by Steve Coll
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 intelligence, eventually became chairman of the board. Badeeb had retired and now operated international companies from Paris and Lebanon. Arnaud de Borchgrave, who served for a time as UPI’s editor, struggled with him over the company�
��s perpetual financial problems. At one point, de Borchgrave recalled, Badeeb sent him a resentful message: “I don’t appreciate your criticism of my business procedure. I’ll have you know I’ve made over $500 million in over thirty-one years of government service.”15
At the quarterly board meetings, Shafiq sat silently. He seemed to Borchgrave to be “clearly a man who had never done anything with his life—spoiled.” The Saudis on the board struggled with one another and tried to forestall bankruptcy; they sold out eventually to business interests controlled by the controversial South Korean church of the Reverend Sun Myung Moon.16
AT THE TIME Osama began to publish his first faxes attacking King Fahd’s dependence on America, a number of his half-siblings continued to spend lengthy periods of time in the United States. Khalil Bin Laden now summered with his wife, Isabel, and their children at Desert Bear, outside Orlando. They turned the estate, at least initially, into a considerably quieter place than it had been during its earlier heyday as Salem’s princely vacation resort. Khalil sat out by the swimming pool in the evenings, overlooking the willow trees and the lake, and puffed tobacco from a tangled Arabian water pipe. He invited the neighbors over for July 4 barbecues, and he occasionally set off fireworks to punctuate his celebrations of American independence. Gaggles of American-accented children belonging to Khalil and Isabel, as well as nieces and nephews visiting from Saudi Arabia or attending preparatory school in the States, occasionally passed through the compound. So did Khalil’s half-sister Rajia, who visited from Los Angeles, where she lived for significant periods of time. She was a pilot and a particularly fast driver of automobiles—so fast that some members of Khalil’s circle joked that they were frightened to ride as a passenger if Rajia was at the wheel.17
The family member with the most embedded life in America was Abdullah Bin Laden, the second youngest of Mohamed’s sons. Some of his friends joked that he was a student for life, and there was some literal truth in this assessment. He had attended college in San Diego, studied law in Saudi Arabia, took courses in business and finance, and then applied to Harvard Law School—not to enroll in its rigorous, spirit-breaking program that churned out lawyers qualified to take American bar exams, but rather to earn first a master’s degree and then a doctoral degree in the academic study of law or legal theories. This was a track at Harvard Law School that attracted a number of international students. Ultimately, Abdullah Bin Laden would remain at Harvard Law for about eight years, not quite a record for the school, but not too far from one, either, his professors said. His enrollment was not continuous, however. He maintained a small office in Cambridge, Massachusetts, where he worked on his theses and on various family business projects. (In the early 1990s, two of his half-sisters spent time in Boston, and his younger half-brother, Mohamed, whose mother had been pregnant with him when Mohamed Bin Laden died in 1967, also lived in the city.) Among other endeavors, he invested in condominiums along Boston Harbor. Between these siblings and various nieces and nephews, Abdullah found himself acting occasionally as the Bin Ladens’ all-purpose guardian in New England. Throughout these years he kept an apartment near Beacon Street, where he lived alone. By the mid-1990s, he had reached his late twenties. He was a man of medium height, slim, with traces of his father’s distinctive nose and cheekbones. Like a number of his half-brothers, he exuded rectitude to the point of pathological shyness, yet he could also project an air of regal dignity, and he could be a genial and intelligent companion. He drove a Range Rover, and he favored an Italian restaurant, Papa Razzi, near his flat.18
He befriended other students from Arab and Islamic countries at Harvard and occasionally invited them over for dinner; he impressed some by cooking many of the dishes himself, which they knew was an unusual hobby for a Saudi man, particularly a wealthy one. He had no maids or servants on display during these evenings, and he ladled out his Middle Eastern vegetable dishes on plastic plates. He was so reserved and polite that he was a natural target for teasing. One of his most audacious tormentors was Lama Abu-Odeh, a young Jordanian woman with a considerably more exuberant style than Abdullah’s. She liked and admired him unreservedly, but “I would tease him a lot about being conservative—make him laugh and blush, laugh and blush,” she recalled. “I would try to push him to his edge.” The elites in her native Jordan prided themselves on their relatively secular sophistication, and she enjoyed ranting about “how conservative his country was, how Saudis appear to be socially conservative. I would say, ‘Behind every plain Saudi is a whiskey addict.’ Just to make him laugh.” She particularly liked to get on Abdullah about how he was handsome and rich, yet he never seemed to date. In fact, Abdullah deflected friends who tried to fix him up with women by describing himself as someone who was not interested in Western-style dating.
