Family of Secrets: The Bush Dynasty, America's Invisible Government, and the Hidden History of the Last Fifty Years

by Russ Baker

  In October 1979, Brzezinski would, on the urging of the Rockefellers, persuade Carter—despite his grave doubts—to admit the fleeing shah for medical treatment. This enraged the Iranian populace, which in turn prompted the takeover of the U.S. embassy in Tehran and the seizure of fifty-two American hostages there. The resulting tensions between the two countries persist to the present day—and continue to stoke the political success of extremist elements in Iran and to heighten the risks of a military showdown.

  Less well known is that David and Nelson Rockefeller used the takeover as a pretext to prevent the Iranian revolutionaries from withdrawing petrodollars from the Chase Manhattan Bank in London, where the shah kept most of his assets. According to several thoughtful accounts, the shah’s looted billions were crucial to Chase’s then-shaky finances. Their withdrawal could have precipitated an international financial crisis.18 The hostage crisis then provided a justification for the Carter administration, under pressure from Rockefeller interests, to seize all of Iran’s assets.

  The presence of the shah’s son in the Houston offices of Jim Bath might have surprised Bill White. But it made sense for the Poppy Bush operation to serve as guardian of the shah’s most prized possession: the heir to the Peacock Throne. The shah had already been an important—if secret— benefactor of Richard Nixon and the GOP. And Poppy knew that if he was good to the shah, the shah could still be good to him—as would become clear with a series of investments that would shortly flow into businesses connected with Poppy’s son George W.

  Poppy for President

  The intelligence apparatus has long meddled in elections abroad. But it took its first known step toward compromising a domestic election when Poppy Bush decided to launch his own bid to become the Republican nominee against Carter.

  With James Baker as campaign manager and a young Karl Rove in a supporting role, Poppy began assembling a campaign organization full of former intelligence officials. Their enthusiasm could hardly be explained by his single year at the helm of the CIA. Part of it, certainly, was Stansfield Turner’s decision to fire so many covert operations officers. A group of them formed Spooks for Bush; the former deputy director of the Defense Intelligence Agency was on Bush’s national steering committee; the CIA director of security actually resigned his position at Langley to work for the campaign full-time; the former CIA Bangkok station chief also came aboard.19 At CIA headquarters, nervy employees even affixed Bush stickers to their cubicles. Nothing remotely like it had ever happened in the history of the agency, though surprisingly little was made of it in the press.

  Clearly, though CIA operatives worked hard to influence election outcomes—abroad, at least—they were not so effective this time around. Ronald Reagan surged past Poppy and claimed the GOP nomination. Soon, however, Reagan was persuaded—thanks in part to some negotiations by James Baker that were supposedly conducted without Poppy’s consent—to make Poppy his running mate. And Poppy brought with him the tricks and mind-set of spycraft.

  The greatest fear that Bush and his fellow Republicans had was that the Carter White House would resolve the Iranian hostage crisis in the final weeks of the 1980 campaign and throw the election back to the Democratic incumbent. Within the Reagan-Bush campaign, this threat was termed the “October Surprise.”

  Gary Sick, Carter’s National Security Council expert on the Middle East, contends in his book October Surprise that William Casey, then manager for the Reagan-Bush campaign, worked out a clandestine deal with the Iranians during the summer and fall of 1980. This involved a quid pro quo: if the fifty-two American hostages were held until after the election, the Republicans vowed to deliver desperately needed arms and spare parts to Iran. The 1980 election involved, in Sick’s words, a “political coup” that handed the Reagan-Bush ticket the White House.20

  Robert Parry, who covered the Iran-contra story for Newsweek and the Associated Press, reported:

  According to handwritten notes of Reagan’s foreign policy adviser Richard Allen, Bush called on Oct. 27, 1980, after getting an unsettling message from former Texas Gov. John Connally, the ex-Democrat who had switched to the Republican Party during the Nixon administration. Connally said his oil contacts in the Middle East were buzzing with rumors that Carter had achieved the long-elusive breakthrough on the hostages.

