Sleeping With The Devil (11 page)

    Carlyle is also not required to reveal annual compensation to its
partners, or their net share in the firm. An article in the March 5, 2001,
New York
Times
estimated that Jim Baker’s share might then have been worth in the vicinity of $180
million, but that was arrived at simply by dividing the firm’s eighteen partners and one
outside investor into the estimated total equity of $3.5 billion. (That was before Carlyle took
half the stock in United Defense public, reaping what was said to be a nearly $700 million
profit.) You can be certain the Carlyle Group is no penny-ante game. When Frank Carlucci
resigned as chairman in November 2002, former IBM CEO Lou Gerstner stepped into his slot.

    It was a Carlyle partner who confirmed to me the detail work on
Azouzi’s $4.6 billion palace. I was in southern France in August 2002, visiting a friend who
keeps a small sailboat near Cannes. We had just moored when we spotted a man on a brand-new
yacht next to ours that was flying an American flag. As it happened, my friend knew him. He
said the man worked for the Carlyle Group. We struck up a conversation across the water and got
to talking about Saudi Arabia. At the first opportunity, I asked about Azouzi’s palace. The man
knew about it, adding that he’d recently been in it. As soon as he’d confirmed the price tag on
the amusement park, he asked why my interest. When I told him I was writing a book on Saudi
Arabia, he went below deck, suddenly seasick.

    FOR A CITY of supposedly dull bureaucrats, Washington is endlessly
inventive about tapping into Saudi funds. Between his stints as secretary of defense and vice
president, Dick Cheney served as CEO of Halliburton, a frequent beneficiary of Saudi
construction projects both during and after his tenure. In late 2001, with Cheney a step from
the presidency and his old company reeling from accounting scandals, Halliburton landed a $140
million contract to develop a new Saudi oil field. The company’s subsidiary, Kellogg Brown
& Root, also placed a successful $40 million bid with two Japanese partners to build a new
ethylene plant there.

    Like the Saudis, Cheney has shown a sharp interest in Central Asian
oil, both privately and publicly. As Halliburton chairman, Cheney defended Heydar Aliyev
against charges that the Azerbaijan strongman routinely violated human rights, while
simultaneously castigating the Clinton administration for its “failure… to recognize the
strategic asset of the oil and gas business.” Cheney also helped put together a 1993 deal
between Kazakhstan and Chevron as he was serving on the Kazakhstan Oil Advisory Board.

    As Halliburton chairman, Cheney was instrumental in securing a $489
million in loan guarantees from the Export-Import Bank for the scandal-plagued Tyumen Oil
Company, or TNK, a Russian entity formed to exploit the oil reserves in the Caspian Sea region.
According to the
Moscow Times
, the bulk of the Ex-Im Bank loan guarantee, $292 million,
was to go for buying equipment from Halliburton to develop TNK’s Samotlor oil field.
Halliburton also has a major engineering contract with the head of the Caspian Consortium, BP
Amoco.

    As vice president, Cheney has made sure that the Ex-Im Bank stays in
friendly hands. The bank’s new chairman, Philip Merrill, was assistant secretary general of
NATO during the Bush I administration and is a close personal friend of both Dick Cheney and
his wife, Lynne. Although her official résumé omits the fact, Lynne Cheney worked in the early
1980s for one of Merrill’s publications,
Washingtonian
magazine. Merrill was sworn in to
his new Ex-Im Bank post in early December 2002 at an invitation-only ceremony at the Cheneys’
official vice-presidential residence.

