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Monday, Nov 9, 2009
As the Saudis became entrenched in Texas in the '70s, bin Mahfouz bought an enormous, rambling $3.5 million faux chateau, later known as Houston's Versailles, in the posh River Oaks section of Houston. He also purchased a 4,000-acre ranch in Liberty County on the Trinity River near James Bath's ranch. "They loved the ranch and they loved the country life," says Bath. "There was a real affinity between Texas and life in the kingdom. Khalid would come out to the ranch with the family and the kids, to ride horses, shoot guns, [watch] fireworks. They'd been going to England forever. But Texas -- there was the novelty."
In the '70s, wealthy Saudis courted Democrats through prominent figures such as former Secretary of Defense Clark Clifford, a Washington super-lawyer, and Bert Lance, head of the Office of Management and Budget under Jimmy Carter. On the GOP side, they went to James Bath. Bath did not have nearly the stature that Clifford had. Nevertheless, he counted among his friends and business associates no fewer than five Texans who at one time or another would be considered presidential candidates.
Bath was friendly with the family of Lloyd Bentsen, the Democratic senator who was the vice-presidential candidate in 1988 and became secretary of the Treasury. He was a partner of one of the senator's sons, Lan Bentsen, in a small real estate firm. While he served in the Texas Air National Guard, Bath also became friendly with George W. Bush, who had begun training in 1970 as a pilot of F-102 fighters at Ellington Air Force Base near Houston. They were members of the "Champagne Unit" of the National Guard, so called as the vehicle through which the sons of Houston society escaped serving in the Vietnam War.
In the mid-'70s, the young Bush introduced Bath to his father, George H.W. Bush, a former U.S. ambassador to the United Nations, chairman of the Republican National Committee and, under President Ford, chief plenipotentiary of the U.S. mission to China. There was also Bath's duck-hunting buddy, James A. Baker III, then in his mid-40s, one of Houston's most powerful corporate attorneys and a true Texas patrician as a member of one of the oldest and wealthiest families in the city. Finally, there was John Connally, the former Democratic Texas governor who became secretary of the Treasury under Nixon in 1971 and had switched to the Republican Party.
By 1976, bin Laden had appointed Bath to be his American business representative. Bin Mahfouz drew up a similar arrangement with him. Bath was more than simply someone who could provide the Saudis with an entree to political power brokers. But exactly what he did beyond that, in the intelligence world and elsewhere, is shrouded in mystery. When asked about his career, Bath downplays his importance. By his account, he is merely "a small, obscure businessman." It has often been said that he was in the CIA, but Bath denied that to Time magazine. Later, he equivocated. "There's all sorts of degrees of civilian participation [in the CIA]," he told me. "It runs the whole spectrum, [from] maybe passing on relevant data to more substantive things. The people who are called on by their government and serve -- I don't think you're going to find them talking about it. Were that the case with me, I'm almost certain you wouldn't find me talking about it."
Bath's role in investing for the Saudis took various forms. "The investments were sometimes in my name as trustee, sometimes offshore corporations and sometimes in the name of a law firm," he says. "It would vary."
Bath generally received a 5 percent interest as his fee and was sometimes listed as a trustee in related corporate documents.
On behalf of Salem bin Laden, Bath purchased the Houston Gulf Airport, a small, private facility in League City, Texas, 25 miles east of Houston. He also became the sole director of Skyway Aircraft Leasing in the Cayman Islands, which was owned by bin Mahfouz.
Through Skyway, Bath brokered about $150 million worth of private aircraft deals to major stockholders in the Middle Eastern Bank of Credit and Commerce International, such as Ghaith Pharaon, a Saudi billionaire, and Sheik Zayed bin Sultan an-Nahayan, president of the United Arab Emirates. To incorporate his companies in the Cayman Islands, Bath used the same firm that set up a money-collecting front for Oliver North in the Iran-Contra affair. He also served as an intermediary between the Saudis and Connally, who, having served as Nixon's Treasury secretary, began to position himself for a shot at the White House in 1980.
In August 1977, Connally and Bath teamed up with bin Mahfouz and his friend Pharaon to buy the Main Bank of Houston, a small community bank with about $70 million in assets.
