Family of Secrets: The Bush Dynasty, America's Invisible Government, and the Hidden History of the Last Fifty Years (47 page)

Powerful forces were moving in, influencing Carter’s presidency from day one.

The peanut farmer lacked experience with foreign affairs. This put him somewhat at the mercy of the better-connected; and the Trilateral Commission, a private international policy group started in 1973 by David Rockefeller, stepped into the void. Carter turned his national security portfolio over to the commission’s executive director, Zbigniew Brzezinski. Without Carter’s knowledge, moreover, Bert Lance, the adviser he trusted most— and the one he prayed with every morning—would be compromised by powerful forces.

Lance was a small-town Georgia banker who had practically bankrolled both the Carter family peanut warehouse and Carter’s successful run for governor of Georgia. Lance had pressing financial needs, which proved his—and to some extent Carter’s—undoing. In early 1975, as Carter and Lance were planning the presidential campaign, Lance was approached by one of the biggest bank-holding companies in Washington, Financial General Bankshares (FGB). Although federal law barred American banks from engaging in interstate banking in those days, FGB had a special exemption. It owned banks in a number of states; and as the only such company it was potentially quite valuable. It was controlled by General George Olmsted (Ret.), a former OSS chief in China, an old intelligence hand with longstanding ties to the late Allen Dulles. FGB’s true essence was under wraps, but it sent out a message of its quiet power to the discerning by locating its headquarters at 1701 Pennsylvania Avenue, diagonally across from the White House.

FGB’s stable included the National Bank of Georgia, and that entity offered Bert Lance the job of president. Lance readily agreed, and took a large stock position in the firm. He was now in deep.
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Before long, Jimmy Carter would be too.

President Jimmy Carter was a sharp fellow, and no pushover. He had been elected with a mandate and an ambition to open up the government. He would not stand in the way of the ongoing congressional inquiries into abuses of power by federal agencies, in particular, the CIA. In fact, one of Carter’s first steps was to try to reform the intelligence agency. Ignoring Poppy Bush’s entreaties to leave him at the helm in Langley, Carter brought in Admiral Stansfield Turner, whom he had known since their days at the Naval Academy, where Turner had been first in his class. But despite a successful career in the Navy, Turner was a fish out of water—actually as unfamiliar with the inner workings of the agency as George H. W. Bush pretended to be. The silver-haired patrician was unprepared for the ruthless internal politics of the CIA, which was more an assemblage of compartmentalized fiefdoms than a top-down military organization.

Nevertheless, Carter and Turner were determined to regain White House control over the CIA. One of Turner’s first steps was to force out hundreds of officers from the Operations (“Dirty Tricks”) Division—the perceived “rogue element”—along with their paid outside agents. Since the CIA’s clandestine services already had been purged by previous directors Schlesinger and Colby, Turner was stepping onto an angry anthill.

To the intelligence brotherhood, Admiral Turner was a dangerously naïve man. Turner’s foreign counterparts, who had liked Poppy Bush because he “got it,” shared the domestic view. Recalls Count Alexandre de Marenches, the former head of French intelligence, in his memoirs:

Admiral Stansfield Turner . . . had perhaps the most corrosive influence . . . he never ceased to amaze me . . . “Call me Stan,” he opened our conversation. I cringed. “In today’s world, do you think communism is still something to be feared?” . . . I giggled. But he was serious. Deadly serious. As far as I was concerned, our conversation had begun and ended there. “Jesus, this is the man,” I thought, “who serves on the national Security Council and who helps to form the opinion on world affairs of the president of the United States . . . If the head of the CIA began by questioning the power and tenacity of his country’s principal enemy . . . there was little hope for the integrity of the agency . . . It was not surprising that the Carter administration all but succeeded in destroying America’s human intelligence capability.
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Turner’s reforms created bitter internal resistance and fostered the establishment of a kind of CIA regime in exile. In 1977, former CIA counterintelligence czar James Angleton and some former colleagues started an organization, the Security and Intelligence Fund (SIF), ostensibly to defend U.S. security and intelligence organizations. The new organization also raised money for the defense of two FBI officers then under indictment. Within six months it was reported to have more than seventeen thousand members. Meanwhile, inside the agency, Hank Knoche, whom Turner retained as his number-two man and de facto chief of operations, was patently disloyal to his boss and frequently communicated directly with the National Security Council without even consulting him. Of all these disgruntled ex-CIA officers who had been turned out from their home, none was more disgruntled than the immediate past CIA director, George H. W. Bush.

