The Wall Street Journal Europe, Friday / Saturday September 28-29 2001, p.4
Bin Laden Family Has Intricate Ties
By Staff Reporters Daniel Golden and James Bandler in Boston, and Marcus Walker in Hamburg
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 U.S. President George 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 Because his Saudi citizenship was revoked in 1994, Mr.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 bin Laden, 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 to 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 planes 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 Carlyle Partners II Fund, which raised $ 1.3 billion overall. The fund has purchased several aerospace companies among 29 deals. So far, the family 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 has changed now," hesaid. "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 both in 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.