately after the inauguration, Halliburton opened an office in Tehran, a move that, according to the Wall Street Journal, was "in possible violation of U.S. sanctions." Halliburton publicly called for lifting the sanctions against working in Iran, but insisted it was not violating U.S. laws because the company in question was a Halliburton subsidiary, not the domestic company itself. [22]

Rather than crack down on Halliburton, however, the Bush administration's Energy Task Force, which was headed by Cheney, presented a draft report in April 2001 saying the United States should reevaluate the sanctions against Iran, Iraq, and Libya that prohibited U.S. oil companies from "some of the most important existing and 'prospective' petroleum-producing countries in the world." Cheney asserted there was no conflict on his part because "Since I left Halliburton to become George Bush's vice president, I've severed all my ties with the company, gotten rid of all my financial interest." [23] Cheney neglected to mention that he was still due approximately $500,000 in deferred compensation from Halliburton and could potentially profit from his 433,333 shares of unexercised Halliburton stock options. [24] [v]

But more to the point, Cheney, as secretary of defense during the Gulf War, had begun a warm relationship with the Saudis. Even though he had little experience in the private sector, after he left his cabinet post, Halliburton had selected Cheney as CEO because of such contacts, so that the oil giant might expand its largely domestic portfolio into foreign markets, including Saudi Arabia. [vi] In his last year at Halliburton, Cheney had received $34 million from the company. Now Cheney was back on the other side of the revolving door, in a position to do business with his benefactors, and he had been uniquely sensitized to Saudi needs.

Meanwhile, the biggest foreign-policy initiative in the early days of the administration was a secretive one -- how to get rid of Saddam Hussein. "It was all about finding a way to do it," said former secretary of the treasury Paul O'Neill, who as a cabinet secretary, was a member of the National Security Council. "That was the tone of it. The president saying, 'Go find me a way to do this.' For me the notion of preemption, that the U.S. has a unilateral right to do whatever we decide to do, is really a huge leap." O'Neill added that such questions as "Why Saddam?" and "Why now?" were never discussed. [25]

According to O'Neill, as reported in The Price of Loyalty by Ron Suskind, plans for occupying Iraq were discussed just days after the inauguration in January 2001. By March, the Pentagon had drawn up a document entitled "Foreign Suitors for Iraqi Oilfield Contracts."

Ironically, three key figures in the administration -- Dick Cheney, who had been a prominent Republican congressman, Secretary of State Colin Powell, who had been national security adviser, and Donald Rumsfeld, who had been Reagan's special presidential envoy to Iraq -- had all played vital roles in giving Saddam Hussein a pass back in the Reagan-Bush era. Cheney and Rumsfeld had since become quite hawkish on Iraq -- both were part of the Project for a New American Century -- but Colin Powell remained convinced that Saddam was not a real threat. "Frankly, the sanctions [against Iraq] have worked," he said in February 2001. "Saddam has not deployed any significant capability with respect to weapons of mass destruction. He is unable to project conventional power against his neighbors." [26] [vii]


As the first year of the Bush administration got under way, throughout the intelligence world analysts again and again heard in the "chatter" of monitored conversations that a major new Al Qaeda operation was in the works. At times, the intelligence was so cluttered with rumors, misinformation, and disinformation that, understandably, it was almost impossible to ferret out the vital clues. At other times, veteran FBI and CIA agents repeatedly discovered suspicious activity that they reported to their superiors. Not all, but substantial numbers of these reports found their way to the most senior counterterrorism official in the country, Richard Clarke.

In 2001, Clarke and Roger Cressey stayed on at the NSC with the new administration. They followed up their briefings with Condoleezza Rice with a memo on January 25, 2001, saying that more Islamist terrorist attacks had been set in motion since the bombing of the USS Cole. Worse, they reported that U.S. intelligence now believed that there were already Al Qaeda "sleeper cells" in America. [27]

Clarke and Cressey were not alone in their awareness of the growing threat. Six days later, on January 31, a bipartisan commission led by former senators Gary Hart and Warren Rudman warned Congress that a devastating terrorist attack on U.S. soil could be imminent. In the report, seven Democrats and seven Republicans unanimously approved fifty recommendations in hopes of addressing the commission's assessment that "the combination of unconventional weapons proliferation with the persistence of international terrorism will end the relative invulnerability of the U.S. homeland to catastrophic attack." [28]

Not long after the commission's report was released, on February 7, CIA director George Tenet testified in Congress that "Osama bin Laden and his global network of lieutenants and associates remain the most immediate and serious threat" to American security. [29]

Nevertheless, even with CIA support, the recommendations of the Hart-Rudman Commission didn't get far. As Hart later lamented, "Frankly, the White House shut it down. The president said, 'Please wait, we're going to turn this over to the vice president. We believe FEMA [Federal Emergency Management Agency] is competent to coordinate this effort.' And so Congress moved on to other things, like tax cuts."

By early February, intelligence analysts had definitively nailed down Al Qaeda's involvement in bombing the USS Cole. As a candidate, in the wake of the attack, Bush had said, "I hope that we can gather enough intelligence to figure out who did the act and take the necessary action. There must be a consequence." [30] Richard Clarke had a specific response in mind. He now argued for striking Al Qaeda's training camps at Tarnak Qila and Garmabat Ghar in Afghanistan -- easy targets that were important because thousands of terrorist recruits trained there to fight the Northern Alliance, the Afghan rebel coalition, or against American interests.

But the Bush administration did not go along with it. Condoleezza Rice and her deputy, Stephen J. Hadley, reportedly admired Clarke's fervor. But they believed Clarke's strategy of battling Al Qaeda would not work. "The premise was, you either had to get the Taliban to give up Al Qaeda, or you were going to have to go after both the Taliban and Al Qaeda together," Hadley told the Washington Post. "As long as Al Qaeda is in Afghanistan under the protection of the Taliban ... you're going to have to treat it as a system and either break them apart, or go after them together." [31]

In the Clinton administration, Clarke's colleagues had been on watch during the attacks against Americans in Riyadh, Kenya, Tanzania, and on the USS Cole, and terrorism came up at cabinet meetings nearly every week. But according to army lieutenant general Donald Kerrick, who managed the National Security Council staff and stayed at the NSC through the spring of the new administration's first year, Bush's advisers were not focused on it. "That's not being derogatory," Kerrick said. "It's just a fact. I didn't detect any activity but what Dick Clarke and the CSG were doing." [32] Without a clear-cut consensus behind them at the highest levels of the Bush administration, Clarke's proposals had to be subjected to a policy review that would take months. In the meantime, there was nothing to take their place. As a result, the tough rhetoric against terrorism espoused by Bush during the campaign was not backed up by action.

