Sons and Heirs

Robert Vitalis

  • The Bin Ladens: The Story of a Family and Its Fortune by Steve Coll
    Allen Lane, 671 pp, £25.00, April 2008, ISBN 978 1 84614 124 9

Steve Coll’s book tells two stories: a big one about how the bin Laden family cashed in on the oil bonanza in Saudi Arabia, and a smaller one about Osama’s role in the family business before he turned to holy warfare. Although well written, lucid and packed with useful detail, The Bin Ladens doesn’t establish much of a connection between the family firm in Saudi Arabia and Osama bin Laden’s jihad in Afghanistan, Yemen, Sudan and America, except that oil wealth funded both. The bin Laden group isn’t among the world’s largest engineering businesses, although readers might finish this book believing that it is: Coll calls it Saudi Arabia’s Halliburton, even though the latter is an oil services firm, not a construction company. He is at his best excavating details from the mountain of documents generated by various bin Laden brothers in the lawsuits and divorce settlements that have followed on several decades of deals gone sour.

Coll gets the story of the origins of the Mohamed bin Laden Company half-right. Osama’s father moved from Yemen to the Saudi port of Jeddah in the 1920s, where he picked up odd jobs, running a food stall or repairing the coral-slab and gypsum-plastered walls that most local buildings were made from. Jeddah’s economy depended on the yearly traffic of pilgrims to Mecca and Medina. When this dried up during the Great Depression, the ruler of the newly united Kingdom of Saudi Arabia, Abdul Aziz Al-Saud (known in the West as Ibn Saud), sold the rights to explore for oil to representatives of the company now known as Chevron in return for annual payments in gold. Mohamed bin Laden crossed the country to work for a year or two for the small colony of Americans who were hiring ‘natives’ in various capacities at their still rudimentary camp.

Coll claims that in 1935 the American oilmen helped bin Laden to start his own contracting business. His source is the son of a Minnesota engineer who went to Saudi Arabia late in 1937. But the California Arabian Standard Oil Company didn’t begin to support small-scale contractors who wanted to start laundries, supply building materials, run buses and so on until years later, once oil production was finally underway and operations were on a much larger scale. In 1944, stung by attacks in the American press just as the Roosevelt administration was being criticised for its crude Caribbean-style imperialism in the Persian Gulf, the company changed its name to the Arabian American Oil Company, or Aramco, and said it was in ‘partnership’ with the king and his country. It compiled lists of the Saudi businesses it claims to have launched; bin Laden’s wasn’t among them.

Coll is also confused about the circumstances surrounding bin Laden’s first job in Riyadh in 1936 or 1937, building parts of the king’s new palace complex. He says that bin Laden stepped in (‘he had a vision’) after California Arabian and its favoured engineering partner, Bechtel, turned the project down, but it was six more years before Bechtel even showed up in the region. It arrived in the middle of World War Two, to expand a refinery in Bahrain and build the first one in the kingdom, together with the first oil pipeline and an ill-conceived railroad from the oilfields to Riyadh. Here, as in much of the book, Coll is straining too hard to establish connections between the bin Laden family and the Americans.

The bin Ladens’ story is revealing about the way business was conducted during those years. When the senior princes initiated the first of Riyadh’s many building frenzies in the late 1940s and early 1950s, American firms refused to accept the finance minister’s pyramid scheme of delayed payments, or the requests for ‘loans’ from contractors (direct requests from the king and his sons were another matter) that had been standard practice among the merchants and moneychangers who paid for Ibn Saud’s rickety state-building venture in the pre-oil days. Bin Laden and the Saudi merchant families had less choice in the matter than companies such as Bechtel, which had opportunities elsewhere. Decades later, Coll shows, the sons who took over the family business were still cultivating princes and chasing down payments long after completing jobs. Their firm has never made the global industry’s top 200 list and was, until September 2001, virtually unknown outside the Arabian peninsula. Nonetheless, Family Business magazine estimates it to be the world’s 62nd largest family business outside the US.

Its wealth accumulation started seriously only after the death of Ibn Saud in 1953. Unlike his father, Saud bin Abdul Aziz (known simply as Saud) was something of a moderniser who brought the first Western-educated Saudis into his administration and put pressure on the oil company to modernise. As the director of government construction and a state minister, Mohamed bin Laden was well placed to benefit from the enormous sums that King Saud earmarked for the transformation of Riyadh and the surrounding countryside of Najd, the homeland of the Saud family. The new king built seven new ministries in a spacious but undeveloped quarter of the city. He agreed to lay the roads needed to knit the country together, and to create its first university – his father had rejected both schemes. Roads, Ibn Saud had feared, would make his country more vulnerable to attack, and a university would produce the kinds of people – lawyers and politicians – whose demands for increased political rights had caused endless problems for rulers elsewhere in the region. The Americans saw higher education as a waste of the kingdom’s resources.