  Bush ordered Allen to find out what he could about Connally’s tip. “Geo Bush,” Allen’s notes began, “JBC [Connally]—already made deal. Israelis delivered last wk spare pts. via Amsterdam. Hostages out this wk. Moderate Arabs upset. French have given spares to Iraq and know of JC [Carter] deal w/Iran. JBC [Connally] unsure what we should do. RVA [Allen] to act if true or not.”21

  In a still “secret” 1992 deposition to the House October Surprise Task Force, Allen explained the cryptic notes as meaning Connally had heard that Carter had ransomed the hostages’ freedom with an Israeli shipment of military spare parts to Iran. Allen said Bush instructed him, Allen, to get details from Connally. Allen was then to pass on any new details to two of Bush’s aides.

  According to the notes, Bush ordered Allen to relay the information to “Ted Shacklee [sic] via Jennifer.” Allen said the Jennifer was Jennifer Fitzgerald, Bush’s longtime assistant, including during his year at the CIA. Allen testified that “Shacklee” was Theodore Shackley, the legendary CIA covert operations specialist.

  Whatever one makes of the allegations and purported evidence that the Reagan-Bush forces were able to intervene to block Carter’s October Surprise, the fact is that the hostages were not released before the election. Instead, they were released the day Reagan and Bush were inaugurated. The scenarios suggest that the Reagan-Bush campaign relied heavily on Bush and William Casey’s off-the-books operations and contacts to deal successfully with the Iranians.

  If this October Anti-Surprise actually took place, it would have been an act of treachery, and even treason.

  CIA off the Books

  Once in the White House, Poppy quickly asserted his desire to oversee national security issues. His Texas operation—and in particular the arrangements with the Iranians—became useful in a new and perhaps unexpected way. They provided a vehicle for funding unauthorized wars in Central America, especially the American-created contra rebel army fighting against the leftist Sandinista regime in Nicaragua. These wars were costly, and they required funding from a variety of sources; it took a vast array of airlines, weapons suppliers, and operational entities to run such an operation, keep it shielded from Congress, and provide the president and his aides their all-important “deniability” in case the press came snooping.

  That’s where Jim Bath’s Saudi-Texan operation proved especially useful. Bath’s partner Bill White recalled Bath saying that he “had been tapped by George Senior to set up a quasi-private aircraft firm that would basically engage in CIA-sponsored activities funded by the Saudi royal family.”22 As a military pilot who had top-secret clearance and had been vetted by the FBI, Bath was a perfect candidate to organize and run covert aviation operations.

  Since the Federal Aviation Administration will certify only planes owned by Americans, Bath acted as the front man for Saudi aviation purchases. In 1977, ostensibly on behalf of Salem bin Laden, Bath bought the Houston Gulf Airport, a small, private facility in League City, Texas, twenty-five miles east of Houston. Bath also bought aircraft for bin Laden.23 Upon purchase, Bath immediately renovated the airport and extended and reinforced the runway to accommodate what he referred to as “heavy iron”—large corporate jets and even light commercial aircraft. Bath bragged that Houston Gulf—unlike the city’s other airports—had no U.S. Customs presence. This absence of oversight could prove handy in many an instance. Another property Bath bought as front man for the Saudis was the Express Auto Park garage at Houston’s Hobby Airport, which fetched a price of $8.4 million.

  By the time Poppy Bush became vice president in 1980, this Bath-fronted, Saudi-funded cover for American intelligence was involved in a broad range of covert activiti
es. These ranged from supplying BCCI with airplanes to playing an integral role in what came to be known as Iran-contra. Bath set up Skyway Aircraft Leasing Ltd. in the Cayman Islands and became the sole director. A deposition of Bath in a subsequent lawsuit would reveal that the real owner was his Saudi friend Salem bin Laden. In essence, Bath was the vehicle through which Osama bin Laden’s brother owned a CIA-connected airline.