One development that typified the bureaucratic inertia was the Bush administration's failure to use the Predator aerial vehicle -- an unmanned drone that, without risk to human life, was able to deliver thousands of photos of Al Qaeda's terrorist training camps. It had been deployed quite successfully during the Clinton administration, but now it was not even being used because of arguments between the Pentagon and the CIA over who should pay for it. [33]

Meanwhile, bin Laden's operatives were on the move. Some had already entered the United States. Over the next few months, others completed their training in Afghanistan and prepared to enter the United States. One already in the United States was a Saudi named Hani Hanjour, from the resort town of Taif. In January and February, Peggy Chevrette, a manager at the Jet Tech flight school in Phoenix, notified the Federal Aviation Administration three times that Hanjour lacked the necessary flying skills for the commercial pilot's license he had obtained in 1999. In response, an FAA inspector checked Hanjour's license and even sat next to him in a class. But the FAA said the inspector observed nothing that warranted further action. [34]

On February 26, 2001, Osama bin Laden attended the wedding of his son Mohammed, in the southern Afghan town of Kandahar, and read aloud a poem that appeared to refer to the bombing of the USS Cole. According to the Saudi paper al-Hayat, the poem read:

Your brothers in the East prepared their mounts and Kabul has prepared itself and the battle camels are ready to go. A destroyer: even the brave fear its might. It inspires horror in the harbor and in the open sea. She goes into the waves flanked by arrogance, haughtiness, and fake might. To her doom she progresses slowly, clothed in a huge illusion. Awaiting her is a dinghy, bobbing in the waves, disappearing and reappearing in view.

The bin Ladens had claimed they were completely estranged from Osama, but that was clearly not the case. The wedding was also attended by bin Laden's mother, two brothers, and a sister. [35] In addition, at roughly the same time, also in February, pro West intelligence operatives saw two of Osama bin Laden's sisters taking cash to an airport in Abu Dhabi in the United Arab Emirates, where, the New Yorker reported, they were "suspected of handing it to a member of bin Laden's Al Qaeda organization. " [36]

A few days after the wedding in Kandahar, thirteen Al Qaeda operatives recorded farewell videos before ending their training. In one of them, which was broadcast on the Arab TV news station Aljazeera in September 2002, Ahmed Alhaznawi pledged to send a "bloodied message" to Americans by attacking them in their "heartland." [37] In a similar video, Abdulaziz Alomari, another Al Qaeda operative, who was a graduate of an Islamic college in the Saudi province of El Qaseem, made an apparent reference to his last testament: "I am writing this with my full conscience and I am writing this in expectation of the end, which is near. ... God praise everybody who trained and helped me, namely the leader Sheikh Osama bin Laden." [38] Other videos showed operatives studying maps and flight manuals in preparation for their mission.

In March, the Italian government gave the Bush administration information based on wiretaps of two Al Qaeda agents in Milan who talked about "a very, very secret plan" to forge documents for "the brothers who are going to the United States." [39]

On April 18, U.S. airlines got a memo from the FAA warning that they should demonstrate a "high degree of alertness" because Middle Eastern terrorists might try to hijack or blow up an American plane. [40] By this time, airlines had been receiving one or two such warnings per month but the threats were so frequent and, often, so vague, they had little impact on security. Likewise, beginning in May, over a two-month period, the National Security Agency reported "at least thirty-three communications indicating a possible, imminent terrorist attack." But, according to congressional testimony, none of the reports provided specific information on where, when, or how an attack might occur. [41] There were so many warnings that officials grew numb to them.

Yet inexplicably, in the context of so many warnings, the Bush administration introduced policies that could only be counterproductive. Far from cracking down on the Taliban, in May, Colin Powell announced that the United States was actually giving $43 million to the Taliban because of its policies against growing opium. "Enslave your girls and women, harbor anti U.S. terrorists, destroy every vestige of civilization in your homeland, and the Bush administration will embrace you," wrote columnist Robert Scheer in the Los Angeles Times. "All that matters is that you line up as an ally in the drug war, the only international cause that this nation still takes seriously. ... Never mind that Osama bin Laden still operates the leading anti-American terror operation from his base in Afghanistan, from which, among other crimes, he launched two bloody attacks on American embassies in Africa in 1998." [42]

Then, in June, the American embassy in Saudi Arabia initiated new security measures that could only be described as absurd, announcing that its new Visa Express program would allow any Saudi to obtain a visa to the United States -- without actually appearing at the consulate in person. The United States waives visas for twenty-eight countries, mostly in Western Europe. But Saudi Arabia was to be the only nation to enjoy the privileges of this new program, launched, in the most fertile breeding ground for terrorists in the world, for a simple reason: convenience. An official embassy announcement said, "Applicants will no longer have to take time off from work, no longer have to wait in long lines under the hot sun and in crowded waiting rooms." [43]

According to Jessica Vaughan, a former consular officer, Visa Express was "a bad idea" because the issuing officer "has no idea whether the person applying for the visa is actually the person (listed) in the documents and application."

Another official described the program as "an open-door policy for terrorists." [44]

And it was -- quite literally. Before the program was in place, eleven Al Qaeda operatives had already made their way to the United States in preparation for September 11. But thanks to Visa Express, three Saudis -- Abdulaziz Alomari, about twenty- eight years old, Khalid Almidhar, twenty-five, and Salem Alhazmi, twenty, began their journey to September 11 without the inconvenience of even having to wait in line.


Meanwhile, Bush had not forgotten that one of the constituencies that helped get him to the White House consisted of Islamic fundamentalists. Having depended so heavily on Muslim-American organizations during the Florida campaign, the Bush administration continued its "outreach" to Muslims. On June 22, 2001, Karl Rove addressed 160 members of the American Muslim Council on Bush's faith-based agenda in the Eisenhower Executive Office Building, which is adjacent to the White House and part of the White House complex.

