by Steve Coll
18. ANXIETY DISORDER
BY THE EARLY 1980S, among all the Bin Laden brothers, Salem’s only significant rival for leadership was Yeslam, who had graduated from the University of Southern California with a business degree in 1976. He was four or five years younger, but as the eldest of a group of three full brothers born to one of Mohamed’s more senior wives, Rabab, a woman of Iranian origin, he had natural allies within the family. He also had friendly relations with some singleton half-brothers who had gotten to know him in California. Yeslam had returned to Jeddah from Los Angeles with plans that seemed to be stoked by his beautiful and ambitious wife, Carmen, the French-speaking daughter of an Iranian mother and a Swiss father. Carmen did not mind saying that she thought Yeslam was the most intelligent of the Bin Laden sons, and that his training and experience in California, where he had dabbled in the nascent personal computer industry, qualified him to lead the Bin Laden companies into modern sectors of international business. By the time Yeslam returned, however, Salem had already established his Bin Laden Brothers incubator; he had sidelined the trustees at the original Mohamed Bin Laden Organization; and, most important, he had made himself indispensable to Fahd. He had also secured the partnership of his own younger full brothers, Bakr and Ghalib, as well as capable half-brothers such as Yahya, Omar, and Tareq, and he had won the contract to participate in the expansion of the kingdom’s telephone system, a major business achievement. Yeslam found he had relatively little room in which to maneuver.
He had some advantages, nonetheless: He understood Western stock and bond markets, from which Salem shied away; he spoke excellent French and English; and he had a cosmopolitan, business-minded spouse. Carmen established herself as a hostess in Jeddah’s merchant and diplomatic circles. She and Yeslam built a tennis court at their villa along the Mecca Road, and on Thursday nights, the beginning of the Saudi weekend, they hosted tennis parties for young Saudi financiers, socialites, foreign executives, and ambassadors. These were casual events where alcohol flowed freely, steaks were grilled on the barbecue, and English was prevalent—a California-influenced refuge amid the kingdom’s Wahhabi awakening.1
Yeslam shared Salem’s obsession with speed. He had trained as a race car driver as well as a pilot, and over the years he had collected Ferraris, Lamborghinis, and Porsches. His full brother Ibrahim had a fondness for Rolls-Royces. After Yeslam’s return to Jeddah, his brother-in-law—the husband of his full sister, Fawzia—suffered fatal brain damage in his Jeddah garage when he snapped his head while backing an imported Formula One racer out of his garage too quickly. Increasingly, among the Bin Laden men, jets and fast cars beckoned as a measure of manhood.2
In business, because of his USC classes and his encounters with bankers in America, Yeslam was more comfortable with the complexities of securities markets than were many of his brothers. He imported computers and began to think about how he could build up a modern investment advisory service, run by Saudis for Saudis, to compete with the American and European brokers who flocked to the kingdom to promote stock investments to the newly wealthy.3
As his ambitions in this field grew, so did tensions with Salem, who expected utter deference from younger brothers. Yeslam resented being patronized. Still, Salem rewarded him handsomely for his rising contributions. Yeslam earned the equivalent of more than $1 million in 1976, according to filings in a Swiss court by Carmen. Two years later, she reported, he was paid almost $1.5 million in salary and other compensation.4
Yeslam and Carmen escaped periodically to Geneva, where they had first met; in 1978, in the suburb of Genthod, at number 1, Chemin de la Petite-Voie, they bought and furnished an old estate. They paid just over 1 million Swiss francs for the property. He lavished her with jewelry—by her count, between 1975 and 1985, he gave her more than $2 million worth of diamond, emerald, ruby, and gold pieces. (“I admit I can be vain,” she later conceded.) Her routine spending money sometimes totaled 20,000 Swiss francs per month. They kept a box of cash in their Jeddah home that often contained about $50,000.5
Like many of the Bin Laden brothers—other than Salem—Yeslam spoke softly and projected a mild, gentle demeanor. He was a thin, fragile-looking man who had his own streak of vanity—he dressed in fashionable designer brands, and he seemed to favor visible labels. He could seem more at home in Switzerland or California than in Saudi Arabia, and as the months passed after his return to Jeddah, he struggled in his search for a comfortable identity. As he approached thirty, he was rich and successful in business, and a father of two young daughters, but he was plagued increasingly by panic attacks.6
