CHAPTER 9
Servants of the Crown
Dictators do not act alone. They rely on others to impose their
will and ways on their people and often to present them to the world in
international forums. Though his books betray a desire to emulate Boswell,
in reality Philby was to Ibn Saud what Goebbels was to Hitler and Tank
Aziz is to Saddam Hussein. The three are excellent examples of how the
human instruments of dictators function.
Some members of a dictator's confederacy, the people who
surround him and do his bidding, may accept their role out of a genuine
belief in the dictator's ideology or because they see him as the
individual who is capable of providing the best government for their
country, or for both reasons. Others recognize the defects of the
situation and try to behave constructively within it. Their work might be
described as 'damage limitation'. A third group are there because of
obvious motives of profit or power, or both. And a fourth group are
yes-men who find themselves in key positions accidentally, without having
had much time or desire to reflect on what they are doing or why. The
reasons are not mutually exclusive and they overlap and produce endless
variations, which makes judging a dictator's inner circle as a group
difficult. That is why the world judged Hitler's henchmen differently:
some of them were hanged while others were imprisoned or acquitted.
Whatever its members' motivation or aims, studying a dictator's
inner circle tells us a great deal about his ways and inclinations and
exposes the inherently corrupt workings of his government. A dictatorship,
by definition, is more dependent on the whims of the dictator than a
democracy is on the individual opinions of its leader. This is why judging
the type of people used by a dictator, and how, usually tells us more than
studying the laws and regulations he enacts, ignores or perverts. This is
especially true when we take into consideration most dictators' tendency
to operate behind closed doors, and to hide behind members of their
confederacy and operate through them. Among others, neither Hitler nor
Stalin left us a full record of their thoughts and what motivated them,
and historians have had to depend on the diaries of their cohorts, the
likes of Goebbels, Speer, Krushchev and Zhukov for insights into their
minds and how they made their decisions.
With regard to Saudi Arabia, the books of Harry St John Philby
and Hafez Wahbeh, suspect and misleading as they are, are indis-pensable
sources for studying Ibn Saud's Bedouin dictatorship. Without intending
it, both books tell us a great deal about his instinctive wile, criminal
ways and preoccupation with sex. Both men were members of his court, both
spoke for their leader and represented him in international forums. They
wrote their books to present a pro-Ibn Saud version of history, but in the
process they had to justify it, and examining the justifications and
deliberate omissions, tell their master's story.
Most people who have served the Saudi kings (like Philby and
Wahbeh, the great majority were mercenary foreigners) believed that their
masters were eminently suitable for the situation at hand. To this group,
the lack of social cohesion in Saudi Arabia and the pace of change racking
it have produced more justification for a dictatorial system of government
than exists in countries with an established social order. The Saudi kings
have been seen as providing much-needed unity and continuity against
undesirable alternatives. There is also the recently discovered reason of
the need to protect the country against its greedy neighbours. In
addition, the assumed backwardness of the Saudi people and the absence of
a workable alternative have always been an implicit part of such
arguments.
These socio-political reasons for supporting the House of Saud
have been reinforced by a more cynical but rarely articulated reason. This
is a belief by some of the servants of the Saudi monarchy that the House
of Saud will survive as long as the West supports it, and that opposing it
is tantamount to indulging in unproductive disruption which, if
successful, would do nothing but produce something similar or worse. This
is why servants of the Saudi crown take their instructions from 'His
Majesty' and refer to 'the Government of Saudi Arabia' and 'our interests'
without ever mentioning the people of their country and their interests.
We are stuck where Edward Said left us: to the servants of the Saudi
throne, the Arab is simple and naive and very much in need of a strong
hand to guide him.
Amazingly, what distinguishes in a major way the Saudi servants
of the crown from their counterparts in other countries is their
possession of a higher level of sophistication than their masters. Unlike
military juntas in South America and dictatorships in other places where
the dictator depends on his equals or his likes, the Saudi kings, bereft
of talent as they were and are, have always depended on people whose
competence exceeds theirs. Philby fronted for Ibn Saud in dealing with
Britain and the oil companies because he was the product of Westminster,
Cambridge and the Foreign Office and Ibn Saud needed him to explain the
mysterious West and to deal with it. Jamal Husseini, a Palestinian
politician, advised King Saud when the latter got deeply involved in
inter-Arab politics because Husseini knew the Arab world and appreciated
its political dynamics infinitely better than Saud. Oil Minister Yamani
knew more about the energy market than did King Faisal and put this
knowledge at his disposal. Khashoggi knows more about realizing the
greatest amount of money from an arms deal than does King Fahd - to the
benefit of both. The Saudi kings used such men when it suited their
survival purposes and image, but when they were no longer needed they were
dropped and their talents totally neglected. This happened when a servant
of the crown forgot that his purpose was the aggrandizement of the king;
in the case of Saudi Arabia, that meant enriching him or bolstering his
image, or both.
The fact that the lackeys of the House of Saud are more talented
than their masters leads to another difference from other dictatorships.
The House of Saud has never involved its confederacy in the business of
governance; its members are competent specialists and at best their
competence is kept in check through placing limitations on how it is
expressed. This means that the nature of the relationship between the
House of Saud and its changing confederacy produces a unique situation
where there is a greater reliance on them as specialists, as isolated
individuals who do not represent a cohesive group capable of rendering
political judgement. The more competent they are, the greater the need to
keep them at a distance from decision-making because involving them would
expose the incompetence of their bosses. Fahd has to keep Khashoggi
beholden to him to stop him from acting independently and manipulating the
arms business, and Yamani's knowledge of the international oil market made
him a perfect front for Faisal, who personally made all the important
decisions.
Another area where the Saudi kings' operatives differ from those
in other countries is in their relationship to each other.
Being specialists in different fields who have little say in the
final decisions means that they seldom compete; they are not South
American army colonels whose support is necessary or Sunni Muslims in Iraq
who provide Saddam with a base to maintain his and their supremacy over
Kurds and Shias. Members of the Saudi confederacy are outsiders who come
from different backgrounds and they arrive at their positions differently.
Their different backgrounds and preoccupation with specific functions keep
them apart. So, the House of Saud confederacy is looser and weaker than
most; they do not act in league and deserve the name only because of their
common loyalty to the king. Yamani and Khashoggi were contemporaries,
members of the same group which surrounded the Saudi throne in the 1960s
and 1970s, but they had very little in common, except their belief in the
supremacy of the king, and they acted separately. How they expressed their
belief - so long as they did not undermine the whole group - was
determined by their function and their personalities. For example,
Khashoggi is still a behind-the-scenes operator motivated solely by money,
while Yamani was an international spokesman who openly fronted for the
crown.
The confederacy which currently serves King Fahd is no dif-ferent.
Even their individual efficiency is inevitably hampered by the
incompetence of the King, who reduces rather than enhances what they have
to offer. The following profiles of members of the confederacy of the
House of Saud provide an indirect demonstration of one of the great
shortcomings of a dictatorship : how an absolute dictator has no loyalty
except to himself and the talented men who forget this maxim are often
turned into worthless entities.
Ghaith Pharoan is short and somewhat overweight with a
non-Saudi, slightly reddish colour. Balding, goateed and speaking Arabic
with a distinct Syrian accent, he is a hardboiled, cigar-chomping
wheeler-dealer representative of Saudi businessmen who operate on an
international basis. He is currently wanted for questioning in the UK and
the US, charged in absentia with embezzling hundreds of millions of
dollars from the Bank of Credit and Commerce International (BCCI). Unlike
other Saudis who have responded to similar accusations of embezzlement by
paying back money, he has shown no inclination to clear his name. But he
is beyond the reach of international law. Like the indigenous crooks of
the Bamieh and other cases, he lives in Saudi Arabia and is protected by
the House of Saud, whose members, amazingly, escape the Western criticism
which is usually directed at those who harbour criminals. Perhaps he had
acted on their behalf when he stole the BCCI money; certainly questioning
him would expose some of the unattractive traits of his masters.
Pharoan was educated at Beirut's International College, the
Colorado School of Mines, Stanford and Harvard's Graduate School of
Business, and there is no doubt as to his intelligence. But his success,
or notoriety, owes as much to his father's achievements as it does to his
education and talents. His father was Dr Rashad Pharoan, formerly an
adviser to Ibn Saud and chief of the council of advisers to Faisal, Khalid
and Fahd. The elder Pharoan was a rare expression of the workings of the
Saudi court; a foreigner who managed to meet the different personal
requirements of four kings, the only yardstick of success in Saudi high
office.