The meeting stirred up controversy even before it took place. The scheduled speaker had actually been Cheney. But that morning, a front-page headline in the Jerusalem Post read, "Cheney to host pro-terrorist Muslim group." Citing logistical conflicts, Cheney canceled and Rove took his place. [45] Conservative pro-Israeli activists felt the Bush administration should be more careful about the Muslim activists that Grover Norquist was bringing into the White House. In this case, they had argued against the meeting because of the AMC's stance supporting Hamas, a sponsor of suicide bombings in Israel. [46] Nevertheless, the meeting went forth as scheduled, and Abdurahman Alamoudi, one of AMC's founders, attended, even though less than a year earlier he had appeared at a White House demonstration where he said, "We are all supporters of Hamas." [47] [viii]

The Secret Service requires White House visitors to submit their Social Security number and birth date for security reasons. But on this occasion, someone of even more dubious background than Alamoudi slipped by them -- Sami Al-Arian, the professor at the University of South Florida who had campaigned for Bush. At the time, Al-Arian had been under investigation by the FBI for at least six years, and several news accounts had reported that federal agents suspected he had links to terrorism.


At roughly the same time Bush's staff was wooing Al-Arian, counterterrorism agents were digging up detailed information on terrorists that could be acted upon -- but even then they were thwarted. In July 2001, a highly regarded forty-one-year-old FBI counterterrorism agent in Phoenix named Kenneth Williams was investigating suspected Islamic terrorists when he noticed that several of them were taking lessons to fly airplanes. [48] Williams became more suspicious after he heard that some of the men had been asking questions about airport security procedures. His supervisor, Bill Kurtz, thought Williams might be onto something and proposed monitoring civil aviation schools to see if bin Laden's operatives had infiltrated them. But, according to Newsweek, in Washington, Kurtz's proposal was completely ignored. Because George Bush had criticized the practice of racial profiling of Arab Americans in his presidential campaign, the FBI now pointedly avoided such measures. In addition, after John Ashcroft, the new attorney general, had taken office in January, the Justice Department had been directed to focus on child pornography, drugs, and violent crime -- not counterterrorism.

Other bin Laden operatives were on the move. In early 2000 two of bin Laden's operatives, Khalid Almidhar and Nawaf Alhazmi, arrived in Los Angeles fresh from an Al Qaeda planning summit in Kuala Lumpur, Malaysia. In L.A., they were soon befriended by Omar al-Bayoumi, the Saudi who had received payments from Prince Bandar's wife, Princess Haifa bint Faisal. [49] In addition to throwing a party for them in San Diego to welcome them to the United States, al-Bayoumi guaranteed the lease on their apartment and, Newsweek reported, also paid $1,500 for the first two months' rent. [ix] In July 2001, al-Bayoumi left the United States, but the monthly payments from Princess Haifa of about $3,500 began flowing instead to his associate, Osama Basilan, the Saudi Al Qaeda sympathizer in California who also aided the terrorists. According to Newsweek, it was unclear whether the money given to the hijackers came from al Bayoumi or Basilan. There is no evidence that Princess Haifa or Prince Bandar knew they may have been indirectly subsidizing Al Qaeda. Bandar has denied all allegations that he or his wife knowingly aided terrorists.


Another reason Prince Bandar looked forward to the return of the Bushes was that he expected the incoming president to help resolve the Israeli-Palestinian crisis. In the final days of the Clinton era, Bandar had quietly gone back and forth between Washington and Palestinian leader Yasir Arafat in a frantic attempt to resolve the Palestinian issue. Hardly a fan of Clinton's, even Bandar recognized that Clinton's new peace plan, which would have given the Palestinians 97 percent of the occupied territories, much of Jerusalem, and $30 billion in compensation, was the best deal ever offered to Arafat. Conditions in the Middle East were always volatile -- the Palestinians, Israelis, Arabs, and the United States all had their own internal politics to contend with -- it was possible that the opportunity for a settlement could quickly vanish.

But in January 2001, as Inauguration Day approached, the obstinate Arafat turned the deal down. The negotiations had failed. Exhausted, Bandar still hoped that the intractable conflict could finally be resolved. According to the New Yorker, before Bush was sworn in, Colin Powell assured Bandar that the new administration would enforce the same Middle East deal that Clinton had negotiated. [50] Within a few weeks, however, Bandar met with the new president and emerged quite upset: Bush had told him that he did not intend to take an aggressive role in mediating the conflict. [51] Historically, the House of Saud had refrained from intervening as forcefully as it might have on the side of the Palestinians. But Israel had killed 307 Palestinians and injured 11,300 during the previous year, [52] and now a great opportunity for peace was slipping away. In February, the hawkish Ariel Sharon was elected to replace Ehud Barak as prime minister of Israel. The violence in Israel continued to escalate. Now that satellite TV was broadcast throughout the Arab world, the news was relentless in Riyadh. Saudis who turned to Aljazeera saw Israeli soldiers attacking Palestinians hour after hour, day after day. On March 3, Palestinians were killed by Israelis in three separate incidents. [53] In April, a Palestinian cabinet minister accused Israel of using a car bomb in an attempt to assassinate a Fatah activist. That same month, Israelis shot dead a fourteen-year-old Palestinian in the West Bank village of Beit Ummar. [54]

Yet the Bush administration blamed all the violence on Arafat. In private conversations with the Saudis, people in the administration said that the president would not waste his slim political capital on what he saw as an unsolvable mess. [55] Their calculus made sense; Bush had been president for only a few months, needed to press his domestic agenda, and was barely legitimate in the eyes of many Americans.

But as a result, Bush's standing in the House of Saud suddenly plummeted. He appeared to be drawing too close to Ariel Sharon and was doing nothing to help the Middle East peace process. In May, Saudi crown prince Abdullah even turned down an invitation to the White House. "The U.S. enjoys a distinguished position as the leader of the new world," he said. "And like it or not, this requires it to meet crises before they get out of hand." [56] Never before had Abdullah been so blunt in criticizing the United States.
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Re: House of Bush, House of Saud, by Craig Unger

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PART 2 OF 2 (CH. 13 CONT'D.)

