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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
The Wall Street Journal
(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
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citizenship was revoked in 1994, Mr.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
"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
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
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
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)