  Via Skyway, Bath brokered about $150 million worth of private aircraft deals to major BCCI stockholders. The firm that handled the incorporation of his companies in the Caymans was the same one that set up a money-collecting front company for White House aide Lieutenant Colonel Oliver North in the Iran-contra affair. Tentacles ran in and out of North’s private network for funding the contras. Some of the money came from wealthy widows such as Ellen Garwood, a good Texas friend of Poppy Bush’s.

  On March 7, 1987, the Washington Post published what may have been the only public account of these transactions, noting the “circuitous route” the money followed through a curious company known as I.C. Inc., which also was incorporated in the Caymans.24 The reporter could not determine who was behind I.C. Inc., nor why this entity was needed to transfer the money. Privately, insiders came to believe that I.C. was a kind of inside joke, and actually stood for “Iran-contra.”

  Arm’s Length

  Not only were Poppy and Bath deeply immersed in these operations—but the next-generation George Bush was himself privy to them, according to former White House adviser Doug Wead. The telling incident came during the early days of the Iran-contra operation, at a Christmas party thrown by Vice President George H. W. Bush at his official D.C. residence, known as the Admiralty. Wead was standing on the stairs with W. As the guests arrived, Poppy rushed to W.’s side and pointed out a young fellow in military garb. Wead said he heard Poppy whisper into W.’s ear, “That’s the guy I was telling you about right now walking in the door.” Was that fellow Oliver North, who would later be revealed as the point man for the secret and unauthorized war in Nicaragua? Wead believes so.

  Poppy, as was his custom, would claim to know nothing about Iran-contra, contending famously that he was “out of the loop.” But when North’s diaries were released, they showed an August 6, 1986, meeting between North and Vice President Bush—at the height of North’s activities coordinating the illegal effort.25

  It was often the people they claimed not to have known, the ones they felt they had to whisper about, who really mattered. Jim Bath was one of these people. Beginning when he and George W. were suspended from flying in 1972, Bath’s relationship with the Bush family, which had been common knowledge, became akin to classified information. For years thereafter, W. sought to create distance from his friend while Poppy Bush denied knowing him at all.

  Bill White witnessed this public distancing when he accompanied Bath to a luncheon in 1982 at Houston’s Ramada Club, where Poppy Bush was scheduled to speak. According to White, he and Bath were seated on a sofa facing the elevators when the doors opened and the vice president emerged with his Secret Service entourage. “He just looked at us and said, ‘Jim’—and kind of winked at him and nodded—and then went off. It was kind of a knowing look, as they were obviously very guarded about any public display of familiarity,” White said.26

  That year, Bath donated five hundred dollars to the campaign of Poppy Bush’s brother Prescott Jr., who was running for a U.S. Senate seat in Connecticut against Lowell Weicker.27 In 1991, Bath acknowledged to Time that he was friends with George W. Bush as a result of their time together in the Texas Air National Guard but described himself as only “slightly” acquainted with Poppy Bush.

  Railroaded

  Whoever may be said to have benefited from the Saudi Houston operation, Bill White is not one of them. At first, things went well enough. For fourteen years, he was partner to Jim Bath in what appeared to be a thriving assemblage of enterprises. He was Mr. Inside to Bath’s Mr. Outside, the one who managed the details while Bath hustled business with his connections and charm. White did well. According to White’s recollections, by 1985 he was “hobnobbing with the rich and famous in Houston,” enjoying “lunches at the River Oaks Country Club and the exclusive Ramada club, Lear jet junkets to Nashville, Las Vegas shows with Siegfried & Roy.” Parties “at the Saudi Big House” and in the “high-rise digs . . . at the Olympic Tower in Manhattan were the order of the day.”

  Today the roof of White’s own house is collapsing; his finances did so long ago. He has been through multiple bankruptcies, been sued untold times, besieged by threats, accidents, and other misfortunes. He even was accused by a man with alleged organized crime ties of not delivering an expensive model train White had sold him. All of this, White contends, is related to his refusal to cover for Bath when, he claims, his partner misappropriated loan funds intended for the Saudi-funded ventures for his personal use. After Bath and InterFirst Bank cut off funding to the Bath-White real estate development companies and partnerships, two main lawsuits mushroomed into dozens, as disgruntled employees, company creditors, and even the IRS joined the onslaught against White, focusing on his liability rather than Bath’s.

