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Neil bush savings and loan syrian baath party { December 12 2003 }

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US: Neil Bush's Business Dealings

By Thomas Catan and Stephen Fidler
Financial Times
December 12, 2003

In the summer of 1992, while his father was still president of the US, Neil Bush took his family on a trip to Disneyland in France. The flap over his role in the collapse of the Silverado Savings and Loan bank, which had cost the taxpayer Dollars 1bn, had died down. According to a person who recalls seeing photographs showing the president's second-youngest son and his family surrounded by various Disney characters, the Bushes seem to have enjoyed themselves.

The trip had been arranged and paid for by the Paris office of Jamal Daniel, a Syrian-American businessman who keeps a low profile but who boasts important connections with leaders and their families throughout the Middle East. Mr Daniel's name surfaced this month when court papers from Neil Bush's acrimonious divorce proceedings found their way into the press.

While many newspapers focused on the lurid revelations of "sex romps" on his trips in Asia, Mr Bush's deposition also gave important insights into his business dealings. Among other things, Mr Bush said he was co-chairman of the Houston-based Crest Investment Corporation and was paid Dollars 15,000 every three months for providing "miscellaneous consulting services . . . such as answering phone calls when Jamal (sic) Daniel, the other co-chairman, called and asked for advice".

Mr Daniel started cultivating his relationship with the Bush family at about the time that Neil was caught up in the Silverado scandal and facing a lawsuit, according to a US businessman who knows him. Mr Bush denied any wrongdoing but was reprimanded by federal regulators and paid Dollars 50,000 in a court settlement.

"Jamal likes to ingratiate himself with family members of whoever's in power," the US businessman says. "He squired Neil Bush around . . . Then he also got close to Pappa Bush, George H., when he came back to Houston . . . Socially there were pictures together and he was very supportive of George W's campaign when he ran for governor."

Another person, a Jordanian lawyer who works on international business transactions in the Middle East, describes Mr Daniel as "a wheeler-dealer, somebody who uses the name of the Bush family to get business and to encourage people to do business with him".

Working closely with Mr Bush and Mr Daniel has been a third man: John Howland, a Houston businessman whose companies have suffered bankruptcy and who, on one occasion, was alleged by the owner of a company he ran of self-dealing and of misusing company funds - an allegation he denies. The three have worked together at Crest, where Mr Howland acted as executive vice-president.

Mr Bush, Mr Howland and Mr Daniel have also been directors of a Swiss company called Silvermat, a financially troubled subsidiary of Crest that was set up in 2000 to supply the hospitality industry. Mr Howland is listed as the chairman of Silvermat and Mr Bush and Mr Daniel as having retired from the board.

There is evidence that Mr Bush has received financing and contacts for his personal business ventures from Mr Daniel. Crest's company secretary, Joseph Peacock - a man involved in many of Mr Daniel's other companies - was listed as one of the original investors in Ignite!, Mr Bush's educational software company.

According to a businessman in the Middle East, Mr Daniel sometimes introduces himself as one of the founding members of Ignite! and has lobbied potential investors on Neil Bush's behalf. Mr Bush went on a Middle East trip in early 2002 to seek contributions for his company. He has successfully secured funds from people connected to at least three ruling families in the Middle East.

Other Middle Eastern businessmen said Mr Daniel or others in his family had used Mr Bush's name to secure investors in projects. Some of these have ended in disputes among the investors. Mr Bush had written letters, including to Ali Abdullah Saleh, president of Yemen, recommending investments.

The businessman said Mr Bush opened doors with prominent figures in the Middle East, but they did not see him getting involved in details of the projects he was promoting. "They fly around in private planes and get big meetings. When they hire Neil Bush, I don't know if he knows what's going on," said one.

Today, Neil Bush's business partners have a new venture, in keeping with the times. New Bridge Strategies was set up this year to help companies secure contracts in Iraq following the war. Mr Howland is chairman and chief executive of the company, while Mr Daniel is a member of the advisory board.

The company briefly hit the headlines this autumn because of the impressive roster of Republican heavyweights on its board, most of whom are linked to one or other of the Bush administrations or to the family itself. The company's website has not been shy about advertising its contacts in both the Middle East and Washington.

"The opportunities evolving in Iraq today are of such an unprecedented nature and scope that no other existing firm has the necessary skills and experience to be effective both in Washington DC., and on the ground in Iraq," it said. That phrasing has since been changed.

