Sleeping With The Devil by Robert Baer Page A

to a posh desert compound outside Riyadh to discuss Saudi-U.S. business relations
    with Crown Prince ‘Abdallah. Carlyle insists that Bush was not carrying the investment firm’s
    portfolio on the trip, but it could not have escaped the notice of his superwealthy hosts that
    G.H.W. Bush is a trusted and highly valued Carlyle senior adviser - with that son making a run
    at the White House.
        Like many advisers to high-powered equity firms, G.H.W. Bush is
    compensated for his time, reputation, and Rolodex with shares in the investments he helps to
    generate. Bush is also allowed to plow back into Carlyle investment funds money he earns by
    giving speeches on the firm’s behalf - generally in the $80,000-to-$100,000 range for each
    speech. Again, Carlyle is a private entity, and Bush I a private citizen. No reporting of total
    take is required or expected, but it would strain credulity to think that the former president
    has earned less than the mid-seven figures from his decade-old association with the investment
    firm, the bulk of that either directly or indirectly from Saudi Arabia. Anything less would be
    almost disrespectful.
        Because Carlyle is privately held, only its principals know how much of
    its money - $13.9 billion under management as of November 2002 - comes from Saudi investors.
    The Bakr bin Laden family had a piddling $2 million invested in the Carlyle Partners II fund, a
    portfolio that includes United Defense and other defense and aerospace companies. With
    embarrassment spreading on both sides, Carlyle and the bin Ladens parted company in October
    2001, some five weeks after the World Trade Center and Pentagon attacks. About a dozen other
    Saudis are thought to still be investors in the group.
        Carlyle is also not required to reveal annual compensation to its
    partners, or their net share in the firm. An article in the March 5, 2001, New York
    Times estimated that Jim Baker’s share might then have been worth in the vicinity of $180
    million, but that was arrived at simply by dividing the firm’s eighteen partners and one
    outside investor into the estimated total equity of $3.5 billion. (That was before Carlyle took
    half the stock in United Defense public, reaping what was said to be a nearly $700 million
    profit.) You can be certain the Carlyle Group is no penny-ante game. When Frank Carlucci
    resigned as chairman in November 2002, former IBM CEO Lou Gerstner stepped into his slot.
        It was a Carlyle partner who confirmed to me the detail work on
    Azouzi’s $4.6 billion palace. I was in southern France in August 2002, visiting a friend who
    keeps a small sailboat near Cannes. We had just moored when we spotted a man on a brand-new
    yacht next to ours that was flying an American flag. As it happened, my friend knew him. He
    said the man worked for the Carlyle Group. We struck up a conversation across the water and got
    to talking about Saudi Arabia. At the first opportunity, I asked about Azouzi’s palace. The man
    knew about it, adding that he’d recently been in it. As soon as he’d confirmed the price tag on
    the amusement park, he asked why my interest. When I told him I was writing a book on Saudi
    Arabia, he went below deck, suddenly seasick.

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