The Bin Ladens

by Steve Coll

  Bakr remained something of a workaholic. On visits to Cairo, he would check into the royal suite at the Marriott and work around the clock, napping for a few hours on sofas. “All his life was hard,” according to his Egyptian employee Sabry Ghoneim. “He didn’t eat much, because he was afraid of getting fat and developing health problems. He would work all the time, but he didn’t eat well or sleep well…Believe me, he paid for his work with his happiness.” Not long after Salem’s death, Bakr divorced his first wife, Haifa, an event that Ghoneim blamed on his work habits. “Even when he came back home, he was working—he would sleep in the reception area of his home…A woman needs her husband to relax and joke with her, to go out to eat with her. But he was in a bad way after the death of his brother.”2

  Salem’s disappearance burdened Bakr with leadership responsibilities that he had never anticipated, but it also freed his considerable ambition. He thrived in business meetings and had a distinctly international outlook. As he gained control of the family during 1988 and 1989, he envisioned diversifying its businesses into new countries and new industries; he started up new divisions in dredging and medical supplies, and made plans to explore new opportunities from Southeast Asia to Europe.

  Salem’s schooling had made him something of an Anglophile, and his restless free spirit drew him to America. Bakr was more influenced by France. His education in the former French colonial spheres of Damascus and Lebanon, and his first wife’s Syrian roots, helped draw him toward Paris, where he bought an enormous apartment on the Quai d’Orsay—although, like many of his half-brothers, he often preferred the easy convenience of luxury hotels, and typically, he forsook his apartment for the Ritz. Bakr spoke some French, but he conducted most of his business in English or in Arabic, and he kept private secretaries to assist him in each language; over the course of a typical day, he would slip frequently and easily between the two tongues. In this he resembled many younger, privileged Saudis who had adapted rapidly to global business idioms in the aftermath of the oil shock.

  In some respects, he was unprepared for the leadership role he now occupied. As an engineer and an operations man, as Salem’s loyal number two, he had learned to work hard and to concentrate on results, but he lacked a natural touch for the richly diverse human foibles and quandaries that his family members continually presented him. As almost anyone would, Bakr suffered by comparison to Salem. He could seem like a bit of a nerd, eager to imitate the sources of his older brother’s charisma and popularity but not always able to pull it off. Some of Salem’s friends thought that Bakr carried something of a chip on his shoulder because of these deficits. Yet he seemed to have genuinely admired Salem, and as he explored his new circumstances as the boss of all he surveyed, Bakr tried to live in some ways as Salem had done.

  He refused, for example, to back off from the family passion for flying, despite the enormous costs that aviation had exacted. Bakr had at first been a somewhat reluctant pilot. He “used to hate flying, maybe because his father died in an airplane” recalled one of his Egyptian instructors, Yahia El Agaty. “And then in Cairo one day at Imbaba Airport, I was flying the [Cessna] 172 which I bought from Salem. And Bakr came to the airport, and he said, ‘Okay, I want to fly.’ I chuckled: ‘You want to fly, Sheikh Bakr!’ He said, ‘Yeah.’”

  “You’re a liar!” Salem had exclaimed when Agaty called to report what had happened, but Agaty was right: gradually, Bakr took instruction and conquered his fear.3 He eventually became qualified on jets and was regarded by his private pilots as quite a competent and enthusiastic flier. He did not fly with Salem’s reckless, showy flair—barrel rolls were not his style—but he did enjoy a few modest demonstrations at the controls from time to time, such as taking off in a Learjet or Gulfstream and leveling at a low altitude, and then suddenly tilting back and roaring upward. He came to talk about planes and private aviation with the same all-consuming hobbyist’s passion as Salem had possessed; gossip about new models and nuances of range and performance became for Bakr what baseball or soccer rosters were for other men. His piloting did seem to some of Salem’s old friends to be a metaphor for Bakr’s relationship with his brother’s ghost—he wanted to fly where Salem had been, but he did not embrace the same degree of risk.

