deepen their contacts with American and British elites—to construct, subtly but unmistakably, an alternative basis to evaluate the family’s attitude toward the West. The more trouble Osama caused, the more Bakr seemed to search for ways to make offsetting donations and financial investments.
ALL OF THE BIN LADEN companies, whether in Saudi Arabia or abroad, operated as privately held entities, so the family was not legally required to disclose its spider’s web of global holdings to stock market regulators or public investors or even to their own executives. There was a random and whimsical nature to some of the family’s investments. A brother might go on vacation in Eastern Europe, meet an enterprising local man, invest in a travel agency, and then neglect it, until the company’s very existence was forgotten. Family firms sold casual wear in London’s Covent Garden and in shopping malls in Cairo and Beirut (“tank tops, jogging shorts, jeans, denims…”); produced television programming and commercials in a Jeddah photo lab; published children’s books in London; and licensed intellectual property in Dubai. The lines between the hobbies of family members and serious businesses were not always easy to discern. Offshore companies would open, fall dormant, and then sit on the books for years, earning fees for the lawyers and accountants who renewed their registrations, but doing little else. By the early 1990s, there were so many small companies and affiliates scattered around the world that at one point, around the time Griffin opened the Rockville office, executives at headquarters retained an American firm just to inventory the family’s holdings, according to a person familiar with the study.7
The locus of the family’s most significant international investments during this period was not Washington but London. As Bakr’s control of the family tightened, he worked out an arrangement with Yeslam to transform Russell Wood & Company—the London Stock Exchange broker-dealer that had endured a computer meltdown and other troubles after its initial purchase in 1987—from a brokerage that relied upon outside clients to a more discreet portfolio-management firm that could coordinate Bin Laden family investments in global markets. How this transformation was arranged financially is not entirely clear—for example, the Cayman Islands parent company of Russell Wood remained Falken Limited, an entity owned by Yeslam and his full siblings, but the firm had booked loans with a number of other offshore companies in Panama, the British Virgin Islands, and the Netherlands Antilles. The changes in management evolved over a number of years, according to company records filed with regulators in London. As late as 1991, Russell Wood’s British auditors were still struggling to make sense of records from the 1987 market crash period. “We are unable to form an opinion,” the auditors reported “as to a) whether the financial statements give a true and fair view of the state of affairs of the Company…and b) whether the financial statements have been properly prepared in all respects…” Eventually Britain’s Securities and Futures Authority required the Bin Ladens to inject about 4 million British pounds into the brokerage, to cover the earlier losses, according to regulatory records.8
Akbar Moawalla, originally from Tanzania, managed the London office. He lived in a large Tudor-style home in suburban Woking, south of the city, and commuted to offices on Berkeley Square in the central Mayfair district, near the Saudi Arabian embassy. Some colleagues found Moawalla particularly secretive, even by the standards of a company that valued discretion. He had a long history with the family and he seemed to know as much as anyone about its finances. Moawalla would sometimes answer a seemingly routine business inquiry from a fellow executive by saying matter-of-factly, “You don’t have a need to know.” He did not seem to be the architect of family investment strategy, however; rather, he was a reliable and efficient administrator. As the London office settled down after its crises of the late 1980s, John Pilley, an experienced British financial executive, joined Moawalla.9
At Bakr’s direction, the two men reported to his half-brother Shafiq, who was placed in charge of international financial issues—an assignment designed to complement Hassan’s role overseeing international business development. Shafiq spent a great deal of time in Europe, where he still lived exclusively in hotel rooms, such as one in the Noga Hilton in Geneva. His Quaker-supervised boarding-school education in Lebanon and his college education in America had led him, by his forties, to a notably Western lifestyle of business meetings and exuberant nightlife, a way of life that provided a notable contrast to that of his half-brother Osama—particularly since the two were both singleton sons of Mohamed’s who had apparently been born in the same month of January 1958. Shafiq remained a quirky character; his hair sometimes grew out in long tufts and his hotel rooms, according to one visitor, could be as messy as a teenager’s. Yet he had earned a bachelor’s degree in business from the University of San Francisco in 1981, and he was one of the few Bin Laden brothers who could hold his own in the technical vernacular of finance and investing, a sometimes mysterious realm of puts and calls, options and warrants, margin calls and vesting dates. In time, according to a business partner, Bakr chaired an investment committee consisting of five Bin Laden brothers, and Shafiq became the committee’s chief manager.10
For years the Bin Ladens had invested on the obscure margins of the United States—the odd strip mall or apartment complex, or blue chip stocks that were very widely held. During the mid-1990s, for the first time, the family began to make more diverse and sophisticated financial investments, particularly in firms that had connections to political elites in Washington and London.