"We want them [the United States] to ... consider their own conscience," he told a Financial Times reporter. "Don't they see what is happening to the Palestinian children, women, the elderly, the humiliation, the hunger?" [57]

The Saudis were not alone in their assessment. Even old Saudi hands like Brent Scowcroft, who had served as national security adviser for Bush's father, criticized the administration for letting down its Arab friends during the conflict. [58]

The rupture was so precipitous that former president Bush himself felt obliged to intervene on his son's behalf. The elder George Bush still kept his hand in foreign policy, an area in which his son was untutored, and continued to receive regular briefings from the CIA. It was a privilege granted to all former presidents, but one that Bush, a former CIA director himself, used far more than anyone else -- perhaps in part because he had a son in the White House who had so little experience in foreign affairs. [59] At the CIA, the briefings were jokingly called the "president's daddy's daily briefing."

In late June, Bush senior called Abdullah to tell him that his son's "heart is in the right place" and that his son was "going to do the right thing." [60] Effectively, he was assuring Abdullah that his son's policies in the Middle East would be similar to his own, i.e., that his son was not too pro Israel. The tone of the conversation was said to be warm and familiar, and according to the New York Times, the president himself was in the room with the elder Bush at the time of the call.

For the time being, the relationship between the Bushes and the House of Saud appeared to be back on track.


As the terrorists continued their preparation through the summer, warning signs reached Richard Clarke. On July 5, he assembled officials from a dozen federal agencies -- the Coast Guard, the FBI, the Secret Service, the Immigration and Naturalization Service, and others -- in the White House Situation Room. "Something really spectacular is going to happen here, and it's going to happen soon," Clarke old them. [61] By here, he meant within the United States. According to the Washington Post, Clarke then ordered every counterterrorist office to put domestic rapid-response teams on shorter alert, to cancel vacations and defer nonvital travel; in short, to be in the highest possible state of readiness against an imminent attack.

By this time, the reality of the threat had reached the Oval Office. Not long after Clarke's exercise, according to Time, President Bush told CIA director George Tenet, "Give me a sense of what Al Qaeda can do inside the U.S." [62]

On August 4, President Bush traveled to his sixteen-hundred-acre ranch in Crawford, Texas. The new Western White House was not exactly a popular choice for the reporters who covered him. In summers past, Clinton had taken the White House press corps to such glamorous resorts as Martha's Vineyard, Massachusetts, or Jackson Hole, Wyoming. Covering Bush senior in August had meant passing time on the gorgeous rugged coast in Kennebunkport, Maine. By contrast, Crawford -- population 705 -- was located smack in the middle of nowhere and offered few diversions. On the Vineyard or at Kennebunkport, there were clambakes and lobsters; in Crawford, haute cuisine meant a "Bush burger" at the Coffee Station, the only restaurant in town. In Crawford, the town's first sidewalk was still under construction. About sixty reporters camped out in a muggy gym seven miles from the ranch, constantly calling presidential aides to get tidbits of news. [63] And every day in the flat scrub plains of Crawford, it was one hundred degrees in the day, eighty at night, one hundred in the day, eighty at night.

To make matters worse, Bush had decided to spend more than just a couple of weeks in Crawford. He was going to repose there for the entire month of August to take nature walks and fish for bass. Bush defended his long vacation. "I just want to remind you all I love to go walking out there, seeing the cows," he said. "Occasionally, they talk to me, being the good listener that I am."

But the press didn't like it.

"By the time President Bush returns to Washington on Labor Day after the longest presidential vacation in 32 years, he will have spent all or part of 54 days since the inauguration at his parched but beloved ranch," the Washington Post observed. "That's almost a quarter of his presidency. ... Throw in four days last month at his parents' seaside estate in Kennebunkport, Maine, and 38 full or partial days at the presidential retreat at Camp David, and Bush will have spent 42 percent of his presidency at vacation spots or en route." [64]

In response, the White House spin factory made clear that this was a "working" vacation, and in truth, Bush had a lot on his mind. There was a paralyzing energy crisis in California. There was the controversy over whether to allow stem cell research, which placed Bush between medical scientists and the evangelical right. And there was the Israeli-Palestinian conflict.

In addition, the concerns about bin Laden and Al Qaeda had not abated. Ordinarily, one of the key starting points of the day for any president is the President's Daily Briefing, or PDB, which represents the CIA's chance to funnel its priorities onto the president's agenda. The briefing is customarily delivered before the White House national security team -- sometimes by the CIA director himself. During the vacation, one of the Agency's briefers had relocated to Crawford to help out with the PDB.

On August 6, the PDB was crafted to answer Bush's query about the threat of an Al Qaeda attack on American soil. [65] That hot Texas morning, he had already gone for a four-mile run and returned with dust on his sweats, then changed into what the press called his "Crawford casual" ensemble -- jeans with a big belt buckle, a short-sleeved button-down shirt, and cowboy boots -- for the meeting. [66]

The memo, which is classified and which the Bush administration had refused to release as this book went to press, was to become a matter of extraordinary controversy. Even its title was a matter of debate. Bush press secretary Ari Fleischer said it was called "Bin Laden Determined to Strike the U.S." But other sources said Fleischer had left out a critical preposition, and it was really "Bin Laden Determined to Strike in the U.S."

Condoleezza Rice was not actually present as the briefing was given. But she discussed it with Bush immediately afterward, as was her practice. According to Rice, the memo was merely analytical and historical, discussing the practices Al Qaeda had used in the past. She said that just one or two sentences dealt with hijacking and they did not raise the possibility that a hijacked plane would ever be flown into a building. She and other administration officials repeatedly said that the memo contained only general information and had no specific threats upon which the president could act. White House spokesman Ari Fleischer later said, "I think it's fair to say that if I walked up to you in August of 2001 and said, 'We have information that Muslim extremists seek to hijack American airplanes,' you'd have said, 'So what? Everybody's known that for a long, long time.'" [67]

But other accounts characterized the briefing differently, as indicative of the serious threat of terrorism on American soil. NBC reported that biological and chemical weapons were discussed and that the president was informed Al Qaeda was "planning to strike us, probably here," meaning in the United States. [68] According to the Washington Post, the memo explicitly said that bin Laden's followers might hijack U.S. airliners. [69]

Without knowing the actual contents of the classified memo, it is difficult to know what options might have been appropriate for the president. But by that hot day in early August 2001, concerns about terrorism on American soil had clearly reached the highest official in the land. Clearly, also, Richard Clarke's detailed, multifaceted plan to strike back at Al Qaeda had been sitting on Bush's desk since he had taken the oath of office and remained unimplemented; Al Qaeda had suffered no major retaliation for the killing of nineteen Americans on the USS Cole.