Bin Laden built a lot of roads and palaces, but he also got the contract to renovate the al-Masjid al-Haram, the Grand Mosque in Mecca: this was part of the king’s attempt to spread some of the oil wealth to the Hijaz, a region that had been distrustful of ‘foreign’ rule ever since Ibn Saud and his holy warriors laid siege to it in the 1920s. The construction industry was soon the third largest employer in the country, after the government and Aramco, and many Saudi builders profited, with bin Laden topping the list. But for complex projects, clients still looked elsewhere. The US-funded airport in Dhahran, designed by the Seattle architect Minoru Yamasaki, was built by the Egyptian contractor Osman Ahmad Osman, who had made a fortune in Saudi Arabia before returning to Egypt to build the Aswan Dam. (Years later, the followers of bin Laden’s son would destroy Yamasaki’s best-known building, the World Trade Center.)

Coll’s take on Saudi politics in the years when Mohamed bin Laden made his fortune is the conventional one. Two brothers vie for power. King Saud is drunk, corrupt and naive. His brother, Crown Prince Faisal, who overthrew him in 1964, is austere, abstemious and a wise guardian of the country’s future: this doubtless pleased Coll’s hosts at the King Faisal Foundation, but it isn’t convincing. King Saud is said to have been ‘corrupt’ because it was during his reign that government officials took on Aramco. Faisal is favoured, although he was the nationalists’ patron and an outspoken admirer of Nasser, because he reversed his position, imprisoning some of his clients and exiling others, and so becoming an ‘enlightened’ ruler.

In fact, Faisal’s coup brought to an end a rare moment of political liberalisation inside the kingdom, and created the authoritarian order that still prevails. In the years before the coup, Saudis were voting in local elections, and Saud had appointed ministers who were planning for a parliament, a constitution and even trade unions. These efforts were backed by a few of his sons, who were never again permitted a role in public life. Faisal, whom Coll calls ‘exceptional’ and ‘the least corruptible of senior Saudi princes, perhaps by many orders of magnitude’, is the only senior prince against whom government officials have ever successfully pursued corruption charges. Fifty years later, the press is still less open than it was at the end of Saud’s reign, when even the Egyptian Islamists who had found refuge in the kingdom were calling for the name of the country to be changed, for new industries to be set up and for women to be allowed to join the workforce.

Faisal, the West’s enlightened reformer, was officially at war with Nasser until the mid-1960s, but he was rehabilitated as a Pan-Arab champion after Nasser’s death in 1970, when he allegedly stood up to Israel and America by unleashing the ‘oil weapon’ in the 1973 war. This is the Faisal whom, many years later, Osama bin Laden would hold up as a model. But Coll is wrong to say that the Arab oil embargo ‘did more to transform the kingdom than any event since the discovery of oil itself’. The Opec cartel had started raising oil prices two years before the war, and what did more than anything else to transform the international oil regime was the takeover of private oil firms’ concessions by both Opec and non-Opec producers, beginning in 1972, immediately in some cases and by negotiated stages in others. (The threat of immediate nationalisation was what enabled Opec to demand the price rises.) Aramco thus became wholly Saudi-owned. The price hikes made nationalisation more palatable to Western firms, compensating for their declining share of oil revenues. What mattered most was that a significant share of the massive increase in resources flowing to the Gulf States would return to the US in the form of investments in Treasury bonds, commercial bank accounts, downstream parts of the oil industry, real estate and so on, not to mention as payments for weapons and engineering contracts, which is what much of Coll’s book is about. But with or without the 1973 war, the outcome of this process would probably have been the same. The boycott was a sideshow.

Mohamed bin Laden was killed in a plane crash in 1967. He had 25 sons and 29 daughters, most of them teenagers. The wives (not including those he had divorced) split one-eighth of the firm’s shares, the sons each received 2.27 per cent and the daughters just over 1 per cent. Salem, the son bin Laden had wanted to take over the business, was busy ‘finding himself’ in London.The brother who actually knew something about the business, Ali, unhappy at being passed over, struck out on his own. King Faisal stepped in to protect the company, which was then laying roads to new military bases, by appointing a set of trustees to run it. In 1970 his government encouraged the Idaho dam-turned-military-base builders, Morrison Knudsen, bin Laden’s partner in operations on the volatile Yemen-Saudi border, to take a stake in the business. Coll says that the deal foundered when the Saudis balked, as might have been expected, at handing majority control over to the Americans, and the executives at MK were scared off by the ‘disarray’ in bin Laden’s family.

In the best section of the book, Coll tells the story of the family’s, as opposed to the firm’s, global expansion under Salem, a quixotic dealmaker. (The firm was still being run by the trustees.) Many millions of bin Laden dollars and a dozen brothers, sisters and cousins followed him to the sunnier parts of the US, which in the 1970s and 1980s was a favourite destination for Saudi families and fortunes. Coll interprets Salem’s foundation of several Panamanian companies as part of an effort to shift more of the family’s wealth overseas for fear that Faisal’s successor, Khalid, might go the way of the Shah. A homegrown Islamist opposition movement had taken over the Grand Mosque in Mecca for two weeks in November 1979. Perhaps the bin Ladens were especially shaken by this because their firm was carrying out yet another series of renovations at the site. Business soon returned to normal, however, and Salem’s most significant contribution to his family’s share in it was to expand the number of deals that required global firms keen to sell goods and services in the Saudi market to do so through the bin Laden organisation. According to Coll, Salem also managed to regain control of the original family business ‘around 1978 or 1979’.