  Bath instigated four criminal charges against White, who was accused of assaulting a twelve-year-old boy, beating up a pregnant woman, setting fire to one of the Bath-White apartment complexes, and forcing a company employee to file a false insurance claim to recover for the fire damage.

  InterFirst—which once employed Poppy, and which funded Bath’s business—hit White with twenty-eight lawsuits in all. White got top Houston attorneys to take his case on a contingency basis, and they filed counterclaims against Bath, though they were careful to remove most references to threats, the Saudis, and Bush.

  Due to the litigation, White, a full Navy commander, lost his chance to qualify for retirement benefits,28 and most recently, there have been attempts to seize his mother-in-law’s house. At one point, White told a Texas court that Bath and the Justice Department had “blackballed” him professionally and financially because he refused to keep quiet about his knowledge of a conspiracy to launder Middle Eastern money into the bank accounts of American businesses and politicians. That got action, and Bath and the bank abruptly shifted gears, offering him a package worth millions of dollars if he withdrew his own legal efforts and stopped speaking publicly about the dispute, but White refused.

  “The settlement proposal was nothing but a ‘hush money’ agreement,” White told the Canadian Broadcasting Corporation in an interview. “It said basically that we could never have this conversation and that I could never disclose the Bush-Saudi relationship. I felt that to take that money and to sign that agreement would have been to basically spit on the graves of all of my friends who died in Vietnam and were fighting to fulfill the oath we took to protect the Constitution. So I’ve paid a heavy price, but I really feel like some of us have a destiny. I certainly didn’t choose this destiny, but it was thrust upon me and I’m trying to do my best to get the truth out. And again there’s really no ill will toward Jim Bath or George Bush. It’s just a matter of getting the truth out on the table and letting the consequences be what they may. But I think the truth’s important.”29

  In June 1992, the Houston Chronicle reported that the federal authorities were investigating whether Bath had failed to register as a foreign agent and therefore was illegally representing Saudi interests in the United States. More important, it suggested that the Saudis were seeking to buy influence at the top:

  Federal authorities are investigating the activities of a Houston businessman—a past investor in companies controlled by a son of President Bush—who has been accused of illegally representing Saudi interests in the United States. The Financial Crimes Enforcement Network—known as FinCEN—and the FBI are reviewing accusations that entrepreneur James R. Bath guided money to Houston from Saudi investors who wanted to influence U.S. policy under the Reagan and Bush administrations, sources close to the investigations say. FinCEN, a division of the
U.S. Department of Treasury, investigates money laundering. Special agents and analysts from various law enforcement agencies, including the Internal Revenue Service and the U.S. Customs Service, are assigned to work with the FinCEN staff.30

  The unnamed “son of President Bush” was George W. Bush.

  For federal employees to investigate such a thing at a time when the investigators’ ultimate boss was Poppy Bush is in itself remarkable; that the investigation was occurring while Poppy Bush stood for reelection in a difficult campaign is also remarkable. Perhaps it is not surprising that nothing came of the investigation. As for the coverage, the Houston Chronicle, Bush’s hometown paper, relegated the potentially explosive story to page 21, and it received no national attention. Earlier, with Poppy Bush in the White House as VP, Bath had come under scrutiny by the same paper. In 1985 he had obtained a unique federal contract to service transiting military aircraft at Houston’s Ellington Field. According to the Chronicle’s competitor, the Houston Post, the U.S. government spent millions of dollars more than necessary by fueling military aircraft, including Air Force One, at Bath’s facility, Southwest Airport Services, at Ellington Field, rather than using a government fuel station at the same airfield. Bath was said to be charging a markup of as much as 60 percent on fuel, but even after the newspaper’s report, no investigations were launched. Bath would go on to refuel Air Force One for Poppy whenever it came to Houston, at a drastically inflated rate.