    During the dark interregnum of the Clinton years, Donald Rumsfeld and
Colin Powell joined former secretaries of state Henry Kissinger (Nixon and Ford) and George
Shultz (Reagan) and other luminaries as company directors of Gulfstream Aerospace Corporation,
the luxury jet manufacturer purchased in 1990 by an investment team headed by Teddy Forstmann,
cochairman of Bush I’s failed 1992 reelection campaign. Their job was basically the same as
Bush I’s with Carlyle - opening doors to governmental and super-wealthy private clients,
including the Saudis and the Kuwaitis, where all four men have star drawing power. In 1998
Forstmann rewarded his directors by letting them cash in - at $43 a share - stock options that
they had purchased at anywhere from $3 to $28 a share. Kissinger’s take for a mere five months
on the board was $876,000 after expenses, Thomas Toch reported in the December 21, 1998,
New
Republic.
Shultz took home $1.08 million and Rumsfeld $1.09 million, while
Powell pocketed $1.49 million.

    In November 2000, not long before he was nominated to be secretary of
state, Powell received as much as $100,000 - one report said $200,000 - for a half hour of
off-the-cuff remarks at Tufts University in Massachusetts. The speech was paid for through a
Tufts speakers fund endowed by Issam Fares, the deputy prime minister of Lebanon. Virtually
every penny Fares owns traces back to his dealings with Prince Sultan, the Saudi defense
minister, and Turki bin ‘Abd-al-‘Aziz, another brother of King Fahd. Powell at least had a good
precedent to go by. The first president Bush basically stiffed his own ambassador during a
state visit to Paris by spending time at Fares’s elaborate digs on the &Bodoni-Book.xeb;le
Saint-Louis.

    There’s also plenty of space for the Saudis and their fat contracts in
the boiler rooms of Washington. Over at Qorvis Communications, which was earning roughly
$200,000 a month to buff the Saudi image in the U.S., it took three partners over a year after
the 9/11 attacks to decide that being the mouthpiece for a state that supports terrorists might
be a bad career move. The law firm of former Texas Republican congressman Tom Loeffler was not
similarly stricken by conscience. Fund-raising chief for Bush II’s first gubernatorial race and
finance cochair of his presidential campaign, Loeffler might be as close to the Bush White
House, including Dick Cheney, as anyone in Washington. In late 2002, the Saudis approached
Loeffler Jonas & Tuggey, waving a $720,000-a-year retainer to represent the kingdom’s
interests. Tom Loeffler, the firm’s founder and senior government affairs partner, accepted the
money. What’s the point of access if not to profit from it?

    IN A DIFFERENT MORAL CLIMATE, all this chumminess among Washington,
America’s corporate boardrooms, and Riyadh plus the rest of the Arab world might be at least
cause for alarm: Economic incentives exist in every direction for President Bush and his
advisers to close their eyes to the contamination in Saudi Arabia. In a sense, though, no one
can be blamed for being too close to the Saudis, because finding a high-ranking former U.S.
government official who isn’t at least tangentially bound to Saudi Arabia is like searching for
a teetotaler at a Phi Gam toga party.

    Brent Scowcroft, national security adviser in the Bush I administration
and a longtime intimate of the older Bush, runs the Scowcroft Group, which markets intelligence
services and market analyses to multinational corporations, including oil and other energy
companies. The company’s literature notes the group’s “extraordinary regional expertise” in the
Middle East and its “strong ties to key decision makers.” Scowcroft also sits on the board of
Pennzoil-Quaker State. Incidentally, Scowcroft is an intimate of Bush’s national security
adviser, Condoleezza Rice, and of CIA chief George Tenet, giving them both advice on how we can
“improve” our intelligence in the Middle East.

    In another case, Lawrence Eagleburger, secretary of state in the Bush I
administration, joined Halliburton’s board of directors while Dick Cheney was doing time as the
company’s CEO.

    Henry Kissinger heads up Kissinger Associates, which counts among its
corporate clients Boeing and Atlantic Richfield/ARCO, as well as many others doing business in
Saudi Arabia. Like Scowcroft, Eagleburger, Rumsfeld, Powell, and all the others, Kissinger
won’t have his integrity questioned. He also won’t stop exploiting his ties to Saudi and other
Arab leaders - all those years of shuttle diplomacy and Camp David confabs - or sucking on the
massive tit of petrodollars. On the sunny banks of the Potomac, if you retire with a high
enough title, you get to have it both ways. (Woe be to any lowly government functionary who
dares to point this out. If there’s one thing the status quo hates, it’s a whistle-blower.)

