The Bin Ladens

by Steve Coll

  “There’s a lot of money in phones,” Salem told his German friend Thomas Dietrich. He knew this because he and his family spent such vast sums of money on international phone calls. When he checked out of European hotels, he usually owed more for his phone bill than for his room and meals. He would call at night just to talk “and he would fall asleep, on an international call,” Dietrich recalled. “And when you hang up, he calls back and says, ‘Why are you hanging up?’” Dietrich learned that even if they were staying in the same hotel, it made much more sense to call Salem on the phone than to try to visit his room “because when you visit him, he sits in front of the TV and talks on the phone—he will not talk to you…In the day, he slept and was on the phone. And in the night, he was on the phone.”5

  SALEM FOUNDED Bin Laden Telecommunications in 1975. He owned 51 percent. Lansdowne Ltd. owned 15 percent; the rest ended up with Salem’s bankers, the Bin Mahfouz family. The company operated at first from a modest residential villa in Jeddah. It possessed the air of whimsy that seemed to swirl around Salem like fairy dust.

  Although he had virtually no prior experience in business, Rupert Armitage, Salem’s guitar-playing schoolmate from Copford Glebe, was soon appointed the company’s managing director. Salem and Rupert had fallen out of touch after school until they bumped into each other in the wee hours at a nightclub outside Rome, where Rupert was working as a bar manager and Salem was partying with a son of Lord Carrington, the British politician who was then his country’s foreign secretary. They jammed with their guitars that night, and six months later, Salem asked Rupert to come to Jeddah to give him additional lessons. Hunnewell and Pochna found Rupert to be a bit of an adventurer, and an unlikely telephone company executive, but they thought he was intelligent and reliable, and he was clearly trusted by Salem, so they accepted him.6

  Their business at first centered on the sale in Saudi Arabia of American-made speed dialers for rotary telephones. These were primitive devices that allowed a user to program the numbers of friends or family and then dial by pressing a single button; they cost about one hundred dollars in the U.S. but sold at a brisk clip for three times that much in the kingdom. Lansdowne won an exclusive agency to sell the dialers in Saudi Arabia, and it turned out that every prince with a palace and a long list of brothers, sisters, aunts, and uncles wanted to have one. They soon branched out into other telephone equipment, such as private exchanges that allowed a palace to have dozens of separate lines. The kingdom still did not have a decent national telephone network, but the royal family wanted the latest and best equipment in their homes, even if the lines crackled or broke off when they punched the blinking buttons.

  The biggest problem, Hunnewell discovered, was getting paid. “We were doing compounds in princes’ palaces and friends of Salem’s,” he recalled, and this drew them into the web of informal debts and credits that bound the Bin Ladens to other merchant families and the royal family. They would install an expensive 250-line exchange in a particular palace, only to be told by its owner, “I’m a friend of Salem’s, and Salem owes me money over here for this, and so he and I will work that out.” Hunnewell would then have to petition through Rupert Armitage to explain, “We’re owed 2.5 million by these people, who all say that you owe them money, and who aren’t gonna pay us” until Salem reconciled his debts.7

  The company books were a continuous mess; there were so many claims of credit, debt, and barter exchange between Salem and his customers that it often seemed hopeless to sort out an accurate picture. “There must have been some cash flow problems” among the interlocking Bin Laden companies, and between Salem and his bankers, Rupert Armitage recalled. Salem “was always saying, ‘Rupert! Where can I find one hundred million dollars? I need it by tomorrow!’”8

  Armitage dealt with much smaller amounts but in an atmosphere of disarray. He would make his way down to the National Commercial Bank “to pick up six hundred thousand riyals in order to pay off some official—and by the way, six hundred thousand riyals is really quite heavy, I can tell you.” In the hallways leading to the bank’s vaults, he would find “a few Yemenis shoveling out one hundred thousand riyals at a time…something huge. Anyhow, that’s a lot of money, and there were just blocks of it going off into the distance.”9

  Hunnewell and Baily thought they should try to build a sustainable, organized business as they had tried to do in their previous merchant banking ventures. Hunnewell had contacts at General Electric and tried to deepen GE’s steadily expanding partnership with the Bin Ladens. They also tried to find a new source of profit in the Bin Ladens’ role as a customer of Caterpillar, the American manufacturer of construction machinery. Hunnewell noticed that there were all sorts of Caterpillar equipment—graders, earthmovers, bulldozers, and so on—just lying abandoned at former Bin Laden job sites. Salem explained that it had been his father’s practice to build the price of a new fleet of Caterpillar equipment into the bid of each road or other major project he took on. He would import the tractors, haul them to his job site, use them until the work was complete, and then just leave them. Caterpillar sent out a team to inventory all the equipment scattered around the kingdom. “They found stuff that was buried in the sands in crates that had never been opened,” Hunnewell recalled. They counted it up and told the Bin Ladens that they were the largest owners of Caterpillar equipment in the world. They discussed making the Bin Ladens their agents in Saudi Arabia, but Salem wasn’t interested. He wanted to build things, not sell somebody else’s products, he said.10