Rashad Pharoan rose to prominence through being one of the
physicians of Ibn Saud. As we have seen, doctors were always prescribing
potency potions and attending to the King's hypochondria, and, like so
many leaders in developing societies, Ibn Saud had absolute faith in his
doctors as people capable of doing almost anything. The elder Pharoan, a
graduate of Damascus University, had gone to Saudi Arabia to seek his
fortune in 1936. Rightly, he thought the odds were in favour of him making
money through meeting and treating Ibn Saud and, like other doctors, he
endeared himself to his master. He soon discarded medicine in favour of
becoming a member of the King's original collection of trusted
mercenaries.
It was the urbane Rashad Pharoan who pushed his four sons
towards higher education and involvement in business. After they graduated
from some of the world's leading universities, he cleverly advised the
boys to create two separate business partnerships, one for Ghaith and
Wabbel and another for Mazen and Hattan. This division understated the
amount of business the partnerships realized; the royal family would have
hesitated to give one Pharoan company too much business. He also advised
them to deal with dif-ferent princes of the realm, and not to take too
much business from one department. Naturally, Rashad Pharoan worked to
connect his children with the then king and the most important princes of
the realm, the present King Fahd, Minister of Defence Prince Sultan,
former Deputy Minister of Defence Prince Turki, Minister of the Interior
Prince Nayef and many lesser figures. It was easy since Pharoan saw the
Kings and their brothers regularly and his position meant that his
children were discreet and reliable fronts.
Ghaith Pharoan grew up as a non-native privileged Saudi, an
extension of a father who attained the highest office in the land
available to a non-royal. When I knew him at Beirut's International
College in the early 1950’s, he was in the habit of describing himself
as 'a Damascene with a Saudi passport'. But, because many of the Saudi
students attending International College at the Saudi Government's expense
were the sons of Ibn Saud's foreign cronies, many suffered from the same
dual identity. The uneasy relationship this group had with contemporaneous
native Saudi students, the Sudeiris, Ghoseibis, Muhtassibs and Bassams,
made sense only in hindsight. Pharoan was never accepted as a Saudi, and
the real Saudis viewed him with unease and detachment, especially when he
mentioned his father's position, spoke of his identity and resorted to
chichi non-Saudi expressions such as referring to his aunts as 'tantes' .
In fact, Ghaith Pharoan has never been a Saudi. Like his father before
him, he did not have a real Saudi's handicap of suspect political leanings
or a sensitivity to social conditions; he saw Saudi Arabia not as a
country but as a place to make money. Retaining a non-Saudi accent when
one is born and raised in the country is an indication of a broader
attitude. He has never lived like a Saudi and, with the exception of
members of the House of Saud, the people with whom he has worked, even
within Saudi Arabia, share a separateness of lifestyle which includes
using au courant French phrases, shopping in Europe and eating Levantine
food. Most of the people who work for Pharoan's Saudi Research and
Development Corporation (REDEC) in managerial positions are non-Saudis;
the majority are Syrians, with whom he has greater personal and business
sympathy and who, like him, think the Saudis are beneath their dignity and
would never think of marrying them. They still marry girls from Syria,
Lebanon and other Arab countries.
Pharoan's father capitalized on Ibn Saud's lack of personal
sophistication and when he started in business in the early 1960s Ghaith
himself focused on the same lack of sophistication, in his case in the
family and the whole country. He did not start a local business, but
adopted the role of a worldly, trilingual middleman between Saudi Arabia
and the rest of the world. He was in the tradition of Gulbenkian of oil
fame and the people who started the trading companies in India and Africa;
someone who devoted his talents to amassing huge wealth at the expense of
native ignorance. As with the people he emulated, the background to his
ventures had to be right and his emergence on the Saudi business scene
coincided with the oil boom of the 1960s and 70s and the needs and
commercial opportunities which emerged with it.
Pharoan concentrated on businesses which were completely new and
beyond local competence. He imported food, particularly meat and new
delicacies, to meet the changing diet, opened hotels to accommodate the
thousands of businessmen who began descending on the country, introduced
insurance to meet the demands created by the changing business environment
and formed joint ventures with Western companies to build the sewage
systems for the cities of Jeddah and Riyadh. For the Western companies
which appointed him agent or representative or who formed joint ventures
with him, he was the ideal of what they needed, a man who spoke their
modern business language and travelled the primitive corridors of power of
the oil-rich country. His Harvard degree, languages and other aspects of
worldliness helped in the West and his close familial relationship with
the royal family facilitated operating in Saudi Arabia.
He dealt with members of the House of Saud, including King Fahd
and Minister of Defence Prince Sultan, directly and easily in ways which
satisfied them. He made money for them. He knew how to bribe them and his
ability to do this directly meant that he could produce more money than
others who had to go through a daisy-chain to do so. This pleased his
royal sponsors. In the 1960s members of the House of Saud needed outside
money more than they saw Pharoan as a problem-solver. This is when and why
they became his partners. They not only granted him licences to import
food, but also interceded with government departments and got them to buy
it. They waived Islamic strictures which said everything is in the hand of
Allah and approved his entry into the insurance business. They labelled
the cement company in which he was a major partner, the Saudi Kuwaiti
Cement Company, a strategic development and granted it huge subsidies,
considerably more than what they gave to more-needed enterprises. In
return, Pharoan educated them about the needs developing in their country
and made them silent partners in his businesses, including his hotel
business (several Hyatt Hotels).
In the 1970s Pharoan steered REDEC into the construction
business, and the royals favoured him over others and gave him and his
partners huge infrastructure contracts worth hundreds of millions of
dollars. (He won a $500-million contract in partnership with the American
company Parsons and was involved in the construction of Al Assard Military
City, one of the largest military construction projects in history.)
Pharoan made so much money that he accounted for a substantial part of the
income of some of the princes. While an exact figure is difficult to
arrive at, there were years when he handed back over $50 million in
kickbacks.
In the mid-1970s, flush with funds, Pharoan became one of the
first Saudi business leaders to go international. He bought control of the
National Bank of Georgia and seven per cent of Hyatt Corporation. He paid
over the odds for both investments, but there is little doubt that Pharoan
and REDEC were making enough in Saudi Arabia to afford them and that doing
business on an international basis elevated him in the eyes of his
masters, some of whom followed him and invested in the same corporations.
But what followed his initial investments is a classic case of somebody
using and abusing his mysterious background and royal connections to
expand his international business interests beyond his resources.
Pharoan retained former Texas Governor John Connally and former
US national budget director Bert Lance as his American pathfinders and
gained control of the Commonwealth Bank of Detroit in addition to the
National Bank of Georgia and invested in other banks. He bought a
substantial share holding in Occidental Petroleum. He formed a joint
venture with Norway's Concordia Shipping Line. He ventured further and
bought a chunk of France's Gervais Danone, formed a special company to
insure oil going to Pakistan and invested in a palm-oil operation in Sabah,
Malaysia.
Simultaneously, his business adventures began to affect his
personal behaviour. He surrounded himself with expensive talent, put his
trust in suspect American influence peddlers, gave parties which cost tens
of thousands of dollars, bought a $15-million apartment in Cannes and
Henry Ford's Georgia plantation and acquired a private jet. His dealings
extended beyond Connolly and Lance: he ventured into other areas and
contributed $150,000 to the campaign of Atlanta Mayor Andrew Young and
spent time with President Carter and his family (the National Bank of
Georgia was the largest lender to the Carter family business). He even
visited President Mobutu of Zaire to obtain concessions in his country and
tried to convince him to use REDEC to front all investments in Zaire. The
Pharoan legend grew so large that the Italian Government sought to endear
itself to him by awarding him a medal; he was made Commendatore of the
Italian Republic.
What sustained Pharoan's forays into the international arena and
provided him with money to meet the huge interest bill he was paying on
the debts of his investment spree was the profit he was realizing from his
Saudi businesses. But the 1982 a decrease in oil prices reduced the level
of business in Saudi Arabia and, under the added burden of high interest
rates and an altercation with King Fahd, suddenly Pharoan's financial
position deteriorated and he found himself unable to service some of his
debt obligations. This is when he resorted to selling and buying companies
and shares in them with incredible speed to avoid the scrutiny of the
business community and the financial authorities of the USA. But it was no
use, for some of his investments had declined in value and there were a
number of published reports which claimed that he had a negative net
worth.