  AS HE ESTABLISHED himself as the new leader, Bakr decided to clean up some family inheritance issues. At the same time, he set up new business partnerships for the future. Court documents describing this period, while far from fully transparent, provide the most detailed snapshots available of the size of the main Bin Laden company and how its wealth was distributed to the heirs of Bakr’s generation after Salem’s death. Osama’s return to Saudi Arabia in 1989 coincided with this family reorganization, overseen by Bakr; it may even have been a factor in his decision to come home.

  Of all the myths that would come to swirl around Al Qaeda, none was greater than the fable of Osama Bin Laden’s wealth. His followers (and, later, some of his adversaries) romanticized every aspect of his leadership, but they particularly exaggerated his personal fortune. The unrestrained, poetic language employed by Islamist propagandists to celebrate Osama’s battlefield achievements in Afghanistan soon extended to the subject of his bank account. To some extent, their exaggerations are explained by Osama’s fundraising achievements; his ability to attract outside donations and government support had made him appear wealthier to his comrades in Pakistan than he actually was. Still, the prosaic truth about his personal finances mattered greatly—because of misreporting about Osama’s wealth, his adversaries, particularly those in the United States, would repeatedly misunderstand him.

  None of Mohamed Bin Laden’s children could easily guess what he or she was worth. The family companies did not trade on any stock exchange, and their web of opaque financial entanglements with the Al-Saud complicated any attempt at financial valuation. At the center of the empire stood the Mohamed Bin Laden Organization, the original construction company founded in 1931. Each of Mohamed’s sons—except for Ali, who had sold his shares when he broke with Salem after their father’s death—owned 2.27 percent of the flagship company, and each of the daughters owned half of that amount, or about 1.14 percent.4 After Bakr became the Bin Laden emir, or leader, he approved dividend payments to the family shareholders each year, based at least in part on that year’s actual profits. These dividends were separate from salaries that particular brothers might earn, and distinct also from profits that might be distributed from other businesses, such as Bin Laden Brothers. Some of the Bin Laden heirs reinvested their dividends in global stock markets, particularly after Yeslam established his Saudi and Swiss brokerages. Yeslam’s full brother Ibrahim, for example, testified in a court deposition that in 1983, in order to raise about $1 million in cash for the purchase of a mansion in Los Angeles, he sold “stocks that I inherited from my father.” He borrowed the rest of the purchase price, about $600,000. It seems most likely that Ibrahim actually inherited cash from Mohamed’s estate, in the form of dividends, which he then shifted into stocks at Yeslam’s direction; his testimony on this point is not precise, but overall, it suggests the scale and fluidity of the inheritance.

  The most reliable portrait of the family dividend system comes from an American certified public accountant, Linda Pergament Swift, a specialist in forensic accounting, who examined the Bin Laden family’s finances during the early 1990s as part of an American divorce proceeding involving Ibrahim. In 1989, Swift reported to an American court, Ibrahim received two dividend payments from the Mohamed Bin Laden Organization totaling just over $325,000. This appears to be roughly the amount allotted to all male shareholders that year, including Osama. Swift wrote, however, that her investigation revealed a strikingly flexible and informal family system: “Each beneficiary receives allotments, usually from profits of the business, on an annual or semi-annual basis. The family business does not simply distribute a lump sum…[but] acts as a money manager or clearing house.” Each son and daughter was credited his or her share of
the annual profits, she continued, and then the company doled out the cash as directed by the heir.5

  Ibrahim’s 1989 take implies that Bakr allotted a total of about $15 million in dividends to family members that year. That is consistent with figures in the 1990 edition of Top 1000 Saudi Companies, a business directory published in cooperation with the Saudi Arabian government. It reported that the Mohamed Bin Laden Organization was the twenty-seventh-largest company in the kingdom and had revenue of about $340 million. Assuming a profit margin of 5 to 10 percent, as would be typical at a large construction firm, the company’s total annual profit around 1989 would have been in the range of $20 to $30 million—an impressive amount, but hardly the stuff of the greatest global business baronies.6