The Carlyle Group operated from majestic offices at 1001 Pennsylvania Avenue, between the White House and the U.S. Capitol. It was a private equity firm, meaning that its partners raised money from wealthy and institutional investors, pooled those funds, and then used them to buy and sell stakes in private companies and other assets. The partners made their money—considerable amounts—by charging management fees to their investors and by orchestrating profitable deals. The moving force at Carlyle was a young workaholic lawyer named David Rubenstein, who had served at a very young age as a domestic policy adviser to President Jimmy Carter. With Stephen Norris, a mergers specialist, Rubenstein formed Carlyle in 1987; they drew its name from the posh Carlyle Hotel in New York. By 1993 the firm’s portfolio of investments had grown to about $2 billion.11
Rubenstein had lured Frank Carlucci, secretary of defense in the first Bush administration, to serve as vice chairman; his connections among Pentagon contractors drew Carlyle into the defense arena. Carlucci’s success impressed upon Rubenstein the advantages of attracting prominent, connected politicians as partners to the firm— their reputations and fame helped attract investors, and their inside connections led to profitable deals. After Bush’s defeat by Bill Clinton in 1992, Rubenstein and Norris visited the White House to meet with outgoing secretary of state James Baker. With the Democrats back in power, Baker was ready to make money. He decided to sign on as a consultant to an upstart energy company in Houston called Enron Corporation. And he agreed to become a partner at Carlyle.12
Baker enjoyed an excellent reputation among Arab elites in the Middle East, particularly in the Persian Gulf region, largely because of his performance in the Gulf war. With other partners and promoters at Carlyle, he traveled the Middle East to raise investment funds from wealthy Arab investors. His most important role—and those of other big-name promoters, such as President George H. W. Bush and former British prime minister John Major— was to draw the deepest pockets in Arabia to dinners and private seminars, to impress upon them Carlyle’s profitable record and outstanding prospects. The tactic worked: between 1994 and 1996, the firm raised $1.3 billion for an investment fund called Carlyle Partners II. The investors included George Soros—the enormously wealthy currency trader, who put in $100 million—and pension funds, such as the California Public Employees’ Retirement System, which put in $80 million.13
The Bin Laden family heard Carlyle’s pitch in 1995, through its London office. The family agreed to put in at least $2 million. Jim Baker “knew them very well” and was the family’s “favorite politician,” said Charles Schwartz, the Houston lawyer who represented Bin Laden family interests in Texas. Shafiq Bin Laden, although an unlikely dinner or hunting partner for the former secretary of state, was appointed by Bakr to attend Carlyle conferences and keep track of the family’s investment. It was this assignment that would ultimately carry him to Washington, D.C., on the same day his half-brother attacked the city.14
Shafiq also supervised the family’s investment in United Press International, the venerable American wire service, which a consortium of Saudi investors, including the Bin Ladens and the Alireza family, had purchased at a bankruptcy auction in 1992 for $4 million. The spread of satellite television dishes on the rooftops of Saudi households during the early 1990s, and the birth of popular Arabic-language broadcasters such as Al-Jazeera, who were hostile or indifferent to the Saudi establishment, had led the Saudi government to encourage the development of Saudi-owned alternatives, such as Al-Arabiya and Middle East Broadcasting. The theory of the UPI purchase seemed to be that its news gathering could support Middle East Broadcasting, although it was never entirely clear to some UPI executives whether families like the Bin Ladens had made this investment on their own accord or as silent partners of the Saudi government. Ahmed Badeeb, former chief of staff to Prince Turki, the head of Saudi