BCCI loomed like an Allah-sent saviour. It was the only bank in
the world willing to place a near-limitless value on his connection with
the House of Saud, and it lent him $300 million against unsound holdings
within Saudi Arabia. BCCI was forever trying to get closer to the House of
Saud, and did this by endearing itself to members of the confederacy
(along with Pharoan, Kamal Adham and Hamad bin Mahfouz either borrowed
money against phoney assets or manipulated the shares of the bank). When
the bank finally collapsed and exposed huge losses and the ineptness of
the regulatory agencies in the United States, United Kingdom and other
countries, Pharoan still owned it $285 million which he does not have.
Our concern, however, is not Pharoan the failed international
businessman, but Pharoan as the creation of the House of Saud and a member
of its confederacy. What was and is he to them? Was he an inherently
corrupt man, or is his corruption an extension of theirs? How
representative is he of the confederacy which represents the House of Saud
in the business world? The answer to the first question determines the
answers to the rest of them and I know of no better way to delineate
Pharoan's relationship with the House of Saud than to tell a story
involving him and the present King Fahd, a hitherto untold story which is
considerably more revealing than the rest of what they did together and
Pharoan's other forays in the international business arena.
King Fahd began summering in Marbella in the late 1970’ss when
he was crown prince and the power behind the throne. The Spanish
Government was more hospitable than others, the place had better weather
than the rest of Europe and Fahd appreciated the privacy it afforded him.
During his many visits in that period, Fahd appears to have developed a
personal relationship with King Juan Carlos. The latter saw to it that the
Prince was accorded the highest degree of comfort and protection, from
special landing rights for his jets to lamb butchered according to Islamic
rules. Juan Carlos visited Fahd whenever the opportunity arose.
In 1980, with the price of oil rocketing to $35-40 a barrel, the
managing director of Hispanoil, the Spanish state-owned oil company,
sought to use the developing relationship between the two royals. He
approached King Juan Carlos through his Prime Minister, Suarez, and asked
the latter whether the King would initiate negotiations with Prince Fahd
towards the direct purchase of Saudi oil for Spain. Direct purchase meant
bypassing the major oil companies and saving Spain $5-7 a barrel.
Considering that Spain needed 180,000 barrels a day, this meant a minimum
saving of $800,000 a day for the Spanish Government.
Juan Carlos, realizing the importance of the deal to the Spanish
economy, obliged and discussions took place over a period of six months.
Pharoan was in attendance on Fahd at three of the meetings with the King.
In fact, his presence at the meeting was accidental, but the Spaniards
could not have known this. Pharoan had arranged to be in Spain when Fahd
was there because it was easier to discuss with Fahd some of the major
projects in Saudi Arabia in which they were 'cooperating'.
Agreement was reached at the highest level and finalized by
Hispanoil and Petromin of Saudi Arabia. Spain was able to buy oil at the
price paid by Exxon, Shell and Mobil and Juan Carlos had good reason to be
pleased, and so did Suarez and the managing director of Hispanoil. But
this victory for Spanish diplomacy did not last long. A week after the
deal was concluded, the managing director of Hispanoil was approached by
Pharoan and asked for a commission of $2 a barrel of oil: $360,000 a day
or $120,000,000 a year. The shocked Spanish execu-tive reminded Pharoan of
the history of the deal, appealed to him to withdraw his request and
asserted, correctly, that Spain went directly to Fahd because they wanted
no intermedi-ary. Pharoan would not desist; he put his request in letters
and telexes and even travelled to Spain to demand immediate payment.
The Spanish faced a real dilemma. They feared that Fahd had sent
Pharoan to extort a commission and that telling him about the request
would scuttle the whole deal. On the other hand, the commission was
ridiculously high and meeting it, particularly after the fact, was
impossible.
The managing director eventually told Prime Minister Sua'rez,
who told the King. His royal dignity affronted, Juan Carlos telephoned
Prince Fahd with the news. Fahd was reassuring and asked for copies of the
correspondence and a record of Pharoan's visits to Spain to be sent to him
in Jeddah. The file containing the record of the attempted extortion was
with him in two days.
Fahd summoned Pharoan for an audience. He enquired about rumours'
about a request for a commission from Hispanoil. When Pharoan denied the
rumours, Fahd threw the file at him and asked him to read it. Pharoan was
at a complete loss, and finally resorted to saying that he wanted the
money to donate to a Saudi charity and not for personal gain. Fahd walked
to where the cowed Pharoan was sitting, slapped him twice across the face,
then spat on him, the gesture of deep insult reserved for the most profane
of criminals. But he did not stop there; he ordered the Saudi Government
agencies not to award any new contracts to REDEC and to delay all payments
on projects already in progress. Naturally, no member of the royal family
was willing to intercede on behalf of Pharoan, and they all behaved as if
the incident was an offence against the House of Saud.
Pharoan and his companies suffered considerable financial
damages at a time when he most needed money to pay interest on the debts
he had incurred on his international acquisitions. He sat on the sidelines
for over a year and used many influential friends to carry messages asking
for Fahd's forgiveness. Sometime during 1982, Fahd decided to forgive him
and Pharoan's first act was an audience with the King which saw him kneel
and kiss the royal hand.
The error Pharoan made was clear. However powerful, he committe4
the ultimate sin of confusing his position with that of the most powerful
member of the House of Saud. The people who front for the House of Saud in
the international business arena are no more than slaves who are used to
express their masters' wishes and greed, and must never offend them or
infringe on their absolute rights. Fahd's anger had nothing to do with
immorality of Pharoan's action, for he was among the creators of the
conditions under which Pharoan operated. It had to do with how it
reflected on his word and authority. Any member of the House of Saud would
have done the same; their lackeys are not entitled to act on their own.
Fahd's willingness to protect Pharoan against the demands of the
law enforcement authorities of the United States and the United Kingdom to
interrogate him in connection with the BCCI scandal completes the picture.
In this case Pharoan is accused of acting criminally. Even so, this was in
Saudi character, against the rules and regulations of outside powers in
the manner of, and as an extension of, the House of Saud. To Fahd, this is
an excusable offence; those who front for the House of Saud in the world
of international business reflect its members' attitude towards
everything. All is permissible, as long as it does not affect the House of
Saud's status.
Although he has been out of office since 1986, Ahmad Zaki
Yamani, the former Saudi Minister of Oil and Mineral Resources, remains
one of the best known people in the world. Everybody recognizes the neatly
trimmed goatee and thick, curly hair, marvels at the beautifully cut
suits, notices the ever-present prayer beads, and people speak about the
piercing eyes and repeat the famous early 1970s joke 'Yamani or your
house' on hearing his name.
In his heyday Yamani was the darling of the Western press and
there is some evidence that his fame contributed to his downfall, that the
egotistical King Fahd fired him because he resented his international
reputation and his identification as a spokesman for Saudi Arabia as much
as he disagreed with his oil policies. Clearly, Fahd is more comfortable
with the present occupier of Yamani's old office, the colourless and less
memorable Hisham Nazer.
To the Arabs, Yamani's name suggests that his family came from
the Yemen and this is supported by his lack of a tribal linkage. His
people were city dwellers and his father was a highly respected qadi, or
Muslim judge, whose modest but admirable achievements meant a life in the
shadows away from politics. The younger Yamani is a man of the limelight
and the controversy which naturally goes with it but the lack of tribal
connection and of political opinion suggests that he made it to the top
because of talents which outweighed these deficiencies. The system, flawed
as it is, apparently permitted the rise of a talented but politically
insignificant person.
Yamani belongs to a small class of educated, non-activist tech-nocrats
and bureaucrats on whom the House of Saud increasingly depends to create
an image that commoners are involved in the affairs of government. But
rather than prevailing against the odds, it is this group's negative
quality, their apparently built-in ability to ignore the conditions of
their country and hopes of their people, which endears them to their
masters. To a House of Saud committed to absolute family rule, this group
appeals because they are unconnected, unconcerned and safe. In fact, the
present Saudi Oil Minister, Hisham Nazer, belongs to this group and in his
case his name suggests Turkish or Turkoman origins, again a lineage
lacking in political weight, and he shows no signs of responding to
anything except the demands of his job as defined by the King.
