Bush advisers cashed in on Saudi gravy train
Boston Herald
By Maggie Mulvihill, Jack Meyers and Jonathan Wells
Tuesday, December 11, 2001
Second of two parts.
Many of the same American corporate executives who have reaped millions of
dollars from arms and oil deals with the Saudi monarchy have served or
currently serve at the highest levels of U.S. government, public records show.
Those lucrative financial relationships call into question the ability of
America's political elite to make tough foreign policy decisions about the
kingdom that produced Osama bin Laden and is perhaps the biggest
incubator for anti-Western Islamic terrorists.
Nowhere is the revolving U.S.-Saudi money wheel more evident than within
President Bush's own coterie of foreign policy advisers, starting with the
president's father, George H.W. Bush.
At the same time that the elder Bush counsels his son on the ongoing war on
terrorism, the former president remains a senior adviser to the Washington
D.C.-based Carlyle Group. That influential investment bank has deep
connections to the Saudi royal family as well as financial interests in U.S.
defense firms hired by the kingdom to equip and train the Saudi military.
Last year, former President Bush visited Saudi Arabia's King Fahd bin Abdul
Aziz Al-Saud, but a Carlyle spokesman said the two did not discuss Carlyle
business as previously reported. The elder Bush is reportedly paid between
$80,000 and $100,000 for each Carlyle speech he makes. The company
declined comment on the former president's pay.
The Carlyle Group has also served as a paid adviser to the Saudi monarchy
on the so-called ``Economic Offset Program,'' an arrangement that effectively
requires U.S. arms manufacturers selling weapons to Saudi Arabia to give
back a portion of their revenues in the form of contracts to Saudi businesses,
most of whom are connected to the royal family. A company spokesman said
yesterday that arrangement was ended ``a few months ago,'' but said he did
not know whether it was terminated before or after the Sept. 11 attacks.
A spokesman for former President Bush, reached yesterday, had no
immediate comment on his work for the Carlyle Group.
These intricate personal and financial links have led to virtual silence in the
administration on Saudi Arabia's failings in dealing with terrorists like bin Laden, said Charles Lewis, executive
director of the Center for Public Integrity, a Washington, D.C.-based government watchdog group.
``It's good old fashioned `I'll scratch your back, you scratch mine.' You have former U.S. officials, former presidents,
aides to the current president, a long line of people who are tight with the Saudis, people who are the pillars of
American society and officialdom,'' said Lewis.
``So for that and other reasons no one wants to alienate the Saudis, and we are willing to basically ignore
inconvenient truths that might otherwise cause our blood to boil. We basically look away,'' he said. ``Folks don't like
to stop the gravy train.''
Some foreign policy observers said as long as American power brokers in lucrative business deals with the
Saudis do not simultaneously craft U.S. foreign policy, there is no conflict of interest.
``To have Bush Sr. on the board of Carlyle is not necessarily a significant problem because Carlyle has interests
all over the world,'' said Vincent Cannistraro, a former counter-intelligence chief for the Central Intelligence Agency.
Companies regularly entice powerful political figures to work for them, he said.
``It's kind of business as usual. Where it really affects things is when someone with a financial interest in a
company also has a policy position in the administration,'' Cannistraro said.
Insiders trading
A significant portion of the millions of dollars U.S. companies and their politically influential executives have earned
in deals with the Saudis has been through military contracts.
The Carlyle Group had a major stake in the large defense contractor B.D.M., which has multimillion-dollar contracts
through its subsidiaries to train and manage the Saudi National Guard and the Saudi air force, U.S. Department of
Defense records show. In 1998, Carlyle sold its controlling interest in B.D.M. to defense giant TRW International.
Meanwhile, the boards of directors of the Carlyle Group, B.D.M. and TRW are all stocked with high-level Republican
policy makers.
Frank C. Carlucci, a former secretary of defense under President Reagan, was chairman of B.D.M. for most of the
1990s. Carlucci, who also served as Reagan's national security adviser and a deputy director of the CIA, now
heads the Carlyle Group.
Along with former President Bush, other officials from past Republican administrations now at the Carlyle Group
include: former Secretary of State James A. Baker III; ex-budget chief Richard Darman; and former Securities and
Exchange Commission chairman Arthur Levitt.
President Bush is himself linked to the Carlyle group: He was a director of one of its subsidiaries, an airline food
services company called Caterair, until 1994. Six years later, when Bush was governor of Texas, the board of
directors of the Texas teachers' pension fund - some of whom were his appointees - voted to invest $100 million
with the Carlyle Group.
