The Bin Ladens

by Steve Coll

  When Salem’s brothers and sisters visited Desert Bear with their children, the atmosphere calmed considerably. Salem transformed one of the outbuildings into a hangar for ultralight aircraft. He hired a pilot from Texas, Pat Deegan, to assemble his fleet. Deegan walked into the main house one day and found Salem on a couch in the living room, still in his bathrobe, with a large group of Bin Laden children, all under twelve years old, lined up before him. Salem presided over a stack of one-hundred-dollar bills. “Come on up,” he told the children, handing out one bill after another. Deegan watched for a while and asked, “Hey, can I get in line?”9

  By this time, Salem had purchased a seaplane. He kept it in America and used it for family recreation in Florida and Texas. He and Ghalib were among the family’s more active fliers during these years; they would zip above Johns Lake and nearby orange groves in ultralights or else haul out the seaplane for takeoffs and splashdowns. “Kid Brother” Ghalib was becoming considerably more religious than Salem, but he was pleasant and adventurous, and he had a growing family of young children who particularly enjoyed Disney World.

  Flying ultralights off the back lawn at Desert Bear required some maneuvers during takeoff and landing; there was a fairly tight glide path between orange trees and power lines. Ghalib had flown the route many times without incident, but one day he drifted too close to the power lines. His engine caught one of the lines, and he flipped over and crashed.

  He broke his back but he was fortunate; he suffered no permanent damage or paralysis. He was immobilized in the hospital for a time and then recuperated at Desert Bear. It was one more close call in the Bin Laden annals of aviation. It would not be the last.10

  SALEM OPERATED AN OFFICE in the Olympic Tower on Fifth Avenue, in Midtown Manhattan. His local partner was Robert Freeman, a former investment banker whose father had befriended King Faisal decades earlier. Freeman’s wife, Gail, had met Salem’s wife, Sheikha, in the first-class cabin of a commercial airliner flying from London to Jeddah. The couples clicked, and they remained close even after Salem and Sheikha divorced. Salem asked Freeman to work for him as his personal financial adviser; Freeman proposed instead that they create a holding company in New York for investments in America. They called their Delaware-registered corporation Amarco—for American Arabian Company. Salem and Khalid Bin Mahfouz each took 40 percent and Freeman took 20 percent. Freeman hoped they would enrich themselves through ambitious undertakings, mainly in commercial real estate; he discovered that Salem was averse to stocks and other intangible assets.11

  Freeman introduced Salem to Donald Trump. The Bin Ladens owned a vacant tract of land near a royal palace in Riyadh, and Freeman thought the property offered “an excellent opportunity for Donald Trump to build one of his signature buildings, like the Trump Tower in New York.” When they met in Trump’s office, the developer told Salem that he was intrigued, but he would require $25,000 in cash plus two first-class tickets to Riyadh for himself and a colleague. According to Freeman, Trump explained that given his reputation, he did not feel that he should be spending his own money on “exploratory ventures in faraway places.” Besides, Trump continued, if Salem was willing to put up the $25,000, it would show that he was serious about the deal. Salem declined. People were clamoring to do business with the Bin Ladens, he said; they did not need incentive pay. The meeting ended in stalemate, to Freeman’s regret. Salem and Trump, he observed, were “very strong personalities, and there was very little give-and-take for either of them.”12 Trump’s spokesperson denied that such a discussion took place. Asked to review the author’s written source materials describing the meeting, the spokesperson did not respond.

  Freeman pitched investment idea after investment idea to his Saudi partners, but Salem rarely expressed interest. He seemed to regard his Manhattan operation mainly as a platform for shopping. When he was in New York, his first priority was to head down to 47th Street, where he expended great energy bargaining for jewelry and consumer electronics with the Hasidim who owned many of the district’s retail stores. He bought bags full of diamond necklaces and earrings for Bin Laden mothers and sisters in Saudi Arabia. Other Saudi tourists swaggered around Tiffany’s, proud to pay the sticker price and to carry conspicuously the Tiffany’s shopping bag, but Salem “was looking for deals,” Freeman recalled. He loved haggling with Hasidic retailers but feared losing out, so he ordered Freeman to find an appraiser who could examine particular pieces of jewelry and offer a sense of what he should pay. Freeman located an Italian appraiser with a second-floor office on 47th Street, to whom he could ferry jewelry entrusted to him by the store owners downstairs. He was never entirely sure, however, whether the appraiser was secretly in cahoots with the jewelers. It hardly mattered; Salem relished the negotiations more than the results. He had imbibed the anti-Semitic stereotype that Jews are the world’s canniest bargainers; he seemed to regard shopping at Hasidic stores as a feat of daring.13