This was not always the case, and Saudi Arabia's first holder of
this position, Abdallah Tariki, one of the architects of OPEC, was a
forceful, imaginative man with solid Saudi credentials who objected to
royal tampering in his domain. He rose to power under the unpredictable
King Saud, but Faisal, loath to tolerate any questioning of his absolute
power, dismissed Tariki and sent him into exile in 1962. Since then the
only important ministry in the country held by a commoner goes to a
technocrat who is willing to assume the title without the power which
normally goes with it. This automatically nullifies the importance of the
appointment. The influence a Saudi oil minister might be expected to have
on Saudi, regional and international politics does not exist in practice
and Yamani's and Nazer's careers support the contention that the kings are
their own oil ministers and policy-makers. In fact, Yamani and Nazer are
excellent examples of the bureaucratic confederacy of the House of Saud,
the handful of ministers, ambassadors and departmental directors who give
Saudi Arabia a semblance of modernity. They act as front men, but only to
outsiders; the Saudi people know better.
Though classifying Yamani is not difficult, understanding him
and others like him is not so easy. Whatever members of this subgroup do,
they do it as humble, obedient servants of the crown, unquestioning
robots. To this day, we do not know what Yamani thinks; he is reluctant to
speak on matters of substance. Interviewers have discovered that why he
was fired, like oil and regional politics, are closed subjects. His
answers are full of technicalities and betray a resort to diversionary
tactics. And he can be excruciatingly boring, because his responses to
signifi-cant questions are no more than an attempt to emphasize their
minor, safe aspects and a reiteration, with annoying regularity, of House
of Saud-pleasing pronouncements. Hisham Nazer, the Ambassador to the UK
and the former Minister of Health, Ghazi Al Ghoseibi, do the same; they
are good interviewees until they have to answer substantive questions to
which no House of Saud answer has been preferred.
But it is still important to analyze Yamani without the benefit
of his honest thoughts. After all, he held for 25 years the highest office
allowed a Saudi non-royal and even his acceptance of it without exercising
its inherent powers may tell us a great deal about how real power in the
country, including the formulation of oil policy, is exercised. And to
understand Yamani, we have to understand his three aspects: the person,
the businessman and the politician cum public figure.
Yamani is a glamorous figure, a dapper 62-year-old who is as
comfortable facing flashlights as a movie star. I cannot find any picture
of him with a single hair out of place, not even after gruelling day-long
OPEC meetings. But unlike other public figures, for example the unnatural
George Bush and the stiff John Major; his studied elegance works; it is in
character and completes his natural good looks. When on holiday, his
Savile Row suits are replaced by designer beachwear and he affects a slow
walk which says hurrying is undignified, and even in that he is effective.
He augments this picture of a worldly dandy in other ways; to my
knowledge, every single reporter who has ever known or interviewed him
speaks of how deferential Yamani is and how he always remembers to ask
them questions which personalize their encounters and betray an interest
in their welfare. He calls them by their first names, remembers something
about the last time they met and says something about their employers or
their families.
We do not know the background to Yamani's accomplished dandyism,
but, generally speaking, the combination of being a qadi's son and a
Harvard Law School graduate goes some way to explaining it. In Yamani, the
gentility of the East merges with the best in the West, and the
combination was polished by exposure to the finer things in life. His long
service as Saudi Arabia's and OPEC's leading spokesman provided him with a
chance to meet top oil company executives and oil ministers from other
countries and to negotiate and befriend Richard Nixon, Henry Kissinger,
Edward Heath, Giscard d'Estaing and other world leaders.
But it does not stop there and Yamani is more than a dandy with
friends in high places; he is also a show-off. He owns houses in Beirut,
Jeddah, Riyadh, Taif, London, Sardinia and Geneva, his yacht is over 200
feet long (the available figures differ) and he talks about his
possessions in the manner of a believer in the if-you-have-it-flaunt-it
approach. This irreverent display of wealth is coupled with a marked
desire for haughty separateness. When he goes to a mosque, Yamani prays in
a private room and some of his biographers claim that he used to gamble
alone, again in a private room in London's Playboy Club. His public
persona is a valid excuse for secret gambling, but praying in a private
room is against the spirit of Islam, which favours group prayer. It
demonstrates a lack of sensitivity to his own culture which, with his
flagrant display of wealth, cannot but tarnish his image with a people who
resent his totally Western demeanour.
In fact Yamani's lack of a solid Saudi background, resented as
it is by an increasingly chauvinistic Saudi people, is made worse by the
adoption of further non-Saudi attitudes. Unlike members of the royal
family and other ministers who use the majlis to go through the motions of
being members of a Bedoum society of equals, he is aloof towards a people
who celebrate the common touch. When in office, he had nothing like a
majlis and he was more available to foreigners than to Arabs. He was
certainly more available to foreign journalists than to the Arab press
contingent, and prominent Arab journalists Farid Al Khatib and Abdel Barn
Attwan tell of how he ignored them in favour of unknown freelance writers
from Western countries.
With foreigners, he always seemed to be selling something -not
oil but Yamani the civilized man in Western terms. His wife and children
were often present when he gave interviews and he introduced them to
interviewers and spoke about them freely and with unconcealed pride. 'Have
you met Tammam?' a Western journalist asked me, referring to Yamani's
second wife. When I answered no, he told me that I had missed something
and carried on about her and the children as if they were an integral part
of the Yamani story. Others repeated the same refrain in their own way and
some wrote of how Yamani flirted with his wife for their benefit. Yamani's
promotion of his family is un-Saudi behaviour, and he says little about
being still married to his first wife. He is a man who is distancing
himself from his Muslim origins through creating a Western identity,
perhaps someone whose exposure to worldliness overwhelmed the pull of his
roots.
But Yamani knows that being a civilized man in the Western world
does not stop at having a pretty, elegantly dressed, intelligent wife and
well-brought-up multilingual kids, but that to complete the picture he
needs other props which people can remember and talk about. To meet this
requirement, Yamani found Islamically acceptable substitutes for a
knowledge of wine. For years he has promoted himself as a gourmet, an
authority on pistachio nuts and an opera-goer who is extremely fond of
Wagner. He was and is fond of reciting the menus of famous restaurants,
and, on occasion, criticizing those menus with rehearsed knowledge. On
pistachios, he is almost unstoppable and, when Minister of Oil, he always
had bags of them in his hotel suite and they would become part of the
conversation. I find it remarkable that he always had one type of
pistachio and that there were not varieties for purposes of comparison,
but then no public figure has ever competed with him in this field. On
music, he very often digressed from routine interviews about oil to ask
interviewees whether they had seen the latest opera production, and on one
occasion in Vienna in the mid-1970s he missed an OPEC meeting to attend a
concert - a departure from schedule which naturally did not escape the
notice of the press.
All of Yamani's image-building exercises are directed at a
Western audience and most are excessive. During OPEC nego-tiations with
the oil companies, he insisted on calling Exxon executive George Piercy by
his first name in a totally non-Arab demonstration of chumminess. He
endowed a Chair in Energy Studies at the University of Wales to the tune
of £250,000 at a time when many Arab students and institutions of higher
education could have used the money for a better reason. Also, according
to his biographer Jeffrey Robinson, he used to go to Harrods after closing
hours so that he and members of his family might have the place all to
themselves. Somehow the press always found out about it.
Yamani the businessman does not contradict Yamani the person. He
is a shrewd exponent of heroic materialism, a successful capital-ist with
a bent for glamorous business behaviour. He opened the first organized law
office in Jeddah and never allowed anybody to forget his legal
credentials. His degrees from the University of Cairo, New York University
and Harvard were there for everybody to see. His manner, deferential,
meticulous and distant, certainly distinct from that of other Saudi
lawyers, allowed him to choose his clients carefully and to treat them as
if he were doing them a favour.
There were no Harvard lawyers in Jeddah in the late 1950s, when
trading on an international scale which required different expertise had
just begun, and Yamani soon became famous. Inevi-tably, he started doing
work for the Government and eventually for the Ministry of Oil. That is
when he caught the eye of the then Prime Minister and later King, Faisal.
Soon he became a legal adviser to several ministries, was promoted to
Minister of State and was made Minister of Oil and Mineral Resources in
1962. Faisal invited him to succeed Abdallah Tariki, the
independent-thinking oil-nationalist co-founder of OPEC. Tariki advocated
a policy of confrontation with ARAMCO and openly questioned the awarding
of some oil concessions which did not make economic sense and which were
granted to companies which bribed the royal family and their relations.