  Also in 1989, Bakr oversaw a one-time distribution to Mohamed Bin Laden’s heirs from the patriarch’s broader estate, according to what the family later told American government investigators. Mohamed’s children and the four women to whom he was married when he died had inherited not only shares in his company but also his land, his homes, and his personal property. Initially the trustees appointed by King Faisal doled out allowances and conserved the estate’s principal. When Salem eventually gained control, according to the account of one family business partner, he argued with some of his brothers over whether and how to distribute the estate’s underlying assets, which were not easy to divvy up, since they included much land and real property. By this account, Salem resisted a straight application of Islamic law, under which each brother would receive one equal share, and each sister one equal half-share, after provisions for charity and Mohamed’s wives. Among other things, Salem felt that brothers who worked at the company deserved a larger distribution than those who did nothing.7 Islamic inheritance law, however, made no such distinction, and it would have been difficult for Salem to sustain his position before a Saudi court if any of his brothers had formally objected.

  Bakr resolved the matter within months of Salem’s death by endorsing a major distribution under Islamic law. Representatives of the Bin Laden family later told the Federal Bureau of Investigation that heirs could choose whether to take cash or to reinvest in the family companies. For his part, Osama seems to have followed both paths. He took about $8 million in cash, according to what family representatives told the FBI. He also became a shareholder in the new partnerships that Bakr organized as he restructured the family businesses. One of these was the Mohamed Bin Laden Company, successor to the original family firm. The other was a new entity called the Saudi Bin Laden Group (SBG), chaired by Bakr and inaugurated in late 1989. These two companies were entirely independent, Bakr later said in an affidavit. After the reorganization and the cash withdrawals, Osama owned about 2 percent of each firm, and his shareholdings were worth about $10 million combined, according to a valuation made several years later.8

  According to Sabry Ghoneim, director of communications for the Bin Ladens in Egypt, Bakr extended himself on Osama’s behalf throughout this period. Bakr “respected all the mothers of his brothers like his own mother,” Ghoneim recalled. “He always felt that Osama’s mother was weak, so as a way to dignify her, he wanted to give Osama one of the bigger projects. This was what he did with all the mothers—offer their sons projects…Bakr felt that while all his siblings were educated, Osama didn’t get a good education. Osama always felt his mother wasn’t with the rest of the mothers, because she was from a lower social class…Osama always felt broken and felt he didn’t get his share—the siblings got education abroad, and he didn’t. He would isolate himself. Bakr was very smart to try to include his brother.”9

  The estimated 1989 distribution to Osama and the rest of Mohamed’s sons of about $18 million each—some in cash, some in renewed shareholdings, depending on the choices made by each brother—is largely consistent with several credible accounts of the inheritance. Yeslam Bin Laden later told Swiss television, for example, that “the amount received by each member of the family didn’t go above $20 million.” Also, Yeslam’s own Swiss tax returns, filed between 1989 and 1993, indicate that he may have taken out cash in a manner similar to Osama, around the same time—his declared financial assets suddenly jumped by about 8 million Swiss francs after 1989. In an interview, a business partner briefed by the Bin Laden family, who asked to not be identified, pegged a full share for Mohamed’s sons circa 1989 at $26 million, higher than other estimates but in the same general range. Investigators for the 9/11 Commission, drawing upon classified documents later provided to the Treasury Department by the Bin Laden family and its lawyers, estimated that Osama received a total of about $24 million between 1970 and 1993 or 1994; this figure would have included his annual allowances and dividends, and the $8 million distribution of 1989, but probably not the value of his shareholdings. (It is not clear whether the figure also included the salaries he earned when he worked at the family firm as a junior executive.) The 9/11 Commission report implied that Osama received equal annual installments of about $1 million, but this does not appear to be accurate. His annual dividends probably averaged less than half of that amount, supplemented by salaries, work bonuses, and the large one-time distribution in 1989. Despite the variations in detail, all these well-sourced estimates of the Bin Laden inheritance are in broad accord. They underline several points: Osama was wealthy, but not grotesquely so; after Salem’s death, he received a particularly large sum of cash, just as Al Qaeda was born; and following receipt of this cash distribution, under Bakr’s leadership, he remained a partner in good standing in the most important Bin Laden businesses.10