“Abdullah, if you’re gay, you can tell me,” Lama would announce. He only laughed some more, and then returned to his reserved mannerisms.19
By the mid-1990s, many of his fellow Arab students at Harvard—much more so than fellow American students—were becoming aware of Osama’s dissident activity and particularly his open defiance of the Saudi government. If Lama was in an especially feisty mood, she would start praising Osama in front of Abdullah and other students. “At least there’s somebody who’s gutsy in that family,” she would pronounce. “You all just want to make money—at least there’s someone who’s said ‘No!’”
Abdullah’s reply was succinct, as Lama recalled it: “Shut up,” he said.20
His academic adviser was Frank E. Vogel, who had conducted his own scholarly research in Saudi Arabia, visiting its Islamic courts and analyzing its approach to legal and religious doctrines. Vogel took an appreciative academic interest in the Saudi system, and he found that Abdullah was interested in questions related to his own research. In May 1992, Abdullah completed a 101-page master’s thesis under Vogel’s supervision titled “Western Banking Practices and Shari’a Law in Saudi Arabia.” His paper explored the conflict between the interest-paying practices of the Western financial system and the prohibitions on interest decreed by many Islamic legal authorities, and how these doctrines had evolved through history and from religious text. He strived to find solutions, a synthesis that would allow both modern banking and Islamic law to thrive in Saudi Arabia. “It could well be,” he wrote, “that when a society as a whole is operating in full compliance with the shari’a code and an Islamic economic system is instituted, that the prohibition of interest would be feasible.”21
In pursuit of his doctoral degree, Abdullah embarked on a much more detailed elaboration on the same themes—his thesis would ultimately run to 327 pages, bearing the distinctly unglamorous title “Negotiability of Financial Instruments in Contemporary Financial Markets: An Islamic Legal Analysis.” Here Abdullah wrestled with how certain instruments of the global markets—such as warrants bonds and profit-sharing contracts—might be accommodated in an Islamic financial system. It was a lucid and richly footnoted thesis, if often arcane, and when it was eventually completed, it marked at least two milestones in the centuries-long history of the Bin Laden family: Abdullah became the family’s first academic doctor (alongside his half-sister Randa, the family’s first medical doctor) and the holder of the Bin Ladens’ first Harvard degree. Intellectually, Abdullah strived to reconcile the two worlds, Arabian and Western, in which the Bin Ladens lived and worked. Vogel respected “the academic seriousness” of his doctoral thesis, “that he really put himself to difficult research, and quite difficult or abstruse text.” As for the subject matter, and what it indicated about the Bin Ladens or Abdullah, in Vogel’s judgment, “For a Saudi to work on a topic related to Islamic law is not saying very much about whether he’s preoccupied with religion.” In the kingdom, there simply was no other way to approach economics, he believed.22
The fundraising opportunity represented by the presence of a young Bin Laden at Harvard was not lost on the law school’s professors. Around 1993—the same year Philip Griffin ope
ned the Bin Laden office outside Washington—the Bin Ladens entered into discussions with the dean of Harvard Law School. “They were interested in the study of Islam, in lots of places,” Vogel recalled. The discussions were “extraordinarily sort of low-key.” Abdullah indicated to Harvard that Bakr would be interested in making a $1 million donation to the university to support the study of Islamic design, one of Bakr’s personal interests, plus an additional $1 million to support visiting scholarships and stipends for students from Arab League countries who wished to follow Abdullah’s footsteps and study at Harvard Law. Vogel and the law school dean traveled to Saudi Arabia; they were received by Bakr at the headquarters of the Saudi Bin Laden Group, where they admired the display models of the family’s work on the holy mosques in Mecca and Medina. Vogel explained to the family, “One of the purposes of our program is to build links with the Middle East.” There was, of course, no discussion of Osama; he was little known outside the Arab world.23
During this same period, Salem Bin Laden’s oldest son, Salman, enrolled as an undergraduate student at Tufts University, just outside Boston. Abdullah helped to keep an eye on him; Salman struggled at times to manage his money and his friendships. One of his business professors, Andrew Hess, felt that Salman had suffered psychologically because of Salem’s sudden death in Texas in 1988. Salman took after his father in some ways, and played the guitar, and he spoke fluent English in a British-inflected accent. But he had his ups and downs at Tufts. He made a personal connection with Hess, who prior to his professorship had worked for many years in Saudi Arabia, in the oil industry. Salman then introduced Hess to his Harvard uncle, Abdullah.24
