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Saudi Arabia: Royal Family Gets Quiet Help From U.S. Firm With Connections

by Charles J HanleyAssociated Press
March 22nd, 1997

KASHIM AL-AN, Saudi Arabia

BODY: In a low-profile operation, hundreds of former U.S. servicemen have been filling key roles at the Saudi Arabian National Guard, the loyalist force that defends the monarchy against internal unrest.

The enterprise, little known outside Saudi Arabia, has another quiet side to it: It is a multimillion-dollar business linked to major figures in Washington.

The ex-soldiers work for Vinnell Corp., a small Fairfax, Va., company that is controlled, through a web of interlocking ownership, by a partnership that includes James A. Baker III and Frank Carlucci, former U.S. secretaries of state and defense.

Vinnell first came to Saudi Arabia 22 years ago on a "one-time" training mission. Today, under a Pentagon-supervised contract, its military specialists are permanent on-scene consultants throughout the National Guard. Three hundred Vinnell experts, almost all U.S. military veterans, many recently discharged, instruct Saudi guardsmen in the latest weaponry, supervise supply operations, teach brigade-level tactics, help operate a hospital and are updating the Guard's data processing, among other functions.

"They are continuously advising, working side by side with the managers ... working on long-range planning and medium-range planning," said Col. Nasser al-Otaibi, a battalion commander at the sprawling National Guard base here on the outskirts of Riyadh, the Saudi capital.

The ex-soldiers' presence illustrates the critical - if often unpublicized - role Americans play in supporting and protecting the oil kingdom's ruling House of Saud.

Americans are even attached to the personal bodyguard unit for Crown Prince Abdullah bin Abdel Aziz, National Guard commander and heir apparent to the ailing King Fahd.

The Vinnell deal also illustrates the Saudi way of doing business. Under the latest contract with the Saudi government, for three years and $ 163 million, Vinnell for the first time must share the proceeds, taking on a brother-in-law of the crown prince as a joint-venture partner. Saudi Arabia's princes often make government contracts a family affair.

This arrangement was formalized about the time Carlucci, a Vinnell director, visited Riyadh in 1995 to discuss business opportunities with Saudi leaders.

Those opportunities reach far beyond Vinnell: The Carlyle Group, the holding company where Carlucci in chairman and Baker senior counselor, has a burgeoning business relationship with the Saudi royals, who worked closely with the two Americans when they were members of the Reagan and Bush cabinets, helping foster the U.S.-Saudi alliance.

The Baker-Carlucci partnership has been retained as the monarchy's official adviser in the Economic Offset Program, which pairs foreign companies with Saudi partners in joint ventures.

Carlyle also has acted as investment banker for House of Saud wealth. One prince, Alwaleed bin Talal, has invested hundreds of millions of dollars via the Washington-based firm.

Carlucci is also chairman of BDM International, a McLean, Va., defense contractor that bought Vinnell in 1992. Carlyle holds 28 percent of the stock of BDM International, which controls 100 percent of Vinnell.

Here in the desert hills overlooking Riyadh, Americans with yellow "Vinnell Arabia" patches on their khaki-and-olive-drab uniforms are training young Saudis in the operation of new General Motors light armored vehicles.

Vinnell specialists, under the oversight of U.S. Army advisers, are also based at four other National Guard sites. The Vinnell operation has 550 non-American employees as well, many of them Saudi interpreters.

"It's a big mission," Maj. Gen. Larry G. Smith, chief of the Army advisers, said in an interview. "We have responsibilities and tasks in every functional area there is to run an organization ... everything from management training to logistics to medical." But the Americans do not "run" the Guard, he said.

A former U.S. ambassador to Riyadh, discussing the operation on condition he not be further identified, described Vinnell's job as "reorganizing" the National Guard. "It has an important role," he said.

"Their attitude is, 'Tell me what to do and I'll do it'," an ex-U.S. Army major and Vinnell supervisor said of the Saudis. "They don't have that initiative that American soldiers have."

Saudi officers seem to accept the permanent presence. "They've become part of the National Guard," one lieutenant colonel said of the Americans.

The Saudi Arabian National Guard - full-time strength estimated at 75,000 - is descended from the Bedouin warriors who helped the Saud clan impose control on the peninsula early in this century.

It still largely recruits from the tribal desert heartland, the monarchy's bedrock of support, while the army recruits townsmen. The Guard's chain of command is independent of the Defense Ministry.

A mobile force, it can complement the tank-heavy army in wartime. But its peacetime job is more critical, as protector of the authoritarian government against political upheaval.

In 1994, for example, National Guard units sped to Buraida, 200 miles northwest of here, to put down anti-government demonstrations inspired by Islamic fundamentalist preachers.

Vinnell's profile has been lowered even further since a terrorist bomb rocked the Riyadh headquarters of Smith's advisory mission in November 1995, killing five Americans - one Army sergeant and four Army civilian employees.

A Vinnell spokesman in Virginia, Kevin O'Melia, cited security concerns in declining to discuss the company's Saudi activities. Vinnell wants to "minimize our visibility over there," he said. "Any press would be a detriment to our employees."

From its very beginnings, the Vinnell operation has had low visibility.

The classified first contract went unnoticed until details leaked into the U.S. press in 1975. A congressional investigation followed, focusing on the wisdom of a private company's doing work previously handled by the U.S. military; on a contract clause, quickly dropped, barring Jews from the operation, and on a suspicion that a $ 4.5 million "agent's fee" was a kickback to Saudis. No charges were filed and the contract went ahead.

Vinnell, which provided support services for the U.S. military in Vietnam, had been on the verge of bankruptcy when the U.S. government came up with the first Saudi deal.

Training was not a specialty, but Vinnell soon recruited ex-Green Berets and others for the assignment, described by an executive as "a one-time thing to do a specific job." It has since collected hundreds of millions of dollars under successive National Guard contracts.

For years, before Carlyle-BDM, the owners of the closely held company were not publicly identified. Vinnell also has contracts for facilities management and other work at U.S. military bases in Turkey and elsewhere, but the Saudi operation accounts for almost half its work force.




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