Tariki's poli-cies and popularity had become a problem for Faisal and in
choosing his replacement the King wanted the opposite: someone who had no
popular base, took orders without arguing and was acceptable to the oil
companies. In fact when it came to Saudi relations with ARAMCO, Yamani was
more than accept-able; he was a friend who ignored the company's attempts
to undermine OPEC and to oppose the Saudi Government's wishes on many
things, including appointing Saudi directors to ARAMCO's board.
This was the beginning of the Yamani we know, the elegant,
wealthy public figure popular in the West and hated by his own people. It
was Faisal who made the already comfortable Yamani very wealthy by giving
him huge parcels of land around Jeddah which had been declared crown
property. Given that Yamani was in the best position to judge the
oil-based economic condition of the country, he sold the land when its
value hit its peak. Estimates vary, but the land he received as a present
fetched $300-500 million. By the time of the 1976 collapse in Saudi
property prices, Yamani had disposed of all his land holdings while lesser
mortals went bankrupt, and the people of Saudi Arabia well remember this
whenever his name is mentioned. Yamani's Western ways did not present an
obstacle to his indulging in what resembles insider trading.
The acquisition of this huge fortune coincided with the golden
age of OPEC, the period when the supply-demand situation favoured the
producers over the consumers. From the early 1970s until 1983 not a week
passed without newspapers carrying a pic-ture of Yamani opining on the oil
crisis. The world got accustomed to the calm, correct delivery of the one
man who became identified with the OPEC-West confrontation without knowing
that he had no power and little influence. True, the major decisions to
raise oil prices several-fold or to embargo the shipments of oil were made
by fellow OPEC members and followed by Faisal, but the outside world did
not know that and some commentators wondered why a man who sounded so
reasonable would act in a contrary manner.
It was a time when what Yamani had to say got confused with the
man. Undoubtedly, even when they disliked the deci-sions wrongly
attributed to him, most saw him as an attractive spokesman for Saudi
Arabia and OPEC. He reasoned and did not hector, and in a way diffused the
danger implicit in the control by a handful of countries of a commodity
the world cannot live without. Under the pressure of ceaseless interviews
he deflected hard questions with an engaging smile and above all he came
across as a moderate committed to cooperation between the producers and
the consumers. Hindsight affords us a better view of what Yamani was doing
and why.
The Yamani oil policy as enunciated by him - if it indeed
existed - consisted of two elements: oil prices should not be raised to a
level which would hurt the Western economies irreparably and they should
not be raised to a level which would make feasible the use of alternative
energy sources. In addition, he had a commitment to OPEC's long-term
interest in remaining the primary oil supplier. He advocated this policy
within the circles of power which influenced and controlled the situation,
the Saudi Government, OPEC and the West.
In Saudi Arabia, Yamani dealt with his creator, Faisal, and
Faisal alone. One of the reasons the present King Fahd resented him was
because he behaved haughtily towards him when Fahd was appointed head of
the Supreme Petroleum Council, nominally the royal personage in charge of
oil policy. What had begun as a search for a politically safe man had
developed into something more: if Faisal and Yamani acted like a team,
perhaps it was an Arab father-and-son relationship in which the educated
son put his talents at the disposal of a traditional, less sophisticated
father who was nevertheless the decision-maker and who preferred to remain
a shadowy background figure. From all the evidence available to me, it was
definitely Faisal who made all the decisions and, capable though he
perhaps was, Yamani consistently failed to take into consideration the
vital factor of how his country's external oil policy affected the
feelings of the people of Saudi Arabia. The following paragraphs explain
how that worked.
Yamani always advocated an increase in Saudi oil production to
keep the price down to minimize damage to the economies of the
industrialized nations, particularly America. He was behind creating the
image of Saudi Arabia as a 'swing producer', the coun-try whose production
policies determined the price of oil. Faisal, though solidly pro-Western,
was much more wary of alienating the members of OPEC to please the
consuming countries, and worried about the reaction of the Saudi people to
keeping oil prices, and hence the national income, down. The policy which
was adopted reflected Faisal's thinking: a balance between high prices and
local and regional political considerations.
Yamani advocated spending his country's huge oil income in order
to recycle it. He wanted to avoid the imbalance in the world's financial
markets which the excess funds in the coffers of the oil producers would
create. Faisal, for good and bad reasons, was extremely concerned over the
social disruption which would be caused by spending too much too fast. The
compromise decision was in Faisal's favour and this is when Saudi Arabia
began to accumulate the huge $140-billion surplus which the House of Saud
eventually frittered away.
Yamani was for separating oil from pure politics and resisting
the Arabs' calls to use the oil as a political weapon against the West.
Faisal, though wishing that he could do what Yamani was advocating, saw
that oil and politics were closely related and addressed himself to
minimizing the damage caused by the inevitable use of oil as a political
instrument. The decision to follow other Arab countries in embargoing the
shipments of oil to the West in the wake of the October 1972 War was made
by Faisal without Yamani's consent, though he was asked to implement it.
Faisal rescinded the decision as soon as that became politically feasible
- when it became possible to do it without incurring the anger of the
Saudi and Arab people, who were all for it, and not because of economic
considerations.
Yamani appears to have been more interested in serving Faisal
than in implementing policies in which he believed. Even when his policies
and reputation were undermined (see Oil, OPEC and the Overseers) by
members of the House of Saud, he still had no problem in speaking for
Faisal on all these points.
Overall, Yamani's role during the heyday of OPEC betrays a
commitment to glamour, an obliviousness to the sensibilities of the Saudi
people, a disinclination to cooperate with Arab countries, and a disregard
for the interests and opinions of fellow OPEC members. He was happy being
a mere public relations man. The latter role produced the admiration he
has earned in the West and drew him close to a Faisal who recognized its
value. It also made him the most unpopular man in Saudi Arabia. I have had
Saudi taxi drivers, businessmen, academics and others tell me how much
they hated him. The reasons for this - and it was a surprising discovery
at least in its extent - are simple: his haughtiness and a perception that
he was willing to accommodate the interests of the West at the expense of
the Saudi people. This does support Faisal's assessment of the existence
of a Saudi public, and places Yamani alongside a long list of Arabs (Sadat
of Egypt, Nun Said of Iraq, Chamoun of Lebanon, among others) who thought
pleasing the West was the only game worth playing.
The highly personal relationship between Faisal and Yamani could
not be perpetuated after Faisal's assassination in 1976. The retiring King
Khalid left things to Crown Prince Fahd, unlike Faisal a petty, arrogant
man who craves the limelight for himself. Faisal, wily and secure,
capitalized on Yamani's talents in a subtle way while Fahd, crude and
unintelligent, felt the need to pay him back for his previous neglect and
to humiliate him to remind him of his position as a dispensable servant of
the throne.
Yamani remained in office for four years after Fahd became king,
but things were never the same again. Fahd saw very little of him and made
his life a pure hell. During this period the supply-demand situation had
shifted to the advantage of the consumers and the price of oil was in a
steady and precipitous decline. This situation was exacerbated by the
Saudi royal family's inclination to undermine the price structure by
bartering extra amounts of oil in excess of OPEC quotas to meet defence
procurement needs and their personal aggrandizement plans. Fahd's
disinclination to study any document or examine anything in depth
cancelled Yamani’s internal role; beyond being a public relations man,
Yamani had thrived on providing his bosses with documents to enable them
to make decisions. Eventually Fahd issued an impossible order to Yamani to
remedy the decline in the country's income. The order called for the
maximum level of oil output and the highest prices, more a magician's than
a technocrat's field of endeavour. When Yamani could not carry it out,
Fahd fired him in an unbelievably humiliating manner: the Oil Minister
heard of his dismissal on television. The Saudi press carried the
announcement without comment; it was treated as an insignificant event.
Though his love of the limelight made him accept serving Fahd,
however ingloriously, Yamani had removed all his valuable papers from his
office before his dismissal. The West mourned his departure and speculated
about its causes, but to the Saudi people, the Arabs and OPEC it was a
case of good riddance which, coming as it did before they got to know
Fahd's stupid ways, temporarily made Fahd popular.
After he was fired, because of the inherent House of Saud
concern about its image, Yamani was not allowed to leave the country for a
long time and even the very few Saudi friends he had avoided him because
doing otherwise was tantamount to affronting Fahd. The order keeping
Yamani in Saudi Arabia was eventually rescinded and, instead of finding
something constructive to do within his country, he now wanders the world
in search of a role. He bought the Swiss watchmaker Vaucheron Constantin
because he likes watches; he created Invescorp to handle his other
investments; and he created the International Centre for Global Energy
Studies as a way to remain involved in the oil business, giving places on
the board of trustees to many of his famous friends with former high
office, including Edward Heath and Valery Giscard d'Estaing. Though he
says very little about his country's oil policy, some claim that Yamani is
waiting in the wings to make a comeback, that Crown Prince Abdallah is
fond of him and is likely to recall him when he ascends the throne. This
is doubtful; Abdallah is a simple man but he has a knack for doing things
to please the people of his country.
