Middle east development
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Due Diligence and Business/Security Assessment June 25, 2008 MIDDLE EAST DEVELOPMENT: Due Diligence and Business/Security Assessment Summary The following report consists of a due-diligence investigation of Middle East Development L.L.C. and its founder, Tarek Mohammed bin Laden, regarding plans to construct a bridge linking Yemen and Djibouti across the Strait of Bab al Mandeb. In this investigation, it was found that Tarek bin Laden, a half brother of Osama bin Laden, is generally respected by international businessmen operating in the region but allegedly has links to terrorist activity, none of which has been proved. In addition, a security assessment is included to indentify risks in Yemen and Djibouti related to the business environment, terrorism, crime, war and insurgency, political instability and other “miscellaneous” factors (weather, health care, transportation, etc.). The risk assessment reveals high levels of corruption, imprecise property laws, bureaucratic inefficiencies, the presence of al Qaeda and other Islamist militants, the proliferation of weapons, ineffective policing and drug trafficking, all of which pose major risks to a project as big and as highly publicized[other than the CPN report alluded to below, has there been much press about this project? Several news reports on this subject, even the Washington Post and Bloomberg.] as the Bab al Mandeb Bridge. Company Background Middle East Development L.L.C. (MED), based in Dubai, is involved in real estate development, project management and investment in the Middle East, North Africa and Southeast Asia. The [privately held? Yes, but MED Singapore is the investment holding company listed on the secondary board of the Singapore Stock Exchange ] company was founded in 2004 by Sheikh Tarek Mohammed bin Laden, a half brother of Osama bin Laden, to build world-class properties and provide contracting and financial services to investors wanting to take advantage of expanding real estate markets in the Middle East [and Asia? Only SE Asia country with operations is Singapore, and that is the investment holding company. Actual developments built in Middle East]. Tarek bin Laden is MED’s chairman and controlling shareholder. In 2007, according to boilerplate in a MED news release, the company had “ongoing projects having [a] completion value in excess of $1 billion.” On June 2, 2008, Commercial Property News[or can we say MED announced the project on this date? CPN probably based this on a news release, but I can’t find one on the MED Web site. No, discussion in the press of this project dates back to Oct. 2007)] reported that MED planned “to raise about $190 billion to build two new cities in Djibouti and Yemen and a bridge linking them.” The report said Tarek bin Laden would provide at least $10 billion for the $200 billion project. Construction of the 18-mile-long bridge, which would carry [oil and gas? The bridge is being designed to carry road vehicles, trains, and pipes for gas and water.] transmission lines as well as vehicular traffic, is due to begin in 2009 and is expected to take about 15 years to complete. The project also includes the development of two new cities on either end of the bridge that are intended to attract manufacturing, technology and leisure ventures. $100bn city and free trade zone at the Yemeni end-- Yemen has given Tarek bin Laden 500 square miles of territory, gratis, to build the City of Light. MED is the parent company of Middle East Development Singapore, Ltd. (MEDS), which is listed on the Singapore Stock Exchange. Formerly known as Hitchins Group, Ltd., MEDS is a leading waterproofing specialist with expertise in preservation, restoration and maintenance of concrete structures. In April 2007, MED signed a contract with MEDS to manage construction of five of MED’s residential tower projects in Dubai -- the Arabian Crowne and Windsor Tower in Dubailand and the Red Residence, Kensington Royale and Sports Plaza in Dubai Sports City -- as well as MED’s Diamond Plaza in Bahrain. According to an August 2007 news release, total construction value for these projects was roughly $354 million. For the 2007 fiscal year, MEDS reported revenue of $11.8 million, solely attributed to the Hitchins’ waterproofing business, which had broken even. Overall, MEDS lost approximately $300,000. With a cash injection in 2007 of $13.3 million (from a “strategic investment exercise involving new shares to its controlling shareholder, new investors and a one-for-two rights issue”), MEDS increased its cash reserves from $1.7 million to $13.3 million. Oussama al Dimashki is MEDS’ current executive chairman and chief executive officer. According to data cited by CoreData, Inc., the charts below represent MEDS’ financial status [from June 2004 through June 2006? yes]:
[Korena, in the columns to the right, can we make the headings consistent (e.g., Jun-06 vs. 6-Jun). I assume they are meant to be the same, in other words, June 2006, June 2005 and June 2004? changed]