Obviously, Jimmy Carter and Stansfield Turner and their reformist ideas represented a major threat to the status quo, and there were many people, both within the Beltway and outside it, who wanted to see them reined in. It was in this time frame that the Senate Governmental Affairs Committee began poking into the financial affairs of Bert Lance, whom Carter had appointed director of the Office of Management and Budget (OMB).
New York
Times
columnist William Safire, a former Nixon speechwriter, had raised the question of whether a $3.4 million loan that Lance received from yet another murky bank after being picked for the OMB job was a “sweetheart” deal. Safire accused the chairman of the First National Bank of Chicago, A. Robert Abboud,
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who was prominent in Chicago Democratic politics, of trying to “to gain life-and-death financial control over the man closest to the President.”
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At issue were loans Lance had used to comply with terms of his stock purchase in the National Bank of Georgia. It was a highly technical matter. As James Ring Adams and Douglas Frantz of the
Los Angeles Times
wrote in their book
A Full-service Bank: How BCCI Stole Billions Around the World
. “This was not a terrible offense and no criminal violation [was] involved. But Bert Lance was budget director of the Carter administration and the Senate investigation did not die after just a few headlines.”
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Shortly after Labor Day 1977, Lance resigned as director of the Office of Management and Budget. He was out of work and nearly broke—and susceptible to being compromised further. It was at this time that he was introduced to Agha Hassan Abedi, the Pakistani who headed BCCI. Abedi ostensibly wanted to use Bert Lance as a front man for acquiring a banking operation in the United States, something foreigners then could generally not do under U.S. law.
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In November 1977, just three months after the group of which he was part purchased Main Bank of Houston, the charming, gift-bearing Ghaith Pharaon, now a business partner of Jim Bath, came into the harried life of Bert Lance. The matchmaker was none other than Agha Hassan Abedi. In what was to transpire, Pharaon’s true function became apparent: he was essentially a front for BCCI.

Abedi explained to Lance that Pharaon was interested in buying Lance’s bank stock—which Pharaon, unlike Abedi, could do because he had already been approved by American regulators and had already acquired substantial interests in domestic banking. Lance, who was deeply in debt, agreed enthusiastically, and Pharaon bought out his shares in the National Bank of Georgia at a 25 percent premium over market value.
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Soon, Pharaon was practically moving into the Peachtree State. He bought Henry Ford II’s eighteen-hundred-acre plantation outside Savannah, threw big parties for the state’s elite, and generally established himself as a formidable local figure.

That Pharaon was essentially a middleman in those days would be corroborated years later, in a U.S. government investigative memo from the summer of 1988, as the problems with BCCI were becoming increasingly evident. The memo cited a source from inside the bank:

Source said everything that Pharaon had came from BCCI. In effect Pharaon was an invention of BCCI . . . After Pharaon had returned from college, he in fact was “recruited” by [the bank] and for years had been used to “front” for BCCI . . . Whenever the BCCI group wanted to buy anything that they perceived was difficult for them to acquire directly, Pharaon would be used. This included, according to the source, the National Bank of Georgia.
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AROUND THE SAME time in 1977 that BCCI bought out Bert Lance’s bank shares, he was approached separately by a purportedly disgruntled shareholder faction of the giant Washington-based Financial General Bankshares (FGB), whose intelligence connections were discussed earlier. These shareholders told him they were looking for a bank to acquire their FGB stock. In retrospect, this all seems a little too neat. Lance was now essentially the possibly unwitting midwife for both the entry of the criminal bank BCCI into the United States and its assumption of the CIA-connected banking activities previously handled by FGB. If anyone were to investigate BCCI’s activities in this period, Lance’s involvement would be prominent, and any scrutiny of Lance’s role could not help but point a finger at his close friend and former business associate Jimmy Carter.