Salem’s sudden death in 1988 – he was piloting a single-engine plane and flew it into a power line in Texas – propelled his brother Bakr, an engineer trained at the University of Miami, to the head of the clan. Bakr oversaw the destruction of several historically important buildings around the Kaaba in Mecca and its transformation into a combination of Disneyland and the Mall of America, for which Khalid’s successor, his brother King Fahd, paid handsomely. Bakr also reorganised the core holdings of the company, with 60 heirs of Mohamed as partners, and created the Saudi bin Laden Group, in which he held 25 per cent of the equity and 19 other brothers the rest. Coll uses the testimony of a forensic accountant hired during the divorce of another bin Laden brother to make some sense of the valuation of the assets and the dividend payments during the reorganisation. If he is correct, the loose descriptions of the patriarch Mohamed and the rogue son Osama as ‘billionaires’ are wrong. Osama’s shares in the businesses were worth about $10 million, and he could draw dividends in the late 1980s of around $300,000 a year. But he got a shot in the arm in the form of an extra $18 million or so from his father’s estate just as al-Qaida was getting off the ground.

Bin Laden’s sons stayed loyal to the business model established by their father, the same model that Aramco found so useful in its day: loyalty to the House of Saud. Members of the family procured women, fitted out planes, arranged holidays and, not least, delivered cash and weapons for the emerging transnational jihad. Osama, who had resisted rather than embraced the allure of the West and who came under the influence of the Muslim Brotherhood while still a teenager in Jeddah, was a key part of this enterprise. He moved to Peshawar, ‘the frontier city that served as the principal base for the Afghan mujahedin’, with his family in 1986 and, like Salem, trawled the world’s arms markets in search of weapons for the war in Afghanistan.

Osama’s break with the houses of Saud and bin Laden came only gradually and reluctantly in the early 1990s. First, when Saudi foreign policy objectives changed, they sought to end Osama’s support of Islamists in Yemen. Worse, after Saddam Hussein marched on Kuwait in August 1990, Fahd agreed to let US forces return to Saudi Arabia, thirty years after his brothers Saud and Faisal had raced one another to close the original US base in Dhahran. As is now well known, Osama protested at what he saw as an American plot to replace the monarchy and remake the region. Coll doesn’t miss the irony here: the bin Ladens, who were shifting resources out of the kingdom once again, this time to Geneva, got the contract with the US army to upgrade bases, roads and telecommunications. After Osama left Saudi Arabia for the last time in May 1991, he followed the well-worn path of the ‘semi-independent bin Laden brothers’ by starting ventures of his own in and around Khartoum: the bin Laden organisation won the contract to build a new Saudi-funded airport in Sudan. King Fahd ordered Bakr to bring the errant Islamic warrior home for ‘consultations’, a strategy used with other dissidents both before and since. Osama wouldn’t budge. In June 1993, the family sold his shares and put the proceeds into a trust for his heirs, although the government was later to freeze them. Ten months later, the Saudi Ministry of the Interior revoked his citizenship, and Osama returned the favour by having his London agent send out by fax the first of many communiqués denouncing the royal family.

The late 1990s were difficult for the bin Laden family, for the Saudi government and for the kingdom’s relations with the United States. Oil prices plummeted; 24 Americans were killed and hundreds wounded in the car bombing of a military training facility in Riyadh in November 1995 and the destruction of an apartment building used as a barracks in Dhahran in June 1996. Coll doesn’t intervene in the controversy over the likely culprits; indeed, the second incident isn’t mentioned. The Saudi government pinned the first on ‘Afghan Arabs’, whom they promptly beheaded, the second on a Shia group they called Saudi Hizbullah. Other Saudis did what they could to shore up the so-called special relationship; the bin Ladens sank a few million into the politically well-connected Carlyle Group. But their brother was trying hard to move the Saudi-US alliance in a different direction when he stepped up al-Qaida’s holy war in August 1998, with simultaneous attacks on US embassies in Nairobi and Dar es Salaam.

To his credit, Coll avoids dramatising any possible collapse of the alliance following what Osama’s minions called the ‘planes operation’ in 2001, a prediction that many otherwise clever people made at the time. If anything, the sixty-year relationship with the US was put back on track as both sides focused on fundamentals. Coll provides a long account of the FBI-assisted evacuation of family members in a specially chartered 727 that picked up bin Ladens in Los Angeles, Orlando, Washington and Boston. The reunion, he says, was ‘mournful’, but once the family was safely inside its massive compound, some of the younger members ‘openly celebrated the September 11 attacks’.