  Salem had his eye on a big prize, a plan announced by the royal family to install about 450,000 new telephone lines in the kingdom, to bring Saudi Arabia into the modern communications age in a single leap. The contract—always on the verge of being finalized but never quite tangible—was the pot of gold at the end of the Saudi rainbow for many foreign businessmen who had flocked to the kingdom during the mid-1970s. Every Saudi merchant family, courtier, and arms broker in Jeddah and Riyadh, including Adnan Khashoggi, seemed to be angling for a piece of the contract as an agent or partner. With his new telecommunications company up and running, Salem decided to join the game. The American bankers were excited about the potential payoff, but Pochna, in particular, who increasingly found Salem arrogant and frustrating, became skeptical that the Bin Ladens would treat them fairly as partners. Salem, he felt, saw his merchant banking partners as “one of the many Westerners” who provided him with the services he required, “and we were no different than one of his pilots.” Pochna particularly resented the long waits he endured in Salem’s smoky reception rooms; he got so fed up that he began to bring a deck of cards to pass the time. This was not the way Harvard-educated investment bankers did business.11

  They all recognized that the monster telephone contract would be won or lost on the basis of private accommodations within and around the royal family that the Americans and Europeans involved in the deal could never fully understand. Salem compounded the mystery of these informal negotiations by speaking about the deal to his partners through “delphic, inaccurate, odd comments,” which he then expected the Lansdowne partners to interpret accurately and act upon to strengthen their bid, in Pochna’s view.12

  Saudi Arabia’s government-controlled telephone company had announced an exclusive deal with Phillips of the Netherlands, whose agent in the kingdom happened to be Mohammed bin Fahd, a son of the crown prince. The price of this tentative contract was estimated at $6.7 billion, an amount so much larger than the true cost of the system, as calculated by European consultants, that it appeared to involve several billion dollars of very mysterious payments. In 1976 and early 1977, Salem and others in Fahd’s circle managed to reopen the negotiations. Logs from Salem’s private jets show that he gave several rides to the minister and deputy minister of communications, and their families, during this period; presumably, he was impressing upon them, among other things, the perks of his friendship.13

  Salem never explained to his American partners how he h
ad worked his way into the contract’s new round of talks, or how the deal would finally be decided, but he made clear at a certain point that “this was one of the contracts he would get,” Pochna remembered. To succeed, however, Bin Laden Telecommunications needed a capable foreign telephone company as a partner—a company that could actually do the work. Lansdowne had negotiated relationships at Northern Telecom, an affiliate of Bell Canada. Northern’s president, Walter Light, flew into Jeddah. Salem threw a party at his house, invited the Canadian ambassador, pulled out his guitar, and sang “She’ll Be Coming ’Round the Mountain.” He then divided the audience into women and men for a rousing version of “Frère Jacques.”14

  Salem’s methods paid off: Despite twists and complications, Bin Laden Telecommunications ended up as Bell Canada’s agent for a large portion of the contract, earning a straight cash commission of 1.5 percent of the company’s five-year, approximately $1.5 billion deal to operate and maintain the new Saudi phone system. The Bin Ladens also earned a similar percentage of a subsequent five-year Bell Canada contract with the kingdom, plus a large share of $400 million worth of ministry and housing construction contracts that Bell Canada was required to undertake as part of the deal. Almost everyone ended up happy—Phillips and Ericsson won a part of the contract involving equipment sales, and Prince Mohammed bin Fahd reportedly received a commission of about $500 million. Two exceptions were Francis Hunnewell and Michael Pochna. They accused Salem of cutting them out of some of the Bell Canada money and of improperly diverting construction contracts from the deal to other Bin Laden firms. They sued and ended up tied down in Canadian courts for many years.15

  More and more, in business deals between Saudis and Americans, greed and a competing sense of entitlement became a risk. Each side condescended to the other. Even so, in the late 1970s, there was, it seemed, an almost endless amount of money to go around. Yachts, private jets, palaces filled with new technology, garages stuffed with European race cars—the princes were updating themselves, and a younger and more international generation was coming to the fore around Fahd. Yet the royal family and its courtiers were also drifting back toward the ethos of public luxury and payoffs that had prevailed two decades earlier under King Saud. The relative austerity and the official piety of the intervening Faisal years were receding. With Fahd firmly in control, with his own sons moving boldly into business, with oil prices rising ever higher, with construction cranes towering above every horizon, it was difficult for many privileged Saudis to imagine what might threaten the existing order.