He managed for a time to fight through these episodes, but in 1979, that year of multiple upheavals, anxiety finally overwhelmed Yeslam. He “hid himself away in the house,” according to Carmen’s assertions in court filings. She spent “whole nights trying to give him reassurance.” His behavior grew erratic: He “wanted to play backgammon day and night and he was forever waking his wife up and asking her to join in this mania.” During the Mecca uprising, Carmen recalled, he dashed “from house to office like a man unhinged.” In the aftermath of the violence, “he had nightmares. He was frightened of everything—frightened of dying, especially.”7
For his part, as his interior struggles deepened, Yeslam felt that his wife was less than understanding. As his attorneys put it in Swiss court filings, “His wife seemed to take a malicious pleasure in aggravating his condition through constant violent scenes, during which she would scream and threaten to commit suicide if her capricious demands were not immediately satisfied…Her usual line was that she was going to drive her car into a tree.” Carmen denied these allegations; she felt that she had done “everything she could to help him take care of himself and stay in control of his destiny and his business.” In any event, unable to cope with either his demons or his wife, Yeslam sought professional help in Geneva, but he found no relief. He flew to Los Angeles for six weeks of medical treatment. According to Yeslam’s court statements, this produced some improvement in his condition.8
In the midst of these struggles, he decided to lead his family into the international stock and bond markets. He bought computers that could support a stock trading operation, and he opened, in Jeddah, the first Saudi Arabian stock brokerage, designed, as one of its brochures put it, “To dispose of the idea that one has to live on Wall Street in order to make money.”9
Yeslam quickly emerged, during the early 1980s, as the Bin Laden family’s pioneer in global stock trading, syndicated real estate investments, and the use of offshore companies in Caribbean, Central American, and European tax and bank secrecy havens. Bin Laden family charity funds had become entangled with Osama’s increasingly disoriented international radicalism; in a similar way, some of the family’s investment money would become entangled with Yeslam’s global financial vision, his anxiety disorders, and his deteriorating marriage.
AROUND 1980, Yeslam formed a Swiss company that would become the Saudi Investment Company, or SICO. A Cayman Islands corporation called Falken Limited—controlled by Yeslam and his full siblings—owned the firm. Falken also would hold stakes in other corporations; the full rosters of shareholders and activities at these offshore companies are unknown, but some of their names suggest a slightly Gaelic whimsy: Celta Finance S.A., Galway Inc. Some of these offshore companies were formed to manage single investments in commercial real estate projects or private Bin Laden family residences in the United States or Europe; others may have handled import or leasing operations for Bin Laden companies; still others were set up to channel finance for construction work in countries such as Sudan; and some remain entirely mysterious. In 1983 Yeslam formed the Saudi Investment Company Panama Corporation; he served as president, and a Swiss lawyer, Baudouin Dunand, joined him as a director. The next year, also in Panama, he organized a branch of the Mohamed Binladin Organization Incorporated, with Salem as president, Yeslam as treasurer and secretary, and Salem’s full brother Bakr as an additional director. The pape
r residue of these and other Bin Laden–related companies in Panama, the Caymans, Curaçao, the Netherlands Antilles, Liechtenstein, Luxembourg, Switzerland, the Channel Isles, and elsewhere soon extended across oceans and continents. The firms opened and closed, changed names, bought one another out, or lay dormant for years at a time, their bare-bones registrations punctually renewed by family lawyers or accountants based in London and elsewhere. Yeslam appears to have been involved with many of these offshore companies, particularly those directed at real estate projects in the United States.10