The list of directors and advisory board members is indeed impressive. Joe Allbaugh, the chairman of the company, was head of the Federal Emergency Management Agency (FEMA) until March 2003 and before that, chief of staff for George W. Bush while he was Texas governor. As national manager for the Bush-Cheney election campaign in 2000, he was one side of the "Iron Triangle" of aides credited with propelling him into the presidency.

Ed Rogers, the company's vice-chairman and director, was a top aide to George H. W. Bush while he was in the White House. Lanny Griffith, another director, also worked in Mr Bush senior's government and on his election campaigns. Haley Barbour, a former chairman of the Republican National Committee who was elected last month as governor of Mississippi, was on the board of Milestone Merchant Partners, a Washington-based private equity fund affiliated with New Bridge, according to the New Bridge website.

A spokesman for Mr Barbour, who is also close to the Bush family, said he resigned from that position in February.

All three are partners at Barbour, Griffith & Rogers, a Republican lobbying firm in Washington, DC. The firm shares an office with New Bridge at 1275 Pennsylvannia Avenue, on the 10th floor.

Milestone, meanwhile, is hardly bereft of political contacts itself. Richard Breeden, former chairman of the US Securities and Exchange Commission and the man appointed to sort out the mess at WorldCom, is on the company's advisory board. So is Ed Mathias, co-founder of The Carlyle Group, the world's best connected private equity firm, which some people have seen as a forerunner of New Bridge. ext to those names, John Howland and Jamal Daniel are relatively unknown. Together in many business transactions connecting Texas with the Middle East, they have been linked to contentious deals, some of which have ended up in court.

Mr Howland is a former US air force officer. He failed to become a pilot because of a slight eyesight problem and ended his military career as a launch control officer in nuclear missile bunkers.

He said he had met Mr Daniel in about 1989. Mr Daniel's family, Christians originating from northern Syria, is said to have been involved in the founding of the Ba'ath Party and sustained links with it in both Syria and Iraq even after being expelled from Syria in about 1966 after Hafez al-Assad came to power. Mr Daniel has told friends that when he was young Tariq Aziz, later foreign minister of Iraq, was a visitor to the family home.

Mr Daniel attended Pepperdine University in the US and then was awarded an MBA from the University of Texas at Arlington, before settling down in Houston. With much of his family still in Geneva, where they settled after leaving Syria, he leads the family's US-based wing and represents its businesses there. The family holds a sizeable US property portfolio via a range of interlinked companies - Uniteg, Finial, Carnavon and Grailwood - as well as some energy businesses.

According to businessmen who know him, Mr Daniel boasts connections with the families of the rulers of at least five Middle East countries: Saudi Arabia, Qatar, Syria, Yemen and Lebanon. At a conference in Washington in April 2000, Mr Daniel was introduced as a person "proud to call (Yemeni) President Saleh a friend."

Before he became president and chief executive officer of New Bridge this year, Mr Howland's business career had met controversy.

In 1997, he was embroiled in a bitter dispute with his then employer, Mohammed Bin Issa Al-Jaber, a Saudi businessman, over allegations that more than Dollars 12m went missing from his company while Mr Howland was in charge. In a lawsuit filed in Houston, Mr Jaber said he had originally been approached with a business proposal by Mr Howland while the latter was president of the Texas-based company, American Rice Inc.

The idea had been to set up a company in Saudi Arabia that would import rice from American Rice and then package it at a plant to be built in Jeddah, enabling the owners to sell it more cheaply than rival companies. In 1992, Mr Jaber set up Rice Milling Trading Investments (RMTI) and hired Mr Howland and another Houston associate, George Prchal, giving them full authority to run it.

"I placed full trust in John Howland to the extent that he was the sole signatory on RMTI's bank account and expenditure made through him on RMTIs projects was in excess of Dollars 50m," Mr Jaber said in a 1997 statement, according to court documents.

Mr Howland drew up a contract with American Rice to be the company's exclusive supplier. What Mr Jaber did not know was that his top two executives were still working for American Rice, meaning that they were on both sides of the negotiating table. Mr Jaber stated that Mr Howland was receiving Dollars 250,000 a year for running RMTI and a further Dollars 100,000 from its supplier, American Rice. The result, industry experts told the court, was a highly unusual 50-year contract heavily biased in American Rice's favour.

At the same time, Mr Howland had a third role working for another company that RMTI saw as a potential competitor and which Mr Daniel represented in the US. RMTI's investigators found business cards showing Mr Howland and Mr Prchal as representing this company, Levant Grain, which was constructing a rice mill in a free zone at the Syrian port of Tartous.