  He prowled the nearby electronics stores for the latest portable phones, calculators, cameras, music players, and miniature televisions, all of which he bought in bulk. “He’d buy hundreds of these things for the princes,” recalled Gail Freeman. He would walk the aisles and peer through the glass cases, asking “Now, tell me the truth: These are brand new? Nobody’s seen them yet, right?” Like a salesman who uses season tickets at Madison Square Garden to cultivate clients, Salem used his mobility and expertise in American consumerism to acquire gadgets that he could use back in Saudi Arabia to ingratiate himself with princes.14

  Khalid Bin Mahfouz bought two apartments at the Olympic Tower, but he and Salem usually preferred the room service and convenience of hotels; when in New York, they stayed mainly at the Helmsley Palace or the Plaza. Salem threw an extravagant twenty-eighth-birthday party for Randa at the Plaza. Since he didn’t know too many people in the city, he asked the Freemans to fill up the private room with friends from their neighborhood in suburban Long Island. Salem sang his usual repertoire of corny folk and Christmas songs. “We were his playthings,” Freeman recalled. Salem’s lack of interest in ambitious business projects frustrated him—he had, after all, given up a career at a major investment bank.

  Still, he tried to live as his partner did. Once, on a trip to Jeddah, Salem ordered Freeman and an Italian associate out of a Jeep at night in the middle of the desert. Salem drove away—Freeman and his colleague had to stumble through the sand to the road, and then hitchhike into Jeddah. When they made it back, Salem was giddy; he seemed to regard his prank as part practical joke, part survival test. Freeman waited patiently for his revenge. One night in New York, when they were all out to dinner with Randa, they discovered that Salem had forgotten his wallet and had no money. Immediately afterward, Freeman drove to Harlem, forced Salem out of the car, and sped away. Randa fretted that Salem would never make it back, but he soon strode into her hotel with two new African American friends. He was, of course, delighted: “Bob, you do have a sense of humor.”15

  Freeman needed it. Salem was often so pinched for cash that Freeman had to call Jeddah night after night to plead for wire transfers: “Salem, we’ve got to have some money—we’ve got people at our door. We’ve got to pay the rent…What are we doing? Where are we heading?” Salem usually came through with the minimum amounts needed to maintain the office, “but it was always at the last minute.” As best Freeman could determine, the Bin Laden companies in Jeddah, which Salem now firmly controlled, had a reasonably steady cash flow, but there were so many calls on that money—employees, equipment, loan repayments, family—that Salem was not able to tap into it very easily for personal projects. Late payments to his construction companies by the royal family drained his liquidity even more. And yet as each year passed, Salem’s appetite for private jets and real estate abroad seemed only to grow. Oil prices fell during the early 1980s, but this did not visibly crimp Salem’s style. Instead, a pattern set in, according to Freeman and other partners and employees. When Salem needed money, Freeman recalled,
“he had to turn to Khalid Bin Mahfouz.”16

  THEY WERE CONTEMPORARIES and best friends, each a scion of a Hadhrami business fortune, each adapting to the international imperatives of the oil boom. As they reached their thirties and assumed their inherited responsibilities, however, they exhibited contrasting personalities. When they flew together on their private jets, Salem might joke and sip champagne and play guitar, but Khalid would sit quietly, drinking tea or smoking an Arabian water pipe. He stayed away from Salem’s more provocative parties for decadent Saudi princes. He did seem to enjoy Salem and his outrageous antics, but he would often observe his friend impassively, or issue only a slight, crooked smile. He was “a very quiet man, a very private man—very deep in thought,” said an employee who spent many hours with the two men. “I think he enjoyed seeing that Salem was not afraid to say or do anything, and I think that he kind of vicariously lived through him.”17