Tarek Mohammed bin Laden Born in 1947 in [where? Nothing written found about birth city, but Tarek’s father was already living and working in SA at that time of his birth) Tarek bin Laden is the second-oldest surviving son of Mohammad [‘Awad? yes] bin Laden, the patriarch of the giant construction conglomerate Saudi bin Laden Group (SBG), which has interests and investments in a variety of industries, particularly construction. Tarek remains a key SBG executive and shareholder. According to multiple Stratfor sources, MED has an relatively good reputation in the region and is considered a highly professional organization. These sources also say there is little doubt about Tarek bin Laden’s reliability, truthfulness and integrity. With considerable experience operating in a multicultural business environment, Tarek is considered to be one of the more Western-minded businessmen in the Middle East. Sources who have done business with him say he is flexible, values loyalty and will not cheat or double-cross business partners. According to a Stratfor source who works in international business and is well connected to the Saudi community, no one has anything negative to say about Tarek bin Laden or his company. Nevertheless, while MED may not be inherently corrupt, the company does operate in a corrupt regional environment. It is virtually impossible to do anything in the Middle East, especially engage in high level business transactions, without paying commission money to[bribing?] politicians and bureaucrats. It depends on the situation. It is SoP that business owners are required to pay politicians a cut of their profits. However, this they do not always have to offer up bribes to get the business. This is standard business practice in the region and MED is no doubt well aware of it. According to Stratfor sources, MED also employs cheap labor from South Asia and provides these workers with substandard accommodations and makes them work in excessively hot temperatures. And MED may not be as substantial a player as the media make it out to be. Rarely do the firm’s large projects materialize. [This is an important claim. Can we support it? For example: Since it was founded in 2004, MED has completed only 25 percent of the real estate development projects it has embarked upon ] While Tarek is by no means viewed as a shady character, his reputation is not stellar [we certainly imply that it is in this report]. Those considering doing business with Tarek and MED should be mindful of the business environment that both operate in as well as Tarek’s business and political connections. Based on MED’s track record, there is a [good?] chance that not all MED projects on the drawing board will actually be built. Working with Kamran to get some last-minute examples to back up this claim. To Stratfor’s knowledge, neither MED nor its founder have ever been the subject of a criminal investigation in Yemen or Djibouti. According to sources who have done business with Tarek, he is not known to directly associate with any individuals or organizations involved in criminal or terrorist activities. Stratfor sources also say that MED does not have a history of engaging in “dirty tricks” with business partners or competitors. In fact, MED’s corporate leaders have a reputation for being straightforward and above board in their business dealings. Despite petty jealousies [among themselves? can we elaborate here a bit? seems unclear and a little out of the blue], no members of MED’s ownership team appear to have enemies among governments, organized crime groups, media organizations or the general public. There appear to be no significant enmities among the company’s top executives, either personal or professional, that could affect MED’s business endeavors. The MED leadership team does not appear to have aspirations for political power, either directly or indirectly. Tarek bin Laden and his associates operate in repressive political environments and cannot reconcile business success with political ambition. Despite a lack of political ambition, Tarek bin Laden still maintains [close? yes] relations with those in power. Stratfor sources have been told that Tarek has direct personal contact with Yemeni President Ali Abdullah Saleh and Djibouti President Ismail Omar Guelleh. Tarek has spent a considerable amount of time trying to convince the two leaders that the Bab al Mandeb Bridge would be good for their countries. (While the Yemeni and Djibouti presidents initially gave Tarek approval to proceed with the bridge project, disagreement recently surfaced regarding the proposed city on the Yemen side of the bridge-- the “City of Light”, also called “Al-Noor City”, which is intended to provide economic opportunities, infrastructure and housing. The Yemeni government wants to have full control over the development while promoters believe the city should be a free-trade zone. Those participating in the project with MED and Tarek bin Laden should be aware that this controversy, which could delay the project.) Tarek’s father was also close to power. After completing work on the Saudi royal palace, Mohammed bin Laden was awarded other major [Saudi government] contracts -- including