After the security briefing, President Bush placed a white cowboy hat on his head and drove off in his truck to the canyons. [70] He spent the rest of the day fishing for bass in his pond. [71]


Over the next thirty days, President Bush had no further meetings about terrorism. Yet the threats were more serious than ever. The FBI had learned that Abu Zubaydah, a Saudi who had been chief of operations for Al Qaeda since 1996 and was in charge of training thousands of Muslim terrorists, [72] was in touch with a Middle Eastern student at a flight school in Arizona. That alarming piece of information, however, was never forwarded to the White House. [73] In addition, on August 21, the CIA notified the Immigration and Naturalization Service (INS) that two other Al Qaeda operatives, Khalid Almidhar and Nawaf Alhazmi, should be put on the terrorist watch list. Unlike the FBI, the INS responded quickly, and, according to The Age of Sacred Terror, came back with even more startling information: the two men had already entered the United States. The INS told both the CIA and the FBI, but this astonishing revelation -- that two terrorists, one of whom may have participated in the bombing of the USS Cole, were already in the country -- was not forwarded to the White House or to Richard Clarke's counterterrorism team. [74]

Even without such vital information, Clarke still saw bin Laden's threat as imminent. But when it came to putting his policies into action, he remained enormously frustrated. Under Clinton, he and his bull-in-a-china-shop approach had been given a relatively free hand by both Anthony Lake and Sandy Berger, Clinton's two national security advisers -- even when it came to butting heads with powerful cabinet officials like Treasury Secretary Robert Rubin. [75] But the Bush White House gave Clarke far less leeway to wreak havoc in bureaucratic squabbles -- something that was inevitable if anything was to be accomplished. Clarke was one of only three White House officials who carried a weapon for protection -- a .357 Magnum SIG-Sauer semiautomatic with jacketed hollow-point bullets. The running joke was that he might well have to use it "for interagency combat." [76]

On September 4, Clarke was finally given the chance to present his strategy at a meeting of the administration's so-called Principals Committee, a group of high-level cabinet-ranking policy makers. Even though the Bush administration had been in power seven and a half months, it was only their second meeting about terrorism -- out of ninety to a hundred meetings since Bush had taken office. [77] [x]

This was the moment Clarke had been waiting for. He would finally get a hearing with the upper echelon of the Bush administration. Those present included Condoleezza Rice, CIA director George Tenet, Secretary of the Treasury Paul O'Neill, and General Richard Myers, the vice chairman of the Joint Chiefs of Staff. Deputy Secretary of Defense Paul Wolfowitz substituted for his boss, Donald Rumsfeld. President Bush was not attending, but the goal of the meeting was to reach an agreement on a National Security Presidential Directive (NSPD). Clarke's strategy had three key elements -- arming the Northern Alliance, which was providing resistance against the Taliban inside Afghanistan; mobilizing Uzbekistan, which shared a border with Afghanistan and whose rulers hated bin Laden; and putting the Predator into action against bin Laden.

If the group reached a consensus, Clarke's proposals would finally be sent to the president and set in motion.

Clarke delivered his presentation, and one of the first people to respond, George Tenet, was unqualifiedly supportive. "We really need to aggressively go after these guys," he said. [78]

Going after Al Qaeda was not a tough call. With Sandy Berger present, Clarke had made that case to Rice and her deputy back in January, and now it was even stronger. But pushing the policy through the bureaucracy was another story. Hundreds of millions of dollars were needed for Clarke's program. Where would the money come from? The principals decided that the Office of Management and Budget and the CIA should try to figure that out later. [79] But the question remained unanswered -- a bad sign that suggested bureaucratic will was lacking. If attacking Al Qaeda was really such a high priority, one of the agencies could pay for it out of its existing budget. Under Rumsfeld, however, the Pentagon certainly did not see counterterrorism as an urgent matter, a fact that was borne out five days later when he threatened to urge a veto if the Senate went ahead with a plan to shift $600 million from missile defense to counterterrorism. [80] [xi]

Then Clarke put forth the boldest part of his proposal. The Predator drone, the unmanned airborne device he championed, had been refitted with Hellfire missiles. Over the summer, tests showed that while flying two miles high, the Predator could find and kill men inside buildings four miles away. To a counterterrorism official, this was truly the "holy grail," [81] and Clarke wanted to send it after Osama bin Laden. [82]

For a few minutes, there was a discussion about whether the Predator's weaponry was effective enough. Would it do the job?

Then Condoleezza Rice asked an even tougher question: Who would be in charge of the Predator? [83] As director of Central Intelligence, Tenet asserted that it would be wrong for him to deploy it. Others made it clear that the decision to actually fire the weapon should be left to the president. But if any of the armed forces was charged with carrying out the mission, General Myers argued, they might as well use a cruise missile, which, with a range of up to two thousand miles, was a different kind of weapon entirely. The Predator was essentially a weaponized surveillance device that had been designed for covert operations, and that should remain in the purview of the CIA.