  Khalid was “just as happy to let Salem run the show,” said a second employee. Among other things, this meant adapting to Salem’s idiosyncratic ideas about when and how to spend his money. Once, on a trip to California, Bin Laden and Bin Mahfouz arranged to meet at the private aviation terminal at Los Angeles International Airport. As they waited, Khalid’s aides watched the country singer Kenny Rogers arrive on a private jet and climb with his entourage into stretch limousines. Salem turned up in a cheap rental car—he waved Khalid into the front passenger seat and they peeled out toward the freeway. “Nobody knows who they are and they couldn’t care less,” recalled the employee.18

  Some of their American and European colleagues found the friendship and business relationship between Salem and Khalid to be extraordinarily complex. On money matters, Khalid was clearly the senior partner. Yet it was Salem who enjoyed such easy, informal access to Fahd and other royalty; because of his charm and energy, Salem’s influence in Riyadh exceeded the size of his bank accounts. One European business partner who knew them both believed that Khalid harbored some quiet resentment about this imbalance. As for Bin Mahfouz himself, some of his partners and employees regarded him as an enigma, a man of many contradictions.

  The least complicated thing about him was his wealth; by the early 1980s, it was on full display. Salem had befriended Harry Winston, the prominent New York jeweler, and through him, he and Khalid were invited to the showroom of Hammerman Brothers, a wholesale jeweler in Manhattan. Khalid picked out some exquisite—and very expensive—pieces. Bernie Hammerman pulled Robert Freeman aside and asked if it would be too great an embarrassment to ask Khalid for a credit reference before he walked out with the jewelry. Khalid suggested two names, Freeman recalled: Ben Love, the chairman of Texas Commerce Bank in Houston, and Tom Clausen, the chairman of Bank of America in San Francisco. Hammerman’s credit department contacted Clausen, who said he was authorized to clear any check up to $50 million for Khalid Bin Mahfouz. As Freeman recalled it, “This created quite a stir in the showroom.”19

  Bin Mahfouz spent much of his time in America in the Houston area. He had met the aircraft broker Jim Bath around the same time that Salem had, and through Bath and other American partners he purchased private jets and real estate. He bought a large ranch on Houston’s outskirts and a mansion in River Oaks, a city neighborhood of oil barons and their retainers who poured their money into antebellum-style plantation houses and columned Georgian estates. The Bin Mahfouz property, at 3800 Willowick, lay just around the corner from Jim Bath’s relatively modest pine-shaded home. Khalid’s main house looked something like Versailles; in the rear was a swimming pool with an island in the middle that could be reached by a footbridge. Bath called it “the Big House,” his partner Bill White recalled. Khalid opened the estate and its guesthouses to the Bin Ladens. Salem’s sisters visited and amused themselves climbing trees on the sprawling grounds. Khalid and Salem hosted parties for the Texas notables who promoted and managed some of Bin Mahfouz’s American investments. At one point during this period, Khalid noticed that tour buses kept stopping on Willowick in front of his estate. “Why do these people keep coming by?” he asked. One of his employees explained that his home was now on the River Oaks celebrity tour. “The next time they come,” he said, apparently quite serious, “invite them in for tea.”20

  John Connally flew on Bin Mahfouz’s jets during his 1980 presidential campaign, according to two of Khalid’s employees. The oil barons Nelson and Bunker Hunt traveled with him, too, and they tried to draw Bin Mahfouz into their ill-fated attempt to corner the world silver market; one of the employees remembered Khalid complaining that he lost money on the venture. In contrast to Salem, Khalid tracked world financial markets and directed investment strategies in precious metals, foreign currencies, and other volatile instruments. His advisers were sophisticated about finance, and some enjoyed connections at the highest levels of international politics—in Houston, his attorneys included Baker Botts, the powerful firm that also represented the Bush family.21

  Khalid was one of several Bin Mahfouz sons who participated in the management of his family’s National Commercial Bank; his aging father, Salem, remained chairman. Khalid involved himself in the bank’s international transactions. NCB was becoming a formidable global institution; in 1985 it would report that it held more than $1 billion in cash or equivalent instruments and more than $6 billion in deposits. As the largest bank in Saudi Arabia, it was inevitably entwined with the royal family and the government. NCB planes sometimes transported payrolls for Aramco, the oil consortium; they carried boxes of brand-new hundred-dollar bills from the Federal Reserve Bank in Dallas, according to pilot David Grey. NCB planes also ferried documents to Baghdad in the early 1980s; the pilots who flew this route believed the missions supported Saudi Arabia’s quiet liaison with Saddam Hussein during the early stages of the Iran-Iraq war, Grey said. Whatever their role, the flights supported Saudi policy to shore up Saddam, a tilt backed by Washington; Fahd later acknowledged providing $25.7 billion in aid to Iraq, and the kingdom also transferred U.S.-supplied weaponry to Saddam.22