In the final analysis Yamani is both a tragic figure and a
ridiculous one. He rose to power under a man who did not listen to him and
was fired by a man who resented his reputation and his manner. His talents
never showed because neither king had any interest in a real Oil Minister.
His appreciation of his essentially empty role remains a mystery and his
absence has had little effect on his country's basic oil policy. When he
was a minister, the only time he took a position contrary to what the
royal family wanted was when he stood against the use of oil to barter and
even this is now rendered questionable by the recent disclosure in the
Arabic weekly Sourakia that his own son violated the rules governing total
control by the Saudi Government of trading in oil (see Oil, OPEC and the
Overseers).
As of now, unless one is enamoured of pistachio nuts, prayer
beads, Vaucheron Constantin watches, or one is in the business of
celebrating colonial subservience, there is very little to say for Yamani.
He was a dispensable technocrat whose services were taken for granted, one
of many who come and go according to the desires and transitory needs of
the House of Saud. But, unlike the House of Saud's other fallen Oil
Minister, Abdallah Tariki, Yamani is not missed. He is more the product of
Madison Avenue than he is of Saudi Arabia and if he was a tragic figure
then it was only in demonstrating the banality of glamour.
It would seem that the only thing people in the West do not know
about Adnan Khashoggi is how to pronounce his name properly. A hard 'g' is
followed by a soft 'g': Khashoggi. In fact while the rest of him is
supposed to be an open book and he has been the subject of several
biographies, including Harold Robbins's 'faction' The Pirate, to which he
contributed generously, his life remains as elusive as the correct
pronunciation of his name. He deserves considerably more than the surface
analysis he has so far received. Unlike others who have served the House
of Saud and who are covered in this chapter, Adnan Khashoggi would have
cooperated in anything to be written about him; but, to me, that would
have been self-defeating. Seeing him from a distance as a thin, subsidiary
line running parallel to the thick, unattractive one ploughed by the House
of Saud is more to the point. Khashoggi, or 'K' as his jet-setting cronies
refer to him, is a true reflection of his masters' fortunes and ways.
Khashoggi is a Turkoman, another non-Saudi son of one of Ibn
Saud's doctors; the world's best-known arms dealer; a giver of
multi-million-dollar parties full of blondes on the make; a man with a
prison record in Switzerland and the United States; once the owner of one
of the most lavishly decorated yachts in the world; a friend of former
Presidents Richard Nixon and Ronald Reagan and a contributor to their
presidential campaigns ( report-edly $2 million to Nixon's 1972 effort)
and the father of a liberated daughter (Nabilla) who openly lived with her
boyfriend and who has very little in common with Saudi womanhood.
Khashoggi is generous and loyal to his friends; and many of them,
including many seemingly useless ones, became multi-millionaires clinging
on to his wheeler-dealer's coat tails.
But the most intriguing thing about Khashoggi is how he has
maintained his position in the inner circle of the House of Saud. It is
true that he has never done anything to offend the members of the House.
On the contrary, he is their loyal supporter and friend and the Saudi
royal family and their involvement in his business interests are things
about which he is silent. But everything else he does is in violation of
what they pretend to stand for; his every act is contrary to the image
they try to present to the world. When this pretence of the House of Saud
is set aside, everything he does becomes a reflection of its members'
hidden attitudes, of the true, private selves of the leading members of
the royal family with whom he deals.
Khashoggi's partying and nightclubbing are un-Islamic and they
should be offensive to the guardians of Islam's holiest shrines. But
members of the House of Saud give parties secretly and many, including
King Fahd, have frequented nightclubs, in his case in the company of
Khashoggi. The latter acknowledges that he is an arms dealer who has made
a lot of money out of the business, but they, particularly the Minister of
Defence, Prince Sultan, have done the same without admitting it. Khashoggi
has admitted that he was involved in supplying arms to Iran as part of the
Iran-Contra scandal and that he dealt with Israeli politicians and
intelligence agents in the process. He did this with the knowledge and
approval of the House of Saud, who were fronting for America but who
ostensibly espouse Arab policies which contradict this involvement.
Khashoggi brags about his loyalty to friends and how they have made money
working with him. And the House of Saud has helped its friends, including
Khashoggi, beyond what is officially acceptable, to amass huge fortunes at
the expense of the Saudi people. Female members of Khashoggi's family
spend money as if it is going out of style and speak of their affairs
openly while the female members of the House of Saud do the samc quietly.
The House of Saud's inability to openly behave in the Khashoggi manner is
behind King Fahd's envious comments whenever he sees pictures of Khashoggi
with pretty blondes (he is in the habit of escorting several of them at a
time).
While Khashoggi's ability to live the life members of the House
of Saud would like to lead goes a long way towards explaining why he is
accepted and admired by them in personal terms, it does not explain how he
became one of their most trusted business associates. We know why Philby
was at Ibn Saud's side, how Faisal used Yamani, and of the relatively
understandable connection between Ghaith Pharoan and the House of Saud,
but in the case of Khashoggi the question of why him and not another may
tell us more about what it takes to become a House of Saud lackey than the
stories of the rest of the loyal confederacy.
Adnan Khashoggi's background differs substantially from those of
Yamani and Pharoan.
He attended Chico State College, in California, hardly an
institu-tion which provides people with superior educational crendentials.
Nor was his father anything but a doctor; Muhammad Khashoggi was one of
the few men of medicine who attended Ibn Saud who failed to elevate
themselves to the position of an adviser. It goes further and whatever
acquaintanceship Adnan had as a young man with members of the royal family
did not deserve the name friendship.
In describing Khashoggi's beginnings, all one can say is that
his non-Saudi background and its inherent appeal to the House of Saud was
his only recognizable asset. But there were a lot of people who had this
qualification, and many of them had access to members of the House of Saud
and tried to endear themselves to them without success. The process of
elimination I have followed leaves me with the conclusion that Khashoggi
did indeed have something unique to offer the Saudi royals.
Khashoggi's original success had no royal patronage behind it.
He began wheeling and dealing in the mid-i 950s, while a student at Chico
State College, and at that time there were fewer than 3000 college
graduates in all of Saudi Arabia and very few people within or outside the
country realized its business potential. It is true that he was hardly an
average Saudi, but his purchase in America and resale to the bin Laden
Group in Saudi Arabia of 50 Kenworth heavy-duty trucks betrays an uncanny
knack for what his country needed.
This relatively small deal was followed by others involving the
importation of trucks and gypsum, and he was so enamoured of dealing that
he left college early and started Al Naser Trading Co, which he later
renamed Triad Holdings. There was nothing new in the import business Al
Naser did - nothing, that is, except its proprietor's wandering eye, which
was on the lookout for new, more lucrative business opportunities. The war
in the Yemen in the early 1 960s and Fai sal's commitment to defeat Nasser
provided Khashoggi with his first big opportunity; he saw the Saudi need
for arms faster and more clearly than anybody around him.
The American defence contractors Lockheed, Raytheon, Grueman and
others either had no representatives in Saudi Arabia or depended on people
who represented them throughout the Middle East. It was a perfect
situation for a matchmaker and Khashoggi filled the breach to become a
power broker between King Faisal and the companies manufacturing defence
equipment. With his amazing ability to grasp the usefulness of a weapon,
Khashoggi emerged as a problem-solver for both sides. He endeared himself
to Faisal by waxing eloquent about how the arms and equipment in question
could tilt the scales in Saudi Arabia's favour. At the same time he
educated the companies about the size and importance of the Saudi market
and convinced them that he had mastered its intricacies. (Because of their
colonial history, the British and French are less inclined to use agents
for local situations than are the Americans.) Even when they had agents,
the companies prevailed on them to cooperate with Khashoggi and,
remarkably and intelligently, he never tried to cut them out.
The war in the Yemen was bigger than people realized; Saudi
Arabia needed a lot of arms and Khashoggi's business flourished. But,
unlike other successful businessman, he was not happy with what he had and
spread his net in a way which eluded most Saudi operators at that time.