Mr Howland said yesterday he had been an officer of Levant, and that Levant was wholly owned by Crest, Mr Daniel's company. But he said there had been no conflict of interest. However, Mr Daniel told the court he was an unpaid adviser to Levant, which was owned by a company linked to relatives of his.

When the Jeddah plant was nearing completion, Mr Howland set up a Dollars 12m credit facility, on behalf of RMTI, with the National Commercial Bank of Saudi Arabia, to finance American Rice's sales. In 1996 a banker working for NCB informed Mr Jaber, to his surprise, that the Dollars 12m letter of credit had been exhausted.

In 1997, according to court documents, Mr Howland told NCB that Mr Jaber had financial problems but that he and Mr Prchal would be willing to take over RMTI once it had gone bankrupt. He had found, he said, interested financial backers.

"Howland indicated that he would do so only after the equity interests of Mohamed bin Issa al-Jaber had been wiped out," Donald Prescott, the banker he approached, said. "This concerned me since I knew Howland was still the senior officer of RMTI, whose major shareholder was Mohamed bin Issa al-Jaber."

Through Mr Howland and Mr Prchal, RMTI also invested in two projects in the Caribbean of which Mr Jaber said he was unaware. In one, it took a minority stake in the Antillean Rice Mills, which operated a rice mill in Bonaire in the Netherlands Antilles, at a price other company officials later judged to be far too high. It also financed construction of a butter plant in nearby Curacao that was built but stood idle because it was never allowed to export to the European Union.

RMTI subsequently found more than a dozen offshore bank accounts linked to these companies, in the Queensgate Bank in the Cayman Islands, in Panama and elsewhere. Mr Jaber estimated his losses in these ventures had run into a further several million dollars.

The case was settled after negotiations - with payments to Mr Jaber totalling more than Dollars 3.5m - and the judge ordered many of the documents sealed. Parties to the case say they are still constrained from talking about it because of a gag order. American Rice went bankrupt soon after.

American Rice, together with Mr Howland and Mr Prchal, countersued RMTI. Kerry Blair, a lawyer for John Howland, described the allegations in the suit as "totally frivolous". Mr Howland said yesterday he did not know what happened to the Dollars 12m letter of credit. He said RMTI alleged that American Rice took some of the money - which to his knowledge was not true - "but they never made (the allegation) against me".

American Rice is now under new management following its emergence from bankruptcy. o how did some of the best-connected Republican figures in Washington end up in business with this controversial pair of Texas businessmen? The answer seems to be: Haley Barbour.

Like many agricultural firms, rice companies benefit from political connections. Mr Howland met Mr Barbour while the latter was at the Reagan White House. When Mr Barbour left the administration, one of his first jobs as a consultant was for American Rice. He was hired by Mr Howland. It was through him that Mr Barbour got to know Mr Daniel. Through a spokesperson, Mr Barbour declined requests for an interview.

What is clear is that he helped make the connection between Mr Howland and Mr Daniel and the Washington heavyweights that give New Bridge its political heft. His firm was also instrumental in bringing other companies into New Bridge's fold, including Diligence, a security firm set up by former US and British intelligence officers that is affiliated to the company.

Barbour, Griffith & Rogers provided initial funding for Diligence, said Nick Day, a former UK intelligence officer and co-founder of the company. Like New Bridge, Diligence was given also space at BGR's office in Washington DC. BGR also provided the company with its well-connected chairman, Richard Burt, former US ambassador to Berlin, as well as its impressive advisory board. Many of the names on that advisory board - including Carlyle's Ed Mathias - overlap with those of New Bridge and Milestone.

The relationship between the companies became even closer after New Bridge found the investor for Diligence's new business in Iraq. In return for finding the investor - the Kuwaiti businessman and member of parliament, Mohammed Al-Saqer - New Bridge got a minority shareholding in the new Iraqi security firm. Diligence Iraq had already escorted some of New Bridge's clients into Iraq, he said.

The idea behind the founding of New Bridge shows an odd symmetry between Washington and the Middle East: that in both places what matters is the ability to exploit connections to well-placed individuals.

According to Middle East specialists, the disclosures about New Bridge will not help US efforts in the region. "In the Middle East, it will be received as confirming the weary cynicism prevailing in the area about US intentions in launching the attack on Iraq in the first place," said Richard Murphy, senior fellow on the Middle East at the Council of Foreign Relations in New York.

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