  NCB’s finances were complex, not least because the bank had to hold an unpublished amount of reserves to protect against loans in Saudi Arabia that might not be repaid. Yet the bank’s profitability and financial health were never in doubt, and Khalid Bin Mahfouz himself appeared to have no difficulty accessing large amounts of cash. Robert Freeman recalled that Bin Mahfouz protested that some of the real estate investments he proposed, in the neighborhood of $5 million, were too small to be worth his attention. Indeed, in Orlando, separately from Salem, Bin Mahfouz began acquiring land on a larger scale than Salem’s family-oriented Oaktree project. In an endeavor code-named “Project Debra,” after a waitress who served him while he was discussing the proposal in an Orlando restaurant, Bin Mahfouz and his agents quietly purchased tracts toward what would become an ambitious eighteen-hundred-acre commercial development known as Metro West; it would eventually be worth just under $1 billion. Khalid routinely traveled with $100,000 or more in his briefcase; at the end of a trip, according to his partner Rick Peterson, he would give whatever was left—as much as $30,000—as tips to employees at his Jeddah headquarters.23

  Salem also traveled with a briefcase full of tens of thousands of dollars, but his underlying accounts appear to have been less secure. Around the time he bought Desert Bear in late 1980, Salem told Miller McCarthy that he and the Bin Laden companies owed Bin Mahfouz and his bank about $220 million. Much of that debt may have involved project loans or letters of credit that would be repaid routinely, but even so, there can be no doubt that Salem lived closer to the financial edge than did Khalid. Robert Freeman was not the only partner of Salem’s who sometimes found it painful to extract money from him. Particularly after the fall in oil prices, Salem occasionally struggled to make dollar payments that ran only to six figures. At one point he backed out of the purchase of a $750,000 yacht, pleading depleted accounts, even though it might lead to the loss of a $200,000 deposit, according to his German friend Thomas D
ietrich, who was helping him with the acquisition. In 1984, for unknown reasons, he took out a $200,000 mortgage on Desert Bear, according to Florida property records.24

  These occasional signals of distress usually passed quickly. He stayed close to Khalid, and partly by borrowing, Salem still managed to find cash for one Learjet after another. In any event, it was often impossible to tell when Salem was handling his own money and when he was managing someone else’s funds. Some of the cash Salem touched seemed to lie outside of the international banking system. Robert Freeman recalled that Salem once asked him to find a way to surreptitiously deposit—or launder—about $5 million to $10 million in cash into Western banks. Freeman said he refused; he never learned where the money Salem wanted to wash had come from.25

  Such were Salem’s financial dealings in the early 1980s: transnational, but connected with America; impressively resourced; complex; and sometimes mysterious. Those traits also perfectly described the covert war in Afghanistan that was about to alter the Bin Laden family’s destiny.

  17. IN THE KING’S SERVICE

  SALEM’S POLITICAL BELIEFS were vague, if they could be said to exist at all. What the royal family wanted, he wanted. If his friends were in trouble, he helped. When Lebanon cracked up during the 1970s, Salem brought families he knew there to Saudi Arabia and arranged for jobs. He handed cash to a friend who spent time in Beirut during the civil war and told him, “You know what to do with this.” His friend used the money to support families in need—“Sunni, Shia, Christians.”1 Such loose charity appealed to Salem’s sense of purpose more than, say, political organizing. For a Saudi, he was not a particularly ardent anti-Zionist. He emphatically saw himself as an architect of closer ties between the kingdom and the United States—but if these views were his own, they also coincided with those of Fahd, his royal patron. He did not devour newspapers, and during the long hours he spent propped up in bed, watching television and talking simultaneously on the telephone, he was much more likely to watch action movies than news broadcasts. Yet he loved the rush of adrenaline, and as at Mecca in 1979, he could throw himself into a fight if he had a point of entry.