the renovation of Mecca -- that helped make the bin Laden family business an industrial powerhouse. The relationship between the bin Ladens and the Saudi royal family goes beyond business ties. As Abdul Aziz’s official contractor, bin Laden also became his confidant and the two families grew close. Many of bin Laden’s sons went to Victoria College in Alexandria, [Egypt?], along with King Hussein of Jordan, Former Jordanian Prime Minister Zaid Al Rifai ([who is/was he?]), Adnan Kashoggi ( a Saudi billionaire and businessman whose father was one of the king's physicians), and Kamal Adham (who ran the Saudi security services under King Faisal), present-day contractors Mohammed Al Attas, Fahd Shobokshi and Ghassan Sakr, and the actor Omar Sharif. Although Tarek bin Laden may not have any personal aspirations to run for political office, he has many contacts that are deeply entrenched in the political system. [did Tarek go to college? if so, where?] Tarek spent most of his teenage years studying in England and Switzerland (uncertain at what schools) and returned to Saudi Arabia in 1967 when he was about 18 to start his own construction business. No mention of where he went to college. Sources indicate it would be only realistic to expect Tarek Bin laden to make financial contributions to the presidents of Yemen and Djibouti. It can also be assumed that MED would make financial contributions to charitable organizations [in the countries in which it operates such as the Tarek bin Laden Hospital & Clinic in Jeddah, Saudi Arabia.]. This is normal in the Middle East -- in fact, it is a religious duty. According to Stratfor sources, MED has been careful since 9/11 to heed [U.S.? Saudi] government warnings [about giving money to charitable organizations that may be fronts for terrorist groups?].
Mohammed Awad bin Laden (born in Yemen) created SBG in 1950. Even after Mohammed’s death in a plane crash in 1968, the bin Laden family companies[company? yes] continued to expand, helping the bin Laden’s become the second wealthiest family in Saudi Arabia (behind only the Saudi royal family). With business ties to major multinational corporations such as General Electric, Unilever, Motorola, Schweppes, Citigroup and Bank HSBC, SBG has become a multinational construction conglomerate and holding company for assets owned by the bin Laden family. After spending his teenage years at schools in England and Switzerland, Tarek returned to Saudi Arabia around the age of 18 to start his own construction business, taking advantage of the housing boom that came with new work in the country after the price of oil rose in 1973. After a 1975 interview with Tarek bin Laden, journalist Kenneth C. Crowe[can we identify this guy?] called him the “personification of the dichotomy of Saudi Arabia,” embodying both conservatism and change. At the age of 29, Tarek ran the Mohammed bin Laden Organization[SBG?] in the south[southern Saudi Arabia yes?], overseeing 7,000 workers and projects estimated to cost a billion Saudi riyals [not sure I get what this means]. At the time, Tarek was quoted as saying that he did not like to invest money outside of Saudi Arabia, feeling that “money that’s not in [his] country was not [his] money.” Despite his fiscal conservatism, Tarek was already constructing cutting-edge developments in Saudi Arabia early in his career, including the country’s first movie theater. Today, SBG is directed by Mohammed’s son Bakr M. bin Laden. SBG’s board of directors includes[is this all the directors? If so, it should say “consists of”] Saleh Gazaz, Mohammed Bahareth, Abdullah bin Said, Mohammed Nur Rahimi, Tarek bin Laden and Omar bin Laden. Thirteen other bin Laden brothers, including Tarek bin Laden, make up the board of SBG. The company is represented throughout Saudi Arabia and in regional capital cities such as Beirut, Cairo, Amman and Dubai. In Egypt, SBG is headed by Abdul Aziz bin Laden, who also represents that country's largest foreign-owned private equity group, with over 40,000 employees.[is this referring to SBG in Egypt or some other company? SBG in Egypt, headed by Abdul Aziz bin Laden] In Lebanon, SBG is represented by Yehia bin Laden, who, prior to the 2006 war between Hezbollah and Israel in southern Lebanon, was holding negotiations with local authorities for a $50 million share in the rebuilding of central Beirut in cooperation with the Saudi conglomerates al Baraka Group and bin Mahfouz Group. SBG’s international operations are handled by the Saudi Investment Company (SICO), which is based in Geneva and headed by Yeslam bin Laden, also a half brother of Osama bin Laden. SBG also has a representative firm in London. The group is discreet about its financial activities, contracts and projects. According to Jean-Charles Brisard, a [French?] consultant on international terrorism who has written about the financial network of the bin Laden organization, including [the book?] "Ben Laden: La Vérité Interdite,” SBG is made up of multiple divisions and affiliates [is the following a complete list? if not, we should say “including”]:
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