Meanwhile, Carter soon became pals with Abedi. In the 1980s, the now ex-president and the banker would spend holidays together in Switzerland and make missionary appearances in Bangladesh, China, and Pakistan, among other countries. (Coincidentally or not, BCCI had development interests in each country.) Abedi even donated five hundred thousand dollars to help create the Carter Center at Emory University.
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As if the scandal over Lance’s banking dealings wasn’t enough of an embarrassment for Jimmy Carter—seriously tarnishing his image of rectitude— intermediaries connected with American and Israeli intelligence managed to woo Carter’s brother Billy into a lucrative arms deal with the reviled Libyan dictator Mu’ammar al-Gadhafi. For obvious reasons, this looked very bad. The president was further embarrassed when it was revealed that Zbigniew Brzezinski, Carter’s national security adviser, was providing Billy with classified information.
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That the Bush name disappears for so long from our narrative is less a symptom of the family’s lack of involvement than a testament to its legendary caution. For Poppy Bush was connected to almost everything cited above. He was deeply involved with the outsourcing of unauthorized covert operations and illegal wars. He had created Bath’s setup and the relationship with the Saudis. It’s not too hard to imagine that, having been exiled by Jimmy Carter, he had mobilized the forces under his control to pay the president back.

Shah? Shush!

Iran was another crucial piece of the geo-petroleum mosaic. And where oil was, George H. W. Bush and his coalition were often not far behind.

In 1979, after years of oppressive rule, the U.S.-backed shah was overthrown, he was given sanctuary in the United States, and angry crowds in Tehran seized the U.S. embassy. The resulting hostage crisis dominated world headlines and began inflicting what would be a mortal wound on Carter’s presidency. It was about this time that a young dark-haired visitor arrived at Bath’s offices.

Bill White would never forget the encounter. “The Secret Service comes in with an Iranian guy who is ostensibly an aircraft salesman, and Jim introduces me and he says, ‘Bill, I’d like to introduce you to His Royal Highness Reza Pahlavi, the shah’s son.’ ”
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Like the Saudi princes, the young man had come to the United States to train as a jet fighter pilot, and spent the previous year at Reese Air Force Base in Lubbock, Texas. But in 1979, with his father overthrown, the shah’s son needed to lay low. The Ayatollah Khomeini had just put out a contract on the shah’s family, and by December, a nephew of the shah would be assassinated in Paris. So Reza was hiding out at Jim Bath’s place, pretending to be an aircraft salesman.

His father, Shah Reza Pahlavi, had been installed by two coups—one British (1947), the other American (1953)—and was incompetent, fabulously corrupt, and gratuitously brutal. The shah’s first national police force, the Gendarmerie, was trained by U.S. World War II veteran General Norman Schwarzkopf (whose namesake son led Poppy Bush’s “Desert Storm” war on Iraq’s Saddam Hussein in 1991). After the 1953 CIA-sponsored coup that toppled a popularly elected prime minister and restored the shah to dictatorial power, it was clear that Reza Pahlavi needed protection against his own people. So the CIA, under Allen Dulles and deputy director Richard Helms, helped train a new Iranian secret police force, the dreaded SAVAK. (This was the template later used by CIA director Bush for formulating his secret pact with the Saudis.) After Helms was removed from the CIA directorship by Nixon in the wake of Watergate, he was shipped off to Iran as U.S. ambassador. This was perhaps not as much of a demotion in the eyes of his colleagues as one might think, considering the looming importance of Iran and its oil reserves.