The biggest problem, Hunnewell discovered, was getting paid. “We were doing compounds in princes’ palaces and friends of Salem’s,” he recalled, and this drew them into the web of informal debts and credits that bound the Bin Ladens to other merchant families and the royal family. They would install an expensive 250-line exchange in a particular palace, only to be told by its owner, “I’m a friend of Salem’s, and Salem owes me money over here for this, and so he and I will work that out.” Hunnewell would then have to petition through Rupert Armitage to explain, “We’re owed 2.5 million by these people, who all say that you owe them money, and who aren’t gonna pay us” until Salem reconciled his debts.7
The company books were a continuous mess; there were so many claims of credit, debt, and barter exchange between Salem and his customers that it often seemed hopeless to sort out an accurate picture. “There must have been some cash flow problems” among the interlocking Bin Laden companies, and between Salem and his bankers, Rupert Armitage recalled. Salem “was always saying, ‘Rupert! Where can I find one hundred million dollars? I need it by tomorrow!’”8
Armitage dealt with much smaller amounts but in an atmosphere of disarray. He would make his way down to the National Commercial Bank “to pick up six hundred thousand riyals in order to pay off some official—and by the way, six hundred thousand riyals is really quite heavy, I can tell you.” In the hallways leading to the bank’s vaults, he would find “a few Yemenis shoveling out one hundred thousand riyals at a time…something huge. Anyhow, that’s a lot of money, and there were just blocks of it going off into the distance.”9
Hunnewell and Baily thought they should try to build a sustainable, organized business as they had tried to do in their previous merchant banking ventures. Hunnewell had contacts at General Electric and tried to deepen GE’s steadily expanding partnership with the Bin Ladens. They also tried to find a new source of profit in the Bin Ladens’ role as a customer of Caterpillar, the American manufacturer of construction machinery. Hunnewell noticed that there were all sorts of Caterpillar equipment—graders, earthmovers, bulldozers, and so on—just lying abandoned at former Bin Laden job sites. Salem explained that it had been his father’s practice to build the price of a new fleet of Caterpillar equipment into the bid of each road or other major project he took on. He would import the tractors, haul them to his job site, use them until the work was complete, and then just leave them. Caterpillar sent out a team to inventory all the equipment scattered around the kingdom. “They found stuff that was buried in the sands in crates that had never been opened,” Hunnewell recalled. They counted it up and told the Bin Ladens that they were the largest owners of Caterpillar equipment in the world. They discussed making the Bin Ladens their agents in Saudi Arabia, but Salem wasn’t interested. He wanted to build things, not sell somebody else’s products, he said.10
Salem had his eye on a big prize, a plan announced by the royal family to install about 450,000 new telephone lines in the kingdom, to bring Saudi Arabia into the modern communications age in a single leap. The contract—always on the verge of being finalized but never quite tangible—was the pot of gold at the end of the Saudi rainbow for many foreign businessmen who had flocked to the kingdom during the mid-1970s. Every Saudi merchant family, courtier, and arms broker in Jeddah and Riyadh, including Adnan Khashoggi, seemed to be angling for a piece of the contract as an agent or partner. With his new telecommunications company up and running, Salem decided to join the game. The American bankers were excited about the potential payoff, but Pochna, in particular, who increasingly found Salem arrogant and frustrating, became skeptical that the Bin Ladens would treat them fairly as partners. Salem, he felt, saw his merchant banking partners as “one of the many Westerners” who provided him with the services he required, “and we were no different than one of his pilots.” Pochna particularly resented the long waits he endured in Salem’s smoky reception rooms; he got so fed up that he began to bring a deck of cards to pass the time. This was not the way Harvard-educated investment bankers did business.11
They all recognized that the monster telephone contract would be won or lost on the basis of private accommodations within and around the royal family that the Americans and Europeans involved in the deal could never fully understand. Salem compounded the mystery of these informal negotiations by speaking about the deal to his partners through “delphic, inaccurate, odd comments,” which he then expected the Lansdowne partners to interpret accurately and act upon to strengthen their bid, in Pochna’s view.12
Saudi Arabia’s government-controlled telephone company had announced an exclusive deal with Phillips of the Netherlands, whose agent in the kingdom happened to be Mohammed bin Fahd, a son of the crown prince. The price of this tentative contract was estimated at $6.7 billion, an amount so much larger than the true cost of the system, as calculated by European consultants, that it appeared to involve several billion dollars of very mysterious payments. In 1976 and early 1977, Salem and others in Fahd’s circle managed to reopen the negotiations. Logs from Salem’s private jets show that he gave several rides to the minister and deputy minister of communications, and their families, during this period; presumably, he was impressing upon them, among other things, the perks of his friendship.13
Salem never explained to his American partners how he had worked his way into the contract’s new round of talks, or how the deal would finally be decided, but he made clear at a certain point that “this was one of the contracts he would get,” Pochna remembered. To succeed, however, Bin Laden Telecommunications needed a capable foreign telephone company as a partner—a company that could actually do the work. Lansdowne had negotiated relationships at Northern Telecom, an affiliate of Bell Canada. Northern’s president, Walter Light, flew into Jeddah. Salem threw a party at his house, invited the Canadian ambassador, pulled out his guitar, and sang “She’ll Be Coming ’Round the Mountain.” He then divided the audience into women and men for a rousing version of “Frère Jacques.”14
Salem’s methods paid off: Despite twists and complications, Bin Laden Telecommunications ended up as Bell Canada’s agent for a large portion of the contract, earning a straight cash commission of 1.5 percent of the company’s five-year, approximately $1.5 billion deal to operate and maintain the new Saudi phone system. The Bin Ladens also earned a similar percentage of a subsequent five-year Bell Canada contract with the kingdom, plus a large share of $400 million worth of ministry and housing construction contracts that Bell Canada was required to undertake as part of the deal. Almost everyone ended up happy—Phillips and Ericsson won a part of the contract involving equipment sales, and Prince Mohammed bin Fahd reportedly received a commission of about $500 million. Two exceptions were Francis Hunnewell and Michael Pochna. They accused Salem of cutting them out of some of the Bell Canada money and of improperly diverting construction contracts from the deal to other Bin Laden firms. They sued and ended up tied down in Canadian courts for many years.15