    So pervasive and intricate are the client ties to Saudi Arabia in
Washington that the two people named to head up the National Commission on Terrorist Attacks -
Kissinger and Vice Chairman George Mitchell, the former Senate majority leader - both resigned
their positions before the hearings got under way, rather than divulge their own client lists.
To find a commission head free of the client taint, George W. Bush finally nominated former New
Jersey Governor Thomas Kean, the president of Drew University, whose only lasting Washington
connection is that he’s an alumnus of the same exclusive D.C. prep school that educated Al Gore
and President Bush’s two younger brothers, Neil and Marvin. At the time he was nominated, it
should be noted, Kean was also a director of Amerada Hess, the petroleum goliath that has
joined forces with a Saudi oil company to develop Central Asian oil fields, but more about that
in a few paragraphs.

    Even Louis Freeh, the former FBI director, is said to have seriously
considered an offer to work for the Saudis after he retired from the bureau in 2001. If so, he
must have awakened every morning since 9/11 thanking God and fate that he instead took a job
with MBNA, the credit-card giant.

    At the corporate level, almost every Washington figure worth mentioning
has served on the board of at least one company that did a deal with Saudi Arabia, and
practically every deal with the Saudis grows opaque, lost in some desert sandstorm back near
the well heads where all the money sprang from.

    Until it was purchased by Northrop Grumman in late 2002, TRW counted
among its board members former CIA Director Robert Gates and former Undersecretary of State and
Ambassador to Japan Michael Armacost. National Security Adviser Condoleezza Rice was, for many
years, a board member of Chevron, which merged in 2001 with Texaco. Chevron Texaco is a partner
with Saudi Aramco in both Star Enterprise and Motiva Enterprises. In the weird way of these
interlocking corporate and government webs, oil is quite possibly being transported to the
U.S., even as you read these words, via the oil tanker that Chevron named for Rice.

    ChevronTexaco - whose board members include Carla Hills, former
secretary of housing and urban development (under Gerald Ford) and former U.S. trade
representative (under George H. W. Bush); former Louisiana senator J. Bennett Johnston, who
made a specialty of energy issues in Congress; and former Georgia senator Sam Nunn, who served
most notably as head of the Senate Armed Services Committee - also has joined forces with Nimir
Petroleum to develop Kazakhstan oil fields thought to contain upward of 1.5 billion barrels of
oil. Nimir, in turn, is owned by the bin Mahfouz family. A 1999 audit conducted by the Saudi
government is said to have found that the National Commercial Bank, partially owned by the bin
Mahfouz family, donated at least $3 million to charities, some of whose money may have found
its way into bin Laden’s networks. One of the charities, Blessed Relief, counts ‘Abd-al-Rahman
bin Mahfouz among its board members. ‘Abd-al-Rahman’s father, Khalid bin Mahfouz, couldn’t even
enter the United States in the early 1990s because of an indictment and involvement in the BCCI
international-banking scandal.

    Elsewhere in the Riyadh-Washington interface, Nicholas Brady, secretary
of the treasury under the first President Bush, and former George H. W. Bush assistant Edith
Holiday serve on the board of Amerada Hess along with Tom Kean. Amerada Hess has teamed with
some of Saudi Arabia’s most powerful royals to exploit the rich oil resources of Azerbaijan. In
1998 Amerada Hess formed a joint venture, Delta Hess, with Saudi-owned Delta Oil to exploit
petroleum resources in Azerbaijan. Houston-based Frontera Resources Corporation joined the
Azerbaijan hunt the same year, teaming with Delta Hess. Among Frontera’s board of advisers:
Lloyd Bentsen, the former Texas senator, ex-secretary of the treasury, and 1988 Democratic
vice-presidential candidate; and yet another former CIA director, John Deutch. (If ex-CIA
directors didn’t exist, America’s corporate boards would have had to invent them.)