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Bin Laden Family Is Tied To U.S. Group
By Wall Street Journal staff reporters Daniel Golden and James Bandler in
Boston, and Marcus Walker in Hamburg, Germany
09/27/2001
The Wall Street Journal
Page A3
(Copyright (c) 2001, Dow Jones & Company, Inc.)
If the U.S. boosts defense spending in its
quest to stop Osama bin Laden 's alleged terrorist activities, there may be
one unexpected beneficiary: Mr. bin Laden 's family.
Among its far-flung business interests, the
well-heeled Saudi Arabian clan -- which says it is estranged from Osama --
is an investor in a fund established by Carlyle Group, a well-connected
Washington merchant bank specializing in buyouts of defense and aerospace
companies.
Through this investment and its ties to Saudi
royalty, the bin Laden family has become acquainted with some of the biggest
names in the Republican Party. In recent years, former President Bush ,
ex-Secretary of State James Baker and ex-Secretary of Defense Frank
Carlucci have made the pilgrimage to the bin Laden family's headquarters in
Jeddah, Saudi Arabia. Mr. Bush makes speeches on behalf of Carlyle Group
and is senior adviser to its Asian Partners fund, while Mr. Baker is its
senior counselor. Mr. Carlucci is the group's chairman.
Osama is one of more than 50 children of
Mohammed bin Laden , who built the family's $5 billion business, Saudi
Binladin Group, largely with construction contracts from the Saudi
government. Osama worked briefly in the business and is believed to have
inherited as much as $50 million from his father in cash and stock,
although he doesn't have access to the shares, a family spokesman says.
Because his Saudi citizenship was revoked in 1994, Mr. bin Laden is
ineligible to own assets in the kingdom, the spokesman added.
The bin Laden family has long disavowed
Osama, and has cooperated fully with several federal investigations into
his activities. The family business, headed by Osama's half-brother Bakr,
epitomizes the U.S.-Saudi alliance that the suspected terrorist often rails
against. After the 1996 truck bombing in Dhahran, Saudi Arabia, that killed
19 U.S. servicemen, Saudi Binladin Group built military barracks and
airfields for U.S. troops.
But the Federal Bureau of Investigation has
issued subpoenas to banks used by the bin Laden family seeking records of
family dealings, a person familiar with the matter said. This person said
the subpoenas weren't an indication the FBI had found any suspicious
behavior by the family. A family spokesman said he had no knowledge of the
subpoenas but that the family welcomes them and has nothing to hide.
People familiar with the family's finances
say the bin Ladens do much of their banking with National Commercial Bank
in Saudi Arabia and with the London branch of Deutsche Bank AG. They also
use Citigroup Inc. and ABN Amro, the people said.
"If there were ever any company closely
connected to the U.S. and its presence in Saudi Arabia, it's the Saudi
Binladin Group," says Charles Freeman, president of the Middle East
Policy Council, a Washington nonprofit concern that receives tens of
thousands of dollars a year from the bin Laden family. "They're the
establishment that Osama's trying to overthrow."
Mr. Freeman, who served as U.S. ambassador to
Saudi Arabia during the Gulf War, says he has spoken to two of Osama's
brothers since hijacked airplanes rammed the World Trade Center and the
Pentagon on Sept. 11. They told him, he says, that the FBI has been
"remarkably sensitive, tactful and protective" of the family
during the current crisis, recognizing its longstanding friendship with the
U.S.
A Carlyle executive said the bin Laden family
committed $2 million through a London investment arm in 1995 in Carlyle
Partners II Fund, which raised $1.3 billion overall. The fund has purchased
several aerospace companies among 29 deals. So far, the family has received
$1.3 million back in completed investments and should ultimately realize a
40% annualized rate of return, the Carlyle executive said.
But a foreign financier with ties to the bin
Laden family says the family's overall investment with Carlyle is
considerably larger. He called the $2 million merely an initial
contribution. "It's like plowing a field," this person said.
"You seed it once. You plow it, and then you reseed it again."
The Carlyle executive added that he would
think twice before accepting any future investments by the bin Ladens.
"The situation's changed now," he said. "I don't want to
spend my life talking to reporters."
A U.S. inquiry into bin Laden family business
dealings could brush against some big names associated with the U.S.
government. Former President Bush said through his chief of staff, Jean
Becker, that he recalled only one meeting with the bin Laden family, which
took place in November 1998. Ms. Becker confirmed that there was a second
meeting in January 2000, after being read the ex-president's subsequent
thank-you note. "President Bush does not have a relationship with the
bin Laden family," says Ms. Becker. "He's met them twice."
Mr. Baker visited the bin Laden family in
both 1998 and 1999, according to people close to the family. In the second
trip, he traveled on a family plane. Mr. Baker declined comment, as did Mr.
Carlucci, a past chairman of Nortel Networks Corp., which has partnered
with Saudi Binladin Group on telecommunications ventures.
Former President Carter met with 10 of Osama's
brothers early in 2000 on a fund-raising trip for the Carter Center in
Atlanta. According to John Hardman, executive director of the center, the
brothers told Mr. Carter that Osama was completely removed from the family.
After Mr. Carter and his wife followed up with breakfast with Bakr bin
Laden in New York in September 2000, the bin Laden family gave $200,000 to
the center. "We don't have any reason to think there's a
connection" between Osama and the rest of the family, Mr. Hardman says.
During the past several years, the family's
close ties to the Saudi royal family prompted executives and staff from
closely held New York publisher Forbes Inc. to make two trips to the family
headquarters, according to Forbes Chairman Caspar Weinberger, a former U.S.
secretary of defense in the Reagan administration. "We would call on
them to get their view of the country and what would be of interest to
investors."
Mr. Weinberger said no trips to Saudi Arabia
were planned. "If we went," he said, "we may or may not call
upon them. I don't think the sins of the son should be visited on the
father or the brother and the cousins and the aunts."
There is no indication President George W.
Bush has met any of the bin Ladens, but he was indirectly linked to one of
them two decades ago. His longtime friend James W. Bath, who met Mr. Bush
when they were both pilots in the Air National Guard, acted as a Texas
business representative for Osama's older brother, Salem bin Laden , from
1976 to 1988, when Salem died in a plane crash. Mr. Bath brought
real-estate acquisitions and other deals to Salem bin Laden , an ebullient
man who headed the family construction business. Mr. Bath generally
received a 5% interest as his fee, and was sometimes listed as a trustee in
related corporate documents. Mr. Bath acknowledged that during the same
period he invested $50,000 in two funds controlled by Mr. Bush but said
that stake was unrelated to his dealings with Mr. bin Laden .
Among the properties that Salem bin Laden
bought on Mr. Bath's recommendation was the Houston Gulf Airport, a lightly
used airfield in League City, Texas, 25 miles east of Houston. But Mr. bin
Laden 's hope that it would develop a major overflow airport for Houston
never materialized, in part due to concern over wetlands. Ever since his
death, his estate has sought to sell the airfield -- without success.
Today, it is still on the market.
(See related letter: "Letters to the
Editor: All in the Family" -- WSJ October 2, 2001)
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