In the end, the NSPD was forwarded to the White House. But there were many unanswered questions about funding and the Predator. Because no one could decide who would be in charge of the Predator, no strategy with regard to using it was sent to the president. [84] Once again, nothing happened. [xii]


If the White House was not keenly focusing on bin Laden, one reason may have been that its alliance with Saudi Arabia was facing one of the deepest rifts in its history -- a crisis that had begun to come to a head twelve days earlier. On August 23, a day when Israeli tanks had penetrated deeper than ever before into the West Bank, Crown Prince Abdullah had seen a TV news report in which an Israeli soldier held an elderly Palestinian woman to the ground by putting his boot on her head. [85] The image left Abdullah enraged, but when it was juxtaposed with what he saw on television the next day, according to one Saudi official, he "just went bananas." [86] From the comfort of his luxurious Riyadh palace, Abdullah listened to President Bush hold forth on the recent violence in the Middle East. "The Israelis will not negotiate under terrorist threat, simple as that," Bush said. "And if the Palestinians are interested in a dialogue, then I strongly urge Mr. Arafat to put one hundred percent effort into ... stopping the terrorist activity. And I believe he can do a better job of doing that." [87]

In the seven months or so that Bush had been president, high-level Saudis had not been terribly impressed by him. One used the word goofy to describe him. [88] Some thought of him as a lightweight who had not mastered foreign policy. Bandar thought Condoleezza Rice's lack of familiarity with the Middle East was partially to blame. [89]

What they especially didn't like was that Bush, pushed in part by neoconservatives in his administration who were close to Israel's Likud party, was blaming all the violence on the Palestinians. Two months earlier Bush senior had assured Abdullah that his son would toe the line. But now, those words appeared to be hollow promises. To the Saudis, it was as if the president of the United States had again become nothing more than a mouthpiece for Israeli prime minister Ariel Sharon.

Prince Bandar happened to be watching the same news conference at his $36-million Rocky Mountain retreat in Aspen, Colorado, when the phone rang. [90] It was Abdullah, directing him to confront the White House. He knew well that the United States still relied on the Saudis for vast amounts of oil, as it had for decades. And the United States still hoped for strategic support from the Saudis in other Middle East regional issues, even though their shared interests were less clear than they had been a decade earlier. It was time to use that leverage to the fullest. Less than a year earlier, Bandar had gone hunting on his English estate with Bush senior, his close friend of two decades. Now he was going to draw a line in the sand with Bush's son -- and push the Bush-Saudi relationship to the brink.

On August 27, with Bush still in Crawford, Bandar met with Condoleezza Rice in her White House office. "This is the hardest message I've had to deliver between our two countries since I started working in this country in 1983," Bandar said, using a twenty-five-page document from Abdullah as his script. [91] As related by a senior Saudi official, the message said, "We believe there has been a strategic decision by the United States that its national interest in the Middle East is 100 percent based on Israeli prime minister Ariel Sharon." [92]

According to an article in the Washington Post by Robert G. Kaiser and David B. Ottaway, Bandar noted that this was America's right, but that Saudi Arabia could not abide by that decision. The message was both full of moral indignation and deliberately provocative in tone. "I reject this extraordinary, un-American bias whereby the blood of an Israeli child is more expensive and holy than the blood of a Palestinian child," it said, "... that when you kill a Palestinian, it is defense; when a Palestinian kills an Israeli, it's a terrorist act." [93]

The message made clear that the Saudis had concluded that Bush was a lost cause. "Starting from today, you're from Uruguay, as they say. You Americans, go your way; I, Saudi Arabia, go my way. From now on, we will protect our national interests, regardless of where America's interests lie in the region." [94]

And Bandar left no room for compromise. Now was the time to "get busy rearranging our lives in the Middle East," he said. [95] He was instructed not to have any further discussions with the United States. Could it be that the two countries' sixty-year alliance was finally coming to an end?

Shocked by this ultimatum, Rice told Bandar that there had been no change in U.S. policy. She agreed to take the message to the president. [96]

For his part, Bush still had no intention of getting involved in the sticky Middle East peace process. Nevertheless, Bush was so stunned by the Saudi threat that he immediately did an about-face. Within thirty-six hours, Bandar returned to Riyadh with a groundbreaking personal message written by the president to mollify Abdullah. "I am troubled and feel deeply the suffering of ordinary Palestinians in their day to day life and I want such tragedies and sufferings to end," Bush wrote. [97] "I firmly believe that the Palestinian people have a right to self-determination and to live peacefully and securely in their own state in their own homeland."

Bush was not just getting involved. For the first time, he was publicly supporting a Palestinian state -- and he had done it in writing. He also addressed the Saudi moral concerns, saying he believed the blood of all innocent people was the same -- whether they be Israeli or Palestinian, Jewish, Christian, or Muslim. [98] [xiii]

Abdullah had played the game well. He had banged his fist and the United States had jumped. He was so thrilled with his victory, the Post reported, that he proudly showed off his correspondence -- Bush's two-page letter and the long message he had given Bandar -- as trophies to Arab leaders in Syria, Egypt, and Jordan.

At Abdullah's invitation, Yasir Arafat came all the way from South Africa to Riyadh especially to read it. Then Abdullah sent Bandar back to Washington to help transform the words into deeds -- and to convince the president to make public that he was calling for a Palestinian state.

On Friday, September 7, three days after Richard Clarke's attempt to lobby his proposal to fight Al Qaeda through the administration, Bandar met with Condoleezza Rice, Dick Cheney, Colin Powell, and President Bush in Washington and told them how happy he was to discover that he had misinterpreted the White House's policy toward the Middle East. The administration reiterated its desire to pursue new peace initiatives immediately. [99]

Many questions were unresolved about how to pursue such initiatives, but suddenly there was enough goodwill that discussions continued between the two countries over the weekend of September 8 and 9. At issue was whether Colin Powell or President Bush should make the speech announcing the new plans. Bush was even willing to meet with Arafat at the United Nations -- a prospect that pleased the Saudis immensely. And lest anyone doubt that Bush would follow through this time, he had invited Bandar to the White House the following Thursday to pursue these matters.

And so, on that Monday night, Prince Bandar bin Sultan bin Abdul Aziz was, in his own words, "the happiest man in the world." As he told the Washington Post, he decided to relax in the indoor swimming pool of his lavish McLean residence, smoking a cigar. He had been back and forth between Saudi Arabia and Washington with the Bush response and then the Saudi response. He had worked through the entire weekend, until three or four o'clock in the morning, and then he had worked all day Monday. He deserved a rest, so he called his office. He told them he was taking Tuesday off -- Tuesday, September 11, 2001. [100]