Though 'in' with Faisal, he had no hold on the wily King. He began
building bridges to 'amenable' members of the royal family and voluntarily
cut some of them in. And simultaneously he was so deferential towards
their reputation that he rebuked a Lockheed official who criticized an
intrusive prince. He handled them so well and his sensitivity to their
ways was so great that he refused to stay in Boston's Ritz Carlton Hotel
with Prince Tallal in order not to be in the way and later on the same
trip he ordered his wife not to wear some of her jewellery and to do
without make-up in order not to upstage the Prince's wife.
Towards the companies, Khashoggi showed similar care. His
awareness of potential problems over commission payments led him to create
small companies in Switzerland and Liechtenstein to receive them, in order
to protect the client companies from public exposure and the censure which
might go with it. The especially created companies appeared with and
disappeared after every deal. He went further, and in moves which betrayed
an uncanny sense for the need to protect his flank, he began courting US
officials and politicians whose functions might help with his business,
people like CIA Middle East chief James Critchfield, CIA super-agent Kim
Roosevelt and President Nixon's friend Bebe Rebozo. (They came in handy:
Critchfield kept him apprised of CIA attitudes, Roosevelt organized for
Northrop Corporation to pay a small bribe through Khashoggi to Saudi Air
Force chief Hashem Hashem and Bebe Rebozo carried messages back and forth
to Nixon.)
This was the beginning of Khashoggi the big-time arms dealer. He
achieved that status in a very short time and his quick attain-ment of
this unique position showed he was a man who totally understood the
circles of power within which he operated. It was the same sensitivity to
surroundings which prompted Khashoggi to focus on the Sudeiri clan within
the House of Saud: the present King Fahd and his six full brothers.
Khashoggi sensed their growing importance and their coming hold on power
before others did and banked on them as the key to his future. There is no
record of his Cultivating the friendship of Princes Muhammad, Bandar and
Nasir, who, according to the seniority system, should each have become
king before Fahd.
Everything was going the Sudeiris' way. During the 1960s King
Fahd was Minister of the Interior and Minister of Education; Prince Sultan
was Minister of Defence; and their full brothers held equally important
portfolios. Khashoggi dealt with each on his own terms, but he dealt with
all of them. To Fahd he was the entertaining companion who introduced him
to Regine's discotheque and the South of France and all that went with
them, but he protected Fahd's movements and stayed out of the way. Sultan
described him as a man 'who does research for the Defence Ministry',
meaning someone who told them what to buy and how. He accommodated
Minister of the Interior Prince Nayef's need for French electronic
equipment for his ministry. He was quiet and unassuming in the presence of
Prince Salman because that was what Salman liked, and stayed on good terms
with Deputy Minister of Defence Prince Turki without offending his elder
brother and boss Prince Sultan. In personal and business terms, Khashoggi
was a window on the world to the Sudeiris.
As they moved towards total control of the country, the Sudeiri
princes' dependence on him grew in proportion to their growing importance
and needs, and he never let them down. Khashoggi was so busy that he would
keep others waiting days to see him, but he was always on time to see a
prince and he was always prepared. He whispered, nodded agreement and
withdrew to carry out their commands. He spoke about everything under the
sun except his royal friends and the nature of their relationship and to
this day the record of any payments to them has never gone beyond hearsay
and circumstantial evidence. It is true that Khashoggi became a very
public person and a jet-setter, but, unlike Yamani, his love of the
limelight has never appropriated the royal image and, by contrast with
Pharoan, he never dealt behind their backs. There was never the slightest
suggestion that his personal power and influence was anything but an
extension of theirs.
It was in the mid-1970s when the Khashoggi the world knows, or
thinks it knows, emerged on the business and social scenes and became
recognized as one of the world's greatest wheeler-dealers and party
givers. The origins of his reputation lie in the incredible amounts of
money he made - and all in less than ten years. His $100-million
commissions from Northrop Corporation were topped by $106 million from
Lockheed, and there were many others, and he accounted for 80 per cent of
the country's foreign procurement business. It was largesse on a scale the
world had never known and is unlikely to know again and this pudgy man,
five feet four inches tall and with a double chin, a receding hairline and
a shy smile became the symbol of oil wealth as much as Yamani did.
People who knew Khashoggi during this period insist that he had
visions of transforming Triad Holdings into one of the world's largest
corporations. He created companies for construction, lei-sure, design,
development and other subsidiaries, and staffed them with Nordic-looking
graduates from America's leading univer-sities, Harvard lawyers, Princeton
architects, Stanford MBAs and Yale troubleshooters. He hired people like
David Searby, a former Assistant Secretary of State for Commercial
Affairs; retained the consultants McKinsey to organize his business
activities and used Price Waterhouse to audit his books.
However, none of this worked because in reality Triad was a
one-man show and the turnover in personnel was staggering and crippling.
Organizing a company and turning it into a global enterprise - and he did
open offices in 35 countries - may have been on Khashoggi's mind but it
was not what he was good at. His strength lay in handling people, from
asking about the family of the doorman of the building where he lived to
meeting the demands of a future king. His successes in this area were an
extension of his personal charm but at the same time he was failing to
make sense of his by now far-flung business empire.
After the 1960s Khashoggi's fortunes ran parallel to the rising
star of the Sudeiri seven and in order to maintain his position he needed
to broaden his approach in line with their increasing demands on him. He
fronted for them in obvious ways and some unattractive ones. He met
President-to-be Richard Nixon at Paris's Rasputin nightclub and befriended
him. His friendship with Prince Rainier of Monaco flourished and he got to
know Prince Bernhard of the Netherlands just in case he needed something
from his coun-try. He endeared himself to King Juan Carlos of Spain and
acted as a conduit for Saudi royals who built palaces in that country. He
insisted on dealing directly with leaders of Third World countries which
represented potential areas for investment, among others President Ja'afar
Numeiri of the Sudan, Sir James Mancham of the Seychelles and Jomo
Kenyatta of Kenya. But Khashoggi also exemplified the glamorous and ugly
sides of fame and fortune with his dependence on Bertram Meadows of
London's 21 Club, the appearances in public with Joan Collins, Sean
Connery, George Hamilton IV and Elizabeth Taylor and the use of Mireille
Griffon, the famous madam from the South of France, to provide girls for
Arab and other visitors.
Huge wealth affected Khashoggi and the fun-loving,
publicity-seeking public side of his personality began to overwhelm the
discreet businessman in him. For example, his purchase of the Japanese
fashion designer Kenzo Takade subordinated business to publicity. His
private DC8 jet and ocean-going yacht Nabilla became the most talked-about
toys in the world and both had Arab and Western wardrobes in them.
Decorating them cost over $20 million, and gold fittings and 10-foot-wide
beds seemed as important as their role as mobile business headquarters
equipped with state-of-the-art electronics. Even his public quarrels with
his attractive first wife, Soraya, appear to have satisfied a craving for
the limelight.
Meanwhile Khashoggi's attempts at expanding his business base
made a lot of headlines but did not succeed. A Saudi Government-sponsored
scheme which cost hundreds of millions of dollars to turn the Sudan into
the bread basket of the Middle East foundered because Triad was not
organized enough to carry it out. Barrick Investment in Hong Kong was
trumpeted as a major entry into the Far Eastern market but it never
amounted to very much. OY Finline, a Finnish shipping company, was bought
and turned into the Saudi Shipping Company, but in time the lack of depth
in its management began to show and it got nowhere. One of Khashoggi's
companies imported food from Brazil, but it never got the attention it
deserved and success eluded it. Khashoggi's banks, travel agencies and
furniture operations suffered from neglect because only one man could make
decisions and Khashoggi had little time to devote to them and concentrated
on the business he knew best, arms. Khashoggi's vision far outstripped his
ability to give his schemes organizational content and his 'legitimate'
businesses began losing a great deal of money. Two major examples of this
were the 1970s investments in 21.8 acres in downtown Houston and a
740-acre industrial park in Salt Lake City. Both were massive projects
with huge potential which required considerable amounts of development
money, much more even than the huge sums Khashoggi was still making out of
over 20 defence contractors he was representing. In Houston, although he
managed to interest many wealthy investors in joining him, Khashoggi still
could not push the deal forward in the organized business fashion it
deserved and he eventually gave it up. The Salt Lake City project called
for an investment of $600 million. Khashoggi failed in two important
respects: the development was too elaborate and expensive for Salt Lake
City and he lacked the money to complete it. When he could not keep up the
payments, Triad America was forced to file for bankruptcy under the USA's
Chapter 11. Khashoggi's lack of organization was so widespread it covered
his personal affairs: he defaulted on paying his $500,000 American Express
bill and his card was temporarily withdrawn.