The president of B.D.M. is Philip A. Odeen, a former high-level Pentagon official in the Nixon administration. During
the Clinton administration, Odeen chaired the Pentagon task force that planned the restructuring of the U.S. military
for the 21st century. Currently, he is the vice-chair of the Defense Science Board, which advises the Pentagon on
emerging threats.
TRW, the new owner of B.D.M., has its own noteworthy board members, including former CIA director Robert M.
Gates and Michael H. Armacost, who served as undersecretary of state under President Reagan and as
ambassador to Japan for former President Bush.
Big Saudi money also makes its way back to Texas and the Bush family. The family of Saudi Arabia's longtime U.S.
ambassador, Prince Bandar bin Sultan bin Abdul Aziz, gave $1 million to the Bush Presidential Library in College
Station, Texas.
The revolving door
Another example of the complex web connecting U.S. and Saudi powerbrokers is Dick Cheney, who moved from
the Pentagon to the international oil business and back as vice president last year.
After serving as the elder Bush's secretary of defense, Cheney was hired to run oil-services giant Halliburton Co.,
where he worked until he resigned last year to campaign with the younger Bush. In 2000, his last year with
Halliburton, Cheney received $34 million when he cashed out from the company.
Not surprisingly, Halliburton's links to Cheney and other Washington power brokers appear to have helped the
company's business prospects in the Middle East.
Just last month, Halliburton was awarded a $140 million contract to develop an oil field in Saudi Arabia by the
kingdom's state-owned petroleum firm, Saudi Aramco, and a Halliburton subsidiary, Kellogg Brown & Root, along
with two Japanese firms, was hired by the Saudis to build a $40 million ethylene plant.
Cheney isn't the only member of President Bush's inner circle whose work for firms connected to the Saudis has
paid big dividends.
The current national security adviser, Condoleezza Rice, is a former longtime member of the board of directors of
another giant oil conglomerate with business in the Saudi desert, Chevron, which merged with Texaco this year.
Rice even has a Chevron oil tanker named after her.
Substantial profits received by U.S. leaders in private sector deals with the Saudis have helped to squelch criticism
of the royal family's refusal to address the role its country has played in fueling Islamic terrorism, Lewis said.
``There's a disconnect there,'' Lewis said. ``I'm fascinated that we don't lay this at Saudi Arabia's doorstep. But the
chances to cash in and the amount you can cash in for are starting to become absolutely astronomical. Who wants
to look like the Boy Scout complaining about it and potentially jeopardize their own post-employment prospects?''
Former advisers to the president's father also hold key positions with U.S. firms which have teamed up with the
Saudis on major oil deals.
Former Bush Secretary of the Treasury Nicholas Brady and a former Bush assistant, Edith E. Holiday, are both on
the board of directors of Amerada Hess, an American petroleum firm currently teaming up with several powerful
Saudi families to develop oil fields in Azerbaijan.
Another company that has done business with wealthy Saudis is international energy firm Frontera Resources
Corp. based in Houston. Until recently, Frontera was a 30 percent investor in a $900 million project to develop
oilfields in Azerbajian. Also investing in the project were Azerbaijan's state-run oil company and Delta-Hess, a
joint-venture created by the Saudis' Delta Oil and Amerada Hess.
Randy Theilig, a Frontera spokesman, said the company relinquished its interest in the project in July because it
was no longer ``economically viable,'' and has no current business dealings with the Saudis or in Azerbajian.
Members of Frontera's board of advisers, which includes former CIA director John Deutch and former Secretary of
the Treasury and U.S. Sen. Lloyd Bentsen, have been active financial supporters of the Democratic Party.
Shining a bright light on the web of financial connections between the power elite in the U.S. and Saudi Arabia is
critical, Middle Eastern foreign policy experts said.
``I think the fact that they have these connections makes it important for this information to be made public,'' said
Henry Siegman, a senior fellow on the Middle East at the Council on Foreign Relations.
Larry Noble, executive director of the Center for Responsive Politics in Washington, D.C., a non-partisan group that
examines money and politics, said the Bush-Carlyle connection is a concern.
``It is well known that the father is a close adviser to his son and therefore it does raise concerns,'' Noble said ``It's
not necessarily that the father has been compromised, but the danger is that it leads people to question George W.
Bush. The public has a right to feel their leaders are making independent judgments without the influence of
private interests.''
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