Family firms are vulnerable to
the behaviour of wayward members. The fate of the Saudi Bin Ladin Group
provides a particularly dramatic example. Jane Lewis reports
Until recently,
few would have believed in the power of one family member to derail a
multi-billion pound international business, but that is the effect that the
actions of Osama bin Laden have had on his family company the Saudi Binladin
Group (SBG).
Founded in the
1930s by Osama’s father, Mohammed, the group began as a construction company
whose close links with the Saudi royal family led to a spate of lucrative
contracts renovating mosques in Mecca and Medina. By the 1970s, however, the
group had metamorphosed into a global powerhouse on the back of the Saudi oil
boom.
As well as
construction, its interests encompassed telecoms, chemicals, consumer product
distribution and finance. With a total worth conservatively estimated at around
$40bn, SBG employed 35,000 people in offices around the world and had emerged
as one of the few companies capable of existing equally comfortably in both
Eastern and Western business cultures. Osama’s oldest half-brother, Salim, even
became a partner in the oil firm of the young George W Bush.
Graduate
scholarships
Many members of the sprawling
Bin Laden (or Binladin as it is sometimes spelt) clan achieved notable success
in other fields. One brother, based in Switzerland, became an expert in
banking, others established strong business and social ties in the US and the
UK. Cultured, educated and philanthropic, the family funded at least two
multi-million dollar graduate scholarships at Harvard Business School.
Nonetheless, a
pattern of family division was established long before the events of 11
September. In 1979, when fanatics seized control of Mecca’s grand mosque, SBG’s
construction arm was instrumental in ending the siege by providing security
forces with detailed plans of the mosque which it had previously renovated. It
later emerged that the group’s construction trucks, supervised by another
renegade brother, Mahrouz, had played a pivotal role in the mosque’s initial
seizure.
Nearly 20 years
later the pattern repeated itself when the Binladin Group picked up a meaty
$150m contract to rebuild the US military residence in Dharan after it was
bombed. It was widely believed, even then, that Osama bin Laden had been behind
the atrocity, but the Pentagon went ahead and hired the group on the grounds
that SBG held a ‘monopoly’ on Saudi construction. As one official pointed out:
“Did people stop buying Hearst newspapers when Patty Hearst became a terrorist?”
Expulsion
In 1993, the mainstream
Binladin family, which still retained close links with the Saudi ruling
dynasty, disowned their brother Osama following his expulsion from Saudi Arabia
for terrorist activity. They considered him “a stain on the family honour”. But
even an estrangement lasting nearly a decade could not protect the family firm
from the repercussions of 11 September,
despite frequent and vociferous condemnations of the act and its perpetrators.
The Binladin
Group, now headed by Osama’s half-brother Bakr, made desperate attempts to
firefight the damage – but to no avail. The UK press reported that attempts to
find a City PR firm willing to take the group on had amounted to nothing. In
New York, meanwhile, Abdullah Binladin – hitherto an eminently respectable
Boston-based businessman – contacted some of Wall Street’s most powerful
lawyers and spin doctors in an effort to save the empire: they turned him down.
Most Americans continued to regard any relationship with the family as a PR
disaster waiting to happen.
Meanwhile, SBG’s
established links with a string of well-known partner companies across the
world, including Unilever, Cadbury Schweppes, Motorola, Quaker and Nortel were
increasingly cast into doubt. It was a similar story with the group’s main
financial backers, Citigroup and the Dutch bank ABN Amro, whose association
with the bin Laden family dates back 70 years.
By October,
Unilever – whose brands were distributed by the Binladin Group throughout
Lebanon and Syria – said it intended to sever the relationship as “part of a
wider review”. Further distribution agreements with Cadbury Schweppes were
terminated, so the company said, “coincidentally”.
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Family directors
In recent months very little
has been heard in the West about either the Saudi Binladin Group, or its
previously prominent family directors. No doubt, given time, SBG will re-emerge
in its prime markets, perhaps under a different name. The conglomerate is
simply too huge and too diverse to be fatally wounded even by such an
extraordinary blow. But, like so many other families, the Binladins will always
bear the scars of that fateful September day and their business will never be
the same again. If nothing else, the story provides a powerful illustration of
the inherent precariousness of family firms.