  DURING THE LATE 1920S, as he completed his conquest of the Arabian Peninsula, King Abdulaziz faced a Frankenstein problem. He had employed his jihadi militia, the Ikhwan, or “Brothers,” to vanquish his enemies and take the Hejaz, but he could not persuade these zealous volunteers that their religious war had reached its end. The Ikhwan protested Abdulaziz’s blasphemous embrace of the automobile and the telegraph. Soon they revolted violently. The king showed little mercy; in some battles, he mocked their beliefs by using his Fords as makeshift motorized cavalry to break their ranks. At the same time he sought a broader political accommodation with his enemies. He created oasis settlements for demobilized holy warriors and encouraged them to take up farming and passive religious study. Qasim, a deeply conservative province of rolling dunes and watered oases to the immediate northwest of Riyadh, hosted a number of these villages filled with resettled Ikhwan. Around 1940, a time when the Brothers’ memories of their grievances against Abdulaziz and his family remained fresh, Juhaiman Al-Otaibi was born in one such Qasim settlement, called Sajir. As he grew up, he seems to have identified early on with the causes and religious austerity of the Ikhwan and to have felt some nostalgia for their revolt against the royal family.16

  He joined his tribe’s levy, or mujaheddin, in the kingdom’s National Guard, a paramilitary force that served as a check on the regular Saudi armed services and also as a kind of national employment scheme for restive tribesmen. Juhaiman became a corporal but left his tribe’s ranks to take up religious study at the University of Medina during the early 1970s. The university was known for its heavy contingent of exiled faculty who belonged to the Muslim Brotherhood. Its students included exiles from Egypt, Yemen, Kuwait, and Pakistan; there were even some American converts to Islam in what became Juhaiman’s Islamic study group. At Medina they studied tenets of Salafi orthodoxy, inherited in part from the beliefs of the Ikhwan, which emphasized the need to withdraw into a state of Islamic purity. These teachings intermingled with the political activism of the Muslim Brotherhood and the specific grievances of expatriate students about their home governments. In all, this blend of Koranic introspection and political dissent, tracing back into Saudi history and connecting outward to pan-Islamic movements abroad, would have seemed quite familiar to Osama Bin Laden and his Muslim Brotherhood–influenced after-school study group at Al-Thaghr, in nearby Jeddah.17

  Juhaiman was almost two decades older than Osama’s generation, but many of his followers at Medina were younger students. They wore short mustaches, long beards, and thobes that fell only to the middle of their calfs, styles they attributed to the companions of the Prophet. They rejected photography as a blasphemous innovation, but their views went even further than those of Osama and his schoolmates in Jeddah. Juhaiman echoed the original Ikhwan by attacking modernity as a kind of grand conspiracy against true believers. After 1974 he and his followers also concluded that the Saudi royal family was illegitimate and corrupt. They withdrew from Medina to form an explicit political conspiracy to challenge the Al-Saud. Informal circles of study groups and students, frequently overlapping in their ideologies, were distinguished by intense and often very subtle debates over theology and the correct course of religious politics. Osama moved in one circle in Jeddah and Mecca; Juhaiman and his followers occupied a partially overlapping but separate realm in Medina.

  After breaking with his professors in Medina, Juhaiman returned to Qasim, then moved to Riyadh, where his following grew to about two hundred. By 1978 they began to print anti-royal pamphlets on presses in Kuwait. One of the pamphlets was called “Rules of Allegiance and Obedience: The Misconduct of Rulers.” It attacked the Saudi royals and the officially sanctioned religious scholars who supported them as false stewards of Islam and its holy places. Some princes were “drunkards” who “led a dissolute life in luxurious palaces.” The royal family had “seized land” and “squandered the state’s money.” Commission-laden contracts like the deal to build a national telephone system were symptoms of a broader political rot. Juhaiman’s fulminations drew the attention of the Saudi interior minister, who arrested and interrogated Juhaiman and his followers. They were released in Riyadh after they promised to quiet down.18

  In fact, they began to plan for a violent revolt.

  IN SEPTEMBER 1979, Salem flew to Washington, D.C., to buy a new Learjet. He visited his American girlfriend Patty Deckard. The two picked up Jack and Anita Pizza from Panama City, Florida, then flew to Europe. They visited Cairo, Jeddah, Dubai, and Abu Dhabi. In early November, they scooped up two of Salem’s sisters, Mona and Randa, and flew to Athens. They spent a night on the Greek island of Crete, then they jetted back to Cairo. It was a particularly busy season in Salem’s playhouse at thirty thousand feet.19

  The siege at the Grand Mosque at Mecca began at the call to dawn prayer on November 20, the first day of the portentous Islamic year of 1400. Juhaiman and his followers unpacked weapons they had smuggled in coffins normally carried by worshippers to bless the dead. They seized microphones and announced that among them was the Mahdi—the prophesied redeemer of Islam whose arrival on earth would signal Judgment Day. The purported Mahdi was Mohamed Al-Qahtani, an otherwise undistinguished follower of Juhaiman whose true role had been divined in a dream by another member of the group. As they fired their weapons from the mosque’s minarets, Juhaiman’s followers announced the start of what they believed would be the last battle known to mortals.20

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p; It quickly devolved into a bloody catastrophe. Saudi security forces arrived and tried to undertake a frontal assault on the holy Haram. Floodlights installed by Bin Laden engineers during past renovations, which normally illuminated worshippers and pilgrims in a celestial glow, lit a killing field for Juhaiman’s sharpshooters. Scores bled to death on the marble. Salem and his muscular Lebanese aide Mustafa Fathlalla donned military uniforms and drove into Mecca with drawings of the mosque’s layout hurriedly pulled from office files.