He hired about a dozen employees at the Saudi Investment Company in Jeddah and held “hundreds of marketing meetings introducing the company to the public,” according to a company brochure. In these presentations, Yeslam and his colleagues emphasized the forces of financial globalization: “Since the Kingdom provides much improved communication networks, the information gap to foreign markets is getting very small, enabling us to compete against foreign brokers, and that’s exactly what we planned to do when we laid the ground work to cover American stock markets for our customers,” the brochure said. Saudi Investment sent several of its brokers abroad to study the operations at foreign brokerages, and it created a department in Jeddah specializing in American and Japanese stock markets. By the end of 1983, the firm claimed to hold more than $10 million worth of stocks for its Saudi customers; it reported annual turnover of almost $200 million. Computer-aided stock trading, which sought to exploit price gaps in markets scattered around the world, and which could increase an investor’s speed and volume, was now roiling stock markets in Tokyo, London, and New York; Yeslam, in effect, promised to bring a small piece of the action to Saudi Arabia.11
He also developed contacts at Wall Street investment banks. Through one of them—Donaldson, Lufkin & Jenrette—Yeslam arranged to clear trades for Saudi customers in the American stock markets, which made it much easier for them to buy and sell stocks on the New York Stock Exchange and in over-the-counter markets.12
Investment bankers at Donaldson, Lufkin introduced Yeslam to Charles Tickle, the chief executive of Daniel Corporation, an American real estate development company. Tickle sought partners who could fund office and residential projects in the United States; Yeslam said he was interested. Yeslam formed another Panamanian company called Saudi Investors, Incorporated, whose shareholders were described in a company document as “Mohamed Binladin Family.” In 1980 they joined with Daniel to develop Imperial Plaza, in Richmond, Virginia, a twenty-two-acre adult-residential community with a restaurant, auditorium, barbershop, bank, pharmacy, library, nursing home, and four high-rise towers containing 891 apartments. Three years later, they invested in Woodgate West, a development of 34 two-story apartment buildings in southwest Houston. One of Yeslam’s brochures described these deals as “a unique concept of investing in American property.” The company expected to have “purchasing power” of $100 million by the spring of 1984.13
Charles Tickle, who operated out of Birmingham, Alabama, found Yeslam to be “always very professional…well educated, well spoken.” Daniel Corporation “never had a bad business dealing with him of any kind.” In all, they worked together on about a half dozen commercial real estate ventures in the United States; in each case, Yeslam’s firm, Saudi Investment, was the only investor besides Daniel Corporation. They formed offshore corporations to serve as financing vehicles, with Tickle and Yeslam sometimes named as directors. The only real mystery, Tickle recalled, was whose money Yeslam was actually investing—his, or that of other members of the Bin Laden family, or that of other Saudi investors, or money from some other source. “That was always such a secretive thing,” Tickle said. At the time, as a business issue, “We could have cared less.” For Daniel Corporation’s purposes, all investment funds were the same; Yeslam had access to quite a lot of cash, and there was no reason for Tickle to believe that it was coming from improper sources.14
AS HE BUILT this global portfolio, Yeslam found it more and more difficult to work with Salem. Yeslam was “now, in effect, the chief financial officer” of the Bin Laden companies, according to Carmen, but his “rise was not welcomed by Salem and Bakr,” who increasingly served as Salem’s second in command. The pair challenged some of Yeslam’s decisions; his resentment deepened. Also, Yeslam and some other brothers “were frustrated by their lack of contact” with the Saudi royal family because “Salem and Bakr guarded their contacts with the princes,” according to Carmen. Yeslam was reluctant to openly confront his elder brothers, however. Even in later years, he never spoke in detail about these conflicts, referring only obliquely to “disagreements” and his gradual exclusion from the principal family businesses.15
In 1985 Yeslam left Jeddah and moved to his estate in the Geneva suburbs. He distanced himself from his brothers, but he did not break completely with them—Yeslam, Salem, and Bakr remained codirectors of a number of offshore companies for years afterward, and they held business and social meetings from time to time. Yeslam also continued to manage family money, particularly that of his full brothers and sister. He would facilitate Swiss banking and some investments for other half-brothers and half-sisters as well. Mainly, however, Yeslam hoped, by breaking away from the business scene dominated by Salem in Jeddah, to cultivate his own independent relations with Saudi princes and other wealthy investors who were not already clients of Salem or Bakr—Prince Majid and Prince Mishal, half-brothers of Fahd, were two of his most important contacts during this period.16