[i] Less than two months after Bush took office, Engelhardt and Chancellor's huge contributions paid off many times over when Bush went back on his campaign promise to impose federal regulations on carbon dioxide released by power plants. His decision was a huge boon to the coal industry, but it drew sharp criticism from environmentalists. "He's turned his back on the weight of all the alarming scientific consensus that global warming is real, and that carbon dioxide is the main cause," said David Doniger, a spokesman for the Natural Resources Defense Council.
[ii] Among the most generous of the contributors were Dick Farmer, chairman of the uniform producer Cintas Corporation ($685,000 total, all of it to Republicans), who was named to the Veterans Advisory Team; Richard Egan of EMC Corporation ($567,100 total, $561,100 to Republicans), the world's number-one maker of mainframe computer memory hardware and software, who was named to the Commerce Advisory Team; John Chambers, CEO of tech giant Cisco Systems ($372,500 total, $304,000 to Republicans), who was named to the Education Advisory Team; Kenneth Lay, head of energy giant Enron ($318,050 total, $310,050 to Republicans), who was named to the Energy Advisory Team; Ken Eldred of Eldred Enterprises ($311,727 total, all of it to Republicans), who was named to the Commerce Advisory Team; and Charles Dolan of Cablevision Systems, Inc. ($270,000 total, $262,000 to Republicans), who was named to the FCC Advisory Team.
[iii] According to a Carlyle spokesman, George H. W. Bush himself had no investments in Carlyle's defense companies. Instead, he was compensated at $80,000 to $100,000 per speaking engagement and could reinvest that money in various Carlyle funds.
[iv] In April 2001, a government advisory panel recommended abandoning the Crusader tank, which is made by Carlyle subsidiary United Defense, but it stayed in the budget until Rumsfeld finally killed it at the end of 2002. Even with the program shut down, United Defense still did quite well with it. According to the Washington Post, the company took in more than $2 billion from the Crusader.
[v] A Congressional Research Service report requested by Senate Democrats concluded that unexercised stock options in a private corporation, as well as deferred salary received from a private corporation, were "retained ties" or "linkages" to a former employer and should be reported as "financial interests."
[vi] In July 2001, Halliburton announced that its profits had tripled and that the drilling outlook was bright in Saudi Arabia, among other places.
[vii] On October 26, 2003, on Meet the Press, Powell was asked about this quote and said, "I did not think he had a significant capability but he did have a capability. And everybody agreed with that assessment. Foreign intelligence sources agreed with it. The previous administration, President Clinton and his administration, agreed with it. The United Nations agreed with that assessment year after year, resolution after resolution. And the information we presented earlier this year and the presentation that I made before the United Nations on the fifth of February of this year was the best judgments that were made by the intelligence community, all members of the intelligence community of the United States coming together, and it was a judgment that was shared by a number of other countries around the world."
[viii] In a written response, Alamoudi later said, "I regret that I made an emotional statement in the heat of the moment and I retract it."
[ix] Officials said it was possible that Almidhar and Alhazmi may have repaid the money at an undetermined date.
[x] A Clinton official said that after the 1998 African embassy bombings, they met every two or three weeks about terrorism and more frequently in times of heightened alerts.
[xi] Other governmental departments, such as the Justice Department under John Ashcroft, did not make counterterrorism a terribly high priority either. According to the New York Observer, "As of Sept. 10, 2001, the Attorney General's final budget request for the coming fiscal year asked to increase spending on 68 programs, 'none of which directly involved counterterrorism.' He had rejected the F.B.I.'s request for funding to hire hundreds of new field agents, translators and intelligence analysts to improve the bureau's capacity to detect foreign terror threats. Moreover, among his proposed cuts was a reduction of $65 million in a Clinton program that made grants to state and local authorities for radios, decontamination garb and other counterterror preparedness measures."
[xii] According to an NBC report, the NSPD was forwarded to the White House on September 9, but it had not been reviewed by the president at the time of the September 11 attacks.
[xiii] Ever the diplomat, Bandar explained Bush's capitulation in a way that allowed the president to save face. The letter was so compelling, Bandar said, that he was certain it was not drafted in response to the Saudi ultimatum, but had been in the works for some time. "This must have been something ... that the administration was thinking about, that they just didn't share with everybody [but] were waiting for the right time," he said.


