Bush advisers cashed in on saudi gravy train

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Charles P. Adams

Jan 13, 2002, 5:09:10 PM1/13/02
Bush advisers cashed in on Saudi gravy train
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

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

``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

Not surprisingly, Halliburton's links to Cheney and other Washington power
brokers appear to have helped the company's business prospects in the Middle

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

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

``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

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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