If the U.S. boosts defense spending in its quest to stop Osama bin
Laden's alleged terrorist activities, there may be one unexpected
beneficiary: Mr. bin Laden's family.
Among its far-flung business interests, the well-heeled Saudi Arabian
clan -- which says it is estranged from Osama -- is an investor in a fund
established by Carlyle Group, a well-connected Washington merchant bank
specializing in buyouts of defense and aerospace companies.
Through this investment and its ties to Saudi royalty, the bin Laden
family has become acquainted with some of the biggest names in the
Republican Party. In recent years, former President Bush, ex-Secretary of
State James Baker and ex-Secretary of Defense Frank Carlucci have made the
pilgrimage to the bin Laden family's headquarters in Jeddah, Saudi Arabia.
Mr. Bush makes speeches on behalf of Carlyle Group and is senior adviser to
its Asian Partners fund, while Mr. Baker is its senior counselor. Mr.
Carlucci is the group's chairman.
Osama is one of more than 50 children of Mohammed bin Laden, who built
the family's $5 billion business, Saudi Binladin Group, largely with
construction contracts from the Saudi government. Osama worked briefly in
the business and is believed to have inherited as much as $50 million from
his father in cash and stock, although he doesn't have access to the
shares, a family spokesman says. Because his Saudi citizenship was revoked
in 1994, Mr. bin Laden is ineligible to own assets in the kingdom, the
The bin Laden family has long disavowed Osama, and has cooperated fully
with several federal investigations into his activities. The family
business, headed by Osama's half-brother Bakr, epitomizes the U.S.-Saudi
alliance that the suspected terrorist often rails against. After the 1996
truck bombing in Dhahran, Saudi Arabia, that killed 19 U.S. servicemen,
Saudi Binladin Group built military barracks and airfields for U.S.
But the Federal Bureau of Investigation has issued subpoenas to banks
used by the bin Laden family seeking records of family dealings, a person
familiar with the matter said. This person said the subpoenas weren't an
indication the FBI had found any suspicious behavior by the family. A
family spokesman said he had no knowledge of the subpoenas but that the
family welcomes them and has nothing to hide.
People familiar with the family's finances say the bin Ladens do much of
their banking with National Commercial Bank in Saudi Arabia and with the
London branch of Deutsche
Bank AG. They also use Citigroup
Inc. and ABN Amro, the people said.
"If there were ever any company closely connected to the U.S. and its
presence in Saudi Arabia, it's the Saudi Binladin Group," says Charles
Freeman, president of the Middle East Policy Council, a Washington
nonprofit concern that receives tens of thousands of dollars a year from
the bin Laden family. "They're the establishment that Osama's trying to
Mr. Freeman, who served as U.S. ambassador to Saudi Arabia during the
Gulf War, says he has spoken to two of Osama's brothers since hijacked
airplanes rammed the World Trade Center and the Pentagon on Sept. 11. They
told him, he says, that the FBI has been "remarkably sensitive, tactful and
protective" of the family during the current crisis, recognizing its
longstanding friendship with the U.S.
A Carlyle executive said the bin Laden family committed $2 million
through a London investment arm in 1995 in Carlyle Partners II Fund, which
raised $1.3 billion overall. The fund has purchased several aerospace
companies among 29 deals. So far, the family has received $1.3 million back
in completed investments and should ultimately realize a 40% annualized
rate of return, the Carlyle executive said.
But a foreign financier with ties to the bin Laden family says the
family's overall investment with Carlyle is considerably larger. He called
the $2 million merely an initial contribution. "It's like plowing a field,"
this person said. "You seed it once. You plow it, and then you reseed it
The Carlyle executive added that he would think twice before accepting
any future investments by the bin Ladens. "The situation's changed now," he
said. "I don't want to spend my life talking to reporters."
A U.S. inquiry into bin Laden family business dealings could brush
against some big names associated with the U.S. government. Former
President Bush said through his chief of staff, Jean Becker, that he
recalled only one meeting with the bin Laden family, which took place in
November1998. Ms. Becker confirmed that there was a second meeting in
January 2000, after being read the ex-president's subsequent thank-you
note. "President Bush does not have a relationship with the bin Laden
family," says Ms. Becker. "He's met them twice."
Mr. Baker visited the bin Laden family in both 1998 and 1999, according
to people close to the family. In the second trip, he traveled on a family
plane. Mr. Baker declined comment, as did Mr. Carlucci, a past chairman of
Nortel Networks Corp., which has partnered with Saudi Binladin Group on
Former President Carter met with 10 of Osama's brothers early in 2000 on
a fund-raising trip for the Carter Center in Atlanta. According to John
Hardman, executive director of the center, the brothers told Mr. Carter
that Osama was completely removed from the family. After Mr. Carter and his
wife followed up with breakfast with Bakr bin Laden in New York in
September 2000, the bin Laden family gave $200,000 to the center. "We don't
have any reason to think there's a connection" between Osama and the rest
of the family, Mr. Hardman says.
During the past several years, the family's close ties to the Saudi
royal family prompted executives and staff from closely held New York
publisher Forbes Inc. to make two trips to the family headquarters,
according to Forbes Chairman Caspar Weinberger, a former U.S. secretary of
defense in the Reagan administration. "We would call on them to get their
view of the country and what would be of interest to investors."
Mr. Weinberger said no trips to Saudi Arabia were planned. "If we went,"
he said, "we may or may not call upon them. I don't think the sins of the
son should be visited on the father or the brother and the cousins and the
There is no indication President George W. Bush has met any of the bin
Ladens, but he was indirectly linked to one of them two decades ago. His
longtime friend James W. Bath, who met Mr. Bush when they were both pilots
in the Air National Guard, acted as a Texas business representative for
Osama's older brother, Salem bin Laden, from 1976 to 1988, when Salem died
in a plane crash. Mr. Bath brought real-estate acquisitions and other deals
to Salem bin Laden, an ebullient man who headed the family construction
business. Mr. Bath generally received a 5% interest as his fee, and was
sometimes listed as a trustee in related corporate documents. Mr. Bath
acknowledged that during the same period he invested $50,000 in two funds
controlled by Mr. Bush but said that stake was unrelated to his dealings
with Mr. bin Laden.
Among the properties that Salem bin Laden bought on Mr. Bath's
recommendation was the Houston Gulf Airport, a lightly used airfield in
League City, Texas, 25 miles east of Houston. But Mr. bin Laden's hope that
it would develop a major overflow airport for Houston never materialized,
in part due to concern over wetlands. Ever since his death, his estate has
sought to sell the airfield -- without success. Today, it is still on the
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