By the early 1980s stories about Khashoggi going bankrupt were
common, and many of them originated with former employees who were
promised the moon and left empty-handed. Some of his businesses had to
close down, but Khashoggi still told the world that his personal expenses
amounted to over $100 million a year. Funnily, both of these contradictory
statements were true, for Khashoggi was having serious financial problems
yet his intangible assets - his relationship with the House of Saud and
several heads of state and his knowledge of the arms business - were
intact, and this translated into an ability to borrow on a huge scale.
Irangate was not a Godsend or a stroke of luck; it was a case of
a complex international deal finding expression in the one person who knew
how to wheel and deal across international boundaries, hob-nob with heads
of governments, indulge in quasi-legal deals and keep secrets. Irangate
was the supersecret operation which involved the United States supplying
Iran with arms secretly through Israel. It called for this transaction to
be funded by Saudi Arabia in a way which would produce profits which the
executive branch of the United States used in illegally funding the Contra
rebels in Nicaragua. The arms in question were Tow anti-tank missiles and
Hawk anti-aircraft missiles. Supplying them to Iran was contrary to avowed
US policy calling for neutrality during the Iran-Iraq War and it was an
insult to the American people, who were smarting from Iran's
hostage-taking activities. On the other side, cooperation between Saudi
Arabia and Israel amounted to an act of treason by Saudi Arabia.
Khashoggi was the father of this elaborate scheme. It began in
1983 when an Iranian arms dealer, Manachur Ghorbinfar, asked him to get
him the missiles in return for the release by Iran of some of the American
hostages. It was a Khashoggi-type idea and he set to work on it. In the
process of organizing the deal, Khashoggi met White House aides, the
present Israeli Prime Minister Yitzhak Rabin, King Fahd and everybody in
between. Over 2000 Tow missiles and an unknown number of Hawks found their
way to Iran. Four countries were beholden to Khashoggi and he made
millions of dollars out of the deal.
The operation was exposed by a pro-Syrian Lebanese magazine, Al
Sb ira, because Syria disapproved of the secret amity developing between
Iran and America. The world held its breath as the details were disclosed.
White House Chief of Staff Robert McFarland, one of the architects of the
American part of the deal, attempted suicide. Colonel Oliver North, a
member of the National Security Council and another conspirator, appeared
in front of a congressional committee and defended the right of the
executive branch to conduct illegal secret operations. Discussions about
impeaching President Ronald Reagan for violating the law became an
everyday topic of conversation. Finally Khashoggi spoke.
To Khashoggi, all the people involved in this affair were
'friends'. His American friends wanted their hostages released; his
Iranian friends were in desperate need of arms; his Saudi friends were
helping their American friends and Rabin was a new friend who facilitated
the whole thing. He loved every minute of it. The whole affair gave
Khashoggi a chance to confirm his three major characteristics: his ability
to make money, his loyalty to his friends and his love of the limelight.
This time the publicity was greater than usual and there were lengthy
television interviews which revealed the showman in him. Once again the
emphasis was on the limelight, rather than discreet business practices.
Despite Irangate, Khashoggi is still in financial difficulties.
The lifestyle he has led since the mid-i 980s is a reduced one because he
no longer makes as much money as before. But it is a continuation, perhaps
an exaggeration, of his earlier years and it is still, for better or for
worse, dependent on the Sudeiri clan. Rather than go into details I will
settle for an example which demonstrates the perils of this dependence.
Irangate's circuitous sale of arms to Iran had Iraqi Presi-dent
Saddam Hussein hopping mad. To him, it was a betrayal by America and Saudi
Arabia, but he was still in the middle of the Iran-lraq War and could not
afford to offend either country. The Iraqis therefore began thinking of
punishing the chief culprit, Adnan Khashoggi. The Saudi royalty, aware of
the violent nature of the Iraqi regime, were confronted by two unpalatable
alternatives. Either they protected Khashoggi by say-ing that they
themselves were behind the deal and he was nothing but a messenger, or
they disowned him by claiming that he had conducted a personal deal which
had nothing to do with them. The moment their interests in maintaining a
friendly relationship with Iraq were threatened, Khashoggi became
dispensable.
King Fahd sent to Saddam Hussein a messenger who denied Saudi
official involvement in Irangate and blamed Khashoggi for everything. The
King went further and asserted that Saudi Arabia would never have anything
to do with Israel and that people who dealt with the Arabs' enemy should
be punished. Alas, continued the message, the Saudis are not good at
eliminating people, so Iraq might wish to deal with Khashoggi directly.
Fahd gave Saddam Hussein a green light to kill one of his most trusted
friends.
Weeks after this oral message reached Saddam Hussein, Jihad Al
Khazen, the editor of the Saudi-owned, London-based daily newspaper Al
Hayat, came to see me and told me that the Saudis had issued a warrant for
Khashoggi's arrest. I gave the story to the Mail on Sunday, which
published it. There is no way of knowing whether Al Khazen was aware that
he was being used and that the story was a piece of disinformation,
nothing but a Saudi attempt to clean up their image in the Arab world. But
the successful attempt to plant this disinformation, along with the
invitation to Iraq to eliminate Khashoggi, demonstrates yet again how the
House of Saud guards its own interests and how dispensable members of its
confederacy are.
Khashoggi survived Saddam's anger because it coincided with an
Iraqi attempt to present a new image to the world. In 1985 Adnan
Khashoggi, in all likelihood unaware of any threat to his life, gave
himself a 50th birthday party in Marbella. Four hundred guests were flown
to Spain at his expense from all over the world, and included Sean Connery,
Shirley Bassey, Brooke Shields, George Hamilton IV and the creme de la
creme of European society. It was a non-stop affair which lasted four days
and cost several million dollars. At the end of it Khashoggi was crowned
King Adnan I. His second wife, Lamia, wearing a $100,000 Chanel dress and
a 21-carat diamond ring was there, but she was not crowned. Nobody asked,
king of what? King of the party givers? Maybe of the wheeler-dealers? Or
of the survivors? It was one of the most unwholesome demonstrations of
vulgarity ever recorded.
But nothing in Khashoggi's publicity arsenal could restore his
pre-eminence. In October 1988 he was arrested in Switzerland and kept in
prison for 90 days. He was charged with concealing funds realized from the
sale of jewellery and paintings which belonged to ex-President Marcos of
the Philippines but which had a US federal claim against them. Later, he
was transferred to prison in the USA, released on bail, tried and
acquitted.
In 1992 fortune briefly smiled on Khashoggi. He played
middle-man in a deal which saw Libya acquire a share of the UK's Metropole
Hotels for £170 million. When nobody would front for Qaddafi, Khashoggi
jumped in and is reported to have realized £14 million from the deal.
This has provided him with a respite from hounding creditors, but the
prospects are not good.
What nobody has noticed about the decline in the fortunes of
Khashoggi is that it signalled an important change in how business is done
in Saudi Arabia. The House of Saud no longer needs intermediaries; its
members are their own middlemen. As was demonstrated by the disclosures of
the Yamama 2 programme, Princes Bandar and Khalid are involved in the
deal, and young Prince Abdel Aziz is implicated too. Without being able to
front for the House of Saud in this unwholesome area or to provide for its
personal needs, Khashoggi has no function. Once again, the corruption of
the Saudi court is claiming one of its infants.
There is nothing new in the way the House of Saud views Pharoan,
Yamani and Khashoggi except the temporary or permanent circumstances under
which each became dispensable. The House of Saud's ability to deal for
itself internationally is a new development, but the attitude behind it is
a traditional House of Saud one. Ministers, generals, ambassadors,
intermediaries and pimps are appointed, hired, used, abused and fired or
neglected depending on the House of Saud's need for their services. The
stories I have told speak for themselves; in working for the House of
Saud, Pharoan, Yamani and Khashoggi accepted the implicit conditions of
the royal family's supremacy and absolutism, and these show no signs of
changing. There is no dignity in working for the House of Saud - just
money and perhaps glamour; it comes down to empty, unwholesome men working
for stupid, unwholesome men. The way things in Saudi Arabia are going,
Pharoan, Yamani and Khashoggi will one day soon have to account for their
deeds to a people's court composed of justly angry men.