Yeslam decided to develop the sort of investment firm that would impress Saudis, Europeans, and Americans alike—one that exuded the mahogany elegance of a Swiss bank. For just over 5 million Swiss francs, he purchased and renovated a grand stone building on a corner lot in Old Geneva, on rue François Lefort; it would serve as the headquarters for Saudi Investment Company. From there, Yeslam managed brokerage accounts and international stock trading. A three-page letter to his full brother Ibrahim, written on Saudi Investment Company stationery on March 11, 1985, and later filed in an American court case, offers a snapshot of his trading activity. It refers to an audit by Arthur Andersen of Geneva and then lists Ibrahim Bin Laden’s holdings: small positions in gold and silver; several hundred thousand U.S. dollars in cash deposits, apparently to provide collateral for stock trades; and shares or options in eighty-five different corporations, most of them American. Included in Ibrahim’s stock portfolio were Anheuser-Busch, the beer company; Bally Manufacturing, a maker of pinball machines; and American Airlines.17
It was a heady time to be promoting the stock market, whatever one’s strategy. After a severe recession in the United States in 1982, the Dow Jones Industrial Average rose by more than 50 percent over the next three years. Through the summer and autumn of 1985, as Yeslam built up his firm in Geneva, the markets climbed further still; the Dow soon doubled from its 1982 low, and then kept climbing. A mania about stock investing spread across the United States and around the industrialized world; the volume of shares traded daily on the major exchanges skyrocketed, and many middle-class investors who had previously shied away from stocks now dived in.
Carmen felt that a similar craze was overtaking Yeslam. In 1985 “he went through a period of massive and reckless spending, amassing more than 500 pairs of shoes, hundreds of suits and over a dozen luxury cars,” her attorneys wrote in Swiss court filings. All the while, he “continued to suffer poor health, phobias and panic attacks.” Carmen found him “increasingly intolerant and dogmatic.” She sought treatment for her own anxiety and panic attacks. For his part, Yeslam found Carmen increasingly hysterical, and he became exhausted by her repeated threats to kill herself, according to the Swiss court filings by his attorneys. He believed that his wife was involved with another man, that she was “taking him for a ride and that her suicide threats were a pretense.” Finally, “unable to stand his wife’s scenes any longer,” he moved out of their Genthod estate and into his building in Old Geneva. His wife then announced that she was pregnant. They arg
ued over whether they should expand their family together; afer some back and forth, she ultimately gave birth to their third daughter in April 1987.18
In the middle of this tumult, Yeslam decided to purchase control of a stock brokerage in London. It was not, perhaps, the most sanguine time in his life to undertake such a complicated investment, but he forged ahead nonetheless. Russell Wood & Company had offices at Southwark, on the south side of the Thames River. George Russell Wood, a British stockbroker, founded the firm with several partners in 1972; it specialized in what was known as the private client business, meaning that it handled stock trading for wealthy individuals. The firm had a seat as a broker-dealer on the London Stock Exchange; this meant it could buy and sell stocks on its own account or for clients without going through any intermediaries—it was a member of the exchange. This allowed it to promote speed, efficiency, and expertise while recruiting wealthy investors. By taking control of the company, Yeslam could bring his firm and the Bin Laden family directly into the international stock markets for the first time. “They wanted to establish themselves as brokers in London because they were brokers in their own country,” recalled Auguste Sauter, then one of the firm’s partners. Yeslam wanted “to advise all the people in Saudi Arabia with pockets of cash, to invest globally.”19
Yeslam had brought with him to Switzerland a Tanzanian passport holder named Akbar Moawalla, who had previously worked at an American bank in Saudi Arabia. Moawalla served as Yeslam’s chief accountant and manager, and he became Russell Wood’s principal contact in Geneva as the acquisition talks unfolded during 1986 and early 1987.
All the while, stock prices went up and up. Trading volume on the major exchanges swelled. By the spring of 1987, they had a deal. The purchase price was not disclosed, but it appears to have totaled at least several million pounds sterling. Yeslam used Falken Limited, his Cayman Islands entity, to take control of Russell Wood. Moawalla became a director. Yeslam brought in one of his stock trading computers to keep track of all the trading by the London brokerage’s existing clients and new clients from Saudi Arabia and elsewhere. The computer system was scheduled to take charge of all trading at the firm in late August 1987.20