  The reorganized Mohamed Bin Laden Company had sixty shareholders—all of Mohamed’s sons, except the deceased Salem and the estranged Ali; all twenty-nine of Mohamed’s daughters; his widows; and Salem’s three children. The new Saudi Bin Laden Group, destined to become an important vehicle for wealth creation under Bakr’s leadership, had just twenty shareholders, all of them sons of Mohamed. The shares in SBG were not distributed equally—Bakr, as chairman, owned the most, just under 25 percent. Only four living sons did not initially become shareholders in SBG: Ali, Yeslam, Ibrahim, and Shafiq.11

  In the same period that he reorganized his father’s estate and the Bin Laden businesses, Bakr also tried to clean up Salem’s personal estate. Salem had not written a will. This in itself did not present much of a complication, however, because under Islamic inheritance law, the identity of his personal heirs was clear: his mother; his widow, Carrie; and his three children. But Salem had left financial detritus scattered around the world.12

  On June 4, 1988, Bakr applied to an Islamic court in Jeddah to become the legal executor of Salem’s estate; about two months later, a Saudi judged approved his position. The judge found after evidentiary hearings that Salem “had, during his life, made a verbal will appointing and instituting his brother Bakr…to be the guardian of his minor children…and he maintained such testament until his death.” The court issued a series of instructions to Bakr, including that he “be God-fearing…in private as well as in public.”13

  Under Islamic law, none of Salem’s brothers or half-brothers would inherit from his personal estate. This presented a potentially tricky question for the family, since the lines between Salem’s individual wealth and that of the family businesses they owned collectively had never been entirely clear. Salem’s private jets belonged to the companies, and Bakr kept them for business use. Salem’s estates in Florida and at Offley Chase were deemed to be private assets, however, and Bakr soon put them up for sale. He hired lawyers in Florida, Texas, and Germany to chase down outstanding financial claims that might benefit Salem’s heirs.

  During these investigations, according to Thomas Dietrich, Ghalib Bin Laden, acting for Bakr, accused Dietrich of mishandling a bank account that he had maintained in Germany to fund Salem’s various adventures in Europe. Dietrich argued that the money he had received from the account reimbursed him for legitimate—if at times unorthodox—expenses directly authorized by Salem. He also said
that Salem had given him title to a glider they flew together, but that the agreement had not been written up as a contract. Hounded by a German lawyer, Dietrich said, he ultimately settled the dispute by selling the glider and turning the proceeds over to the Bin Ladens; the episode left him with some bitter feelings toward Bakr. Separately, Bakr also agreed to settle, by making a payment of about $1 million, the long-running lawsuit in Canada stemming from the payment dispute with American partners over the Saudi telephone contracts Salem had won. Bakr also hired lawyers in Texas to examine a failed shopping center investment Salem had made with his attorney, Wayne Fagan, but they took no action in that case.14

  One of the biggest paydays from these investigations came at the expense of Dee Howard, the San Antonio aviation pioneer who had remodeled King Fahd’s lavish 747 under the contract obtained through Salem. In a separate deal from the airplane project, Salem had invested just less than 1 million British pounds and had guaranteed an NCB loan of $1 million more to develop with Dee Howard some innovative aircraft-engine technology that could extend the flying range of certain jets. Ian Munro, who had been involved in this project, believed that Howard had profited from the technology Salem funded without properly compensating his partners. Howard denied this. Bakr hired lawyers in Florida to explore the claim, and ultimately they retained Charles Schwartz, a partner at the large Houston firm of Vinson and Elkins, to sue Dee Howard and his company. The case eventually came to trial before a civil jury in Bexar County, Texas. Appealing to the presumed skepticism of Texas jurors toward Saudi millionaires, Dee Howard’s attorney missed no opportunity to talk at trial about Salem’s riches or to refer to him as “sheikh.” Schwartz objected to all the “sheikhs” and tried to counter by emphasizing Salem’s reputation as a friend of Ronald Reagan and his success in international business. Finally, after a six-week trial highlighted by testimony from both Ian Munro and Dee Howard (the former speaking with aplomb in his British accent, the latter quarreling impetuously in a Texas drawl), the Bin Laden side won. The jury returned a verdict of $6 million in favor of Salem’s estate; the case later settled for just over half of that amount.15