1. Maureen Dowd, "A Golden Couple Chasing Away a Black Cloud," New York Times, November 27, 2002.
2. Jeffrey Toobin, Too Close to Call, p. 41.
3. Chris Dufresne, Los Angeles Times, November 16, 2000, p. 52.
4. Center for Responsive Politics, ... nTeams.htm .
5. Interview with Richard Rechter, a participant in the hunting trip.
6. Elsa Walsh, "The Prince: How the Saudi Ambassador Became Washington's Indispensable Operator," New Yorker, March 24, 2003.
7. Ibid.,p.48.
8. Michael Elliott, "They Had a Plan," Time, August 12, 2002.
9. Ibid.
10. Ibid.
11. Barton Gellman, "A Strategy's Cautious Evolution," Washington Post, January 20, 2002, p. A 1.
12. Elliott, "They Had a Plan."
13. Ibid.
14. Condoleezza Rice, "Promoting the National Interest," Foreign Affairs, January/February 2000.
15. "Remarks by Condoleezza Rice, Gov. George W. Bush's International Affairs Adviser, to the Republican National Convention on Tuesday," Associated Press, August 1, 2000.
16. Gellman, "A Strategy's Cautious Evolution."
17. Andrew Leonard, "Will Bush Be Tarnished by Enron's Collapse?" Salon, November 30, 2001, ... .html?pn=1 .
18. Walsh, "The Prince," p. 48.
19. Leslie Wayne, "Elder Bush in Big G.O.P. Cast Toiling for Top Equity Firm," New York Times, March 5, 2001.
20. Walter Pincus, "Crusader a Boon to Carlyle Group Even if Pentagon Scraps Project," Washington Post, May 14, 2002, p. A3.
21. "Baker Botts Opens in Riyadh with Two Arent Fox Partners," Lawyer, February 5, 2001, p. 13.
22. Peter Behr and Alan Sipress, "Energy Panel Seeks Review of Sanctions," Washington Post, April 19, 2001, p. A 13.
23. Hotline, February 1, 2001.
24. "Democrats Mount Effort to Strip Cheney of Corporate Salary and Stock Options," U.S. Newswire, October 14, 2003.
25. Lesley Stahl, "Bush Sought Way to Invade Iraq," CBS, January 11, 2004, ... 2330.shtml .
26. "Slick Deals: Bush Advisers Cashed In on Saudi Gravy Train," Boston Herald, December 11, 2001.
27. Interview on NBC's Meet the Press, October 26, 2003.
28. Gellman, "A Strategy's Cautious Evolution."
29. Jake Tapper, "We Predicted It," Salon, September 12, 2001, ... index.html .
30. Robert Burns, "CIA Chief Calls bin Laden Biggest Threat to U.S. Security," Associated Press, February 7, 2001.
31. Gellman, "A Strategy's Cautious Evolution."
32. Ibid.
33. Ibid.
34. Elliott, "They Had a Plan."
35. John Solomon, "Fighting Terror/Early Signs; FAA Was Warned of Pilot," Associated Press, May 11, 2002.
36. "'To Her Doom': Bin Laden Reads Poem About USS Cole's Fate at Son's Wedding," Reuters, March 1, 2001, ... laden.html .
37. Jane Mayer, "The House of Bin Laden," New Yorker, November 12, 2001,
38. Julian Borger, "Arab TV Network Broadcasts First Taped Testimony by a Hijacker," Guardian, April 16, 2002, ... 02,00.html .
39. Peter Finn, "Hamburg's Cauldron of Terror," Washington Post, September 11, 2002.
40. Carl Cameron, "Clues Alerted White House to Potential Attacks," Fox News, May 17, 2002,,2933,53065,00.html.
41. Jonathan D. Salant, Associated Press, May 18, 2002, ... 1679.story .
42. "Joint Inquiry Staff Statement, Part 1," Eleanor Hill, Staff Director, Joint Inquiry Staff, Senate Select Committee on Intelligence, September 18, 2002, ... 91802.html .
43. Robert Scheer, "Bush's Faustian Deal with the Taliban," Los Angeles Times, May 22, 2001.
44. Edward T. Pound, "The Easy Path to the United States for Three of the 9/11 Hijackers," U.S. News and World Report, December 12, 2001, ... 011212.htm .
45. Joel Mowbray, "Open Door for Saudi Terrorists: The Visa Express Scandal," National Review Online, June 14, 2002, ... 061402.asp .
46. Mike Allen and Richard Leiby, "Alleged Terrorist Met with Bush Adviser," Washington Post, February 22, 2003.
47. Mary Jacoby, "Friends in High Places," St. Petersburg Times, March 11, 2003.
48. Michael Hirsh and Michael Isikoff, "What Went Wrong?" Newsweek, May 27, 2002.
49. Michael Isikoff, "9-11 Hijackers: A Saudi Money Trail?" Newsweek, November 22, 2002.
50. Walsh, "The Prince."
51. Ibid.
52. Steven Mufson, "Israel Cited for 'Excessive Force'; State Dept. Report on Human Rights Also Faults Palestinians," Washington Post, February 27, 2001, p. A 20.
53. "World," Reuters; "In Brief," Washington Post, March 4, 2001, p. A 25.
54. Wafa Amr, "Palestinian: Israel Set Car Bomb," Reuters; Washington Post, April 13, 2001, p. A 20.
55. Walsh, "The Prince."
56. "Saudi Arabia: Political Outlook," MEED, Janet Matthews Information Services, Quest Economics Database, September 3, 2001.
57. Walsh, "The Prince."
58. Jane Perlez, "Bush Senior, on His Son's Behalf, Reassures Saudi Leader," New York Times, July 15, 2001.
59. Ibid.
60. Ibid.
61. Barton Gellman, "Before Sept. 11, Unshared Clues and Unshaped Policy," Washington Post, May 17, 2002, p. A1.
62. Michael Elliott, "How the U.S. Missed the Clues," Time, May 27, 2002.
63. Mike Allen, "A White House on the Range, Bush Retreats to Ranch for 'Working Vacation,'" Washington Post, August 7, 2001.
64. Terry Moran, ABC World News Tonight, August 3, 2001.
65. Elliott, "How the U.S. Missed the Clues."
66. Scott Lindlaw, "President Bush Vacationing in Texas," Associated Press, August 6, 2001.
67. Dan Rather, CBS News, May 16, 2002.
68. "White House Defends Response to Pre-9/11 Intelligence Reports," Bulletin's Frontrunner, May 17, 2002.
69. Bob Woodward and Dan Eggen, "Sources: Aug. 6 Memo Focused on al Qaida," Washington Post, May 18, 2002, p. A 3.
70. Lindlaw, "President Bush Vacationing in Texas."
71. Frank Rich, "Thanks for the Heads-Up," New York Times, May 25, 2002, p. A 17.
72. Gerald Posner, Why America Slept, p. 183.
73. Benjamin and Simon, The Age of Sacred Terror, p. 347.
74. Ibid.
75. Barton Gellman, "Anti Terror Pioneer Turns In the Badge," Washington Post, March 13, 2003.
76. Ibid.
77. Ted Bridis, "Bush's Top Security Advisers Met Just Twice on Terrorism Before Sept. 11 Attacks," Associated Press, June 29, 2002.
78. Benjamin and Simon, The Age of Sacred Terror, p. 345.
79. Ibid.
80. Elliott, "They Had a Plan"; and Joe Conason, "Ashcroft's Failures Deserve a Hearing," New York Observer, .
81. Gellman, "A Strategy's Cautious Evolution."
82. Gellman, "Anti Terror Pioneer Turns In the Badge."
83. Benjamin and Simon, The Age of Sacred Terror, p. 345.
84. Ibid.
85. Robert G. Kaiser and David B. Ottaway, "Saudi Leader's Anger Revealed Shaky Ties," Washington Post, February 10, 2002; and Walsh, "The Prince," p.48.
86. Kaiser and Ottaway, "Saudi Leader's Anger Revealed Shaky Ties."
87. Ibid.
88. Ibid.
89. Walsh, "The Prince," p. 48.
90. Charlie Brennan, "The Brightest Star in Starwood," Rocky Mountain News, December 28, 2002.
91. Walsh, "The Prince," p. 48.
92. Kaiser and Ottaway, "Saudi Leader's Anger Revealed Shaky Ties."
93. Ibid.
94. Ibid.
95. Ibid.
96. Walsh, "The Prince," p. 48.
97. Ibid.
98. Kaiser and Ottaway, "Saudi Leader's Anger Revealed Shaky Ties."
99. Ibid.
100. Ibid.
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