(Excerpted from Chapter 3: The House of Saud & JP Morgan: Big Oil & Their Bankers )
ARAMCO’s banker has always been Morgan Guaranty Trust. The Saudi Arabian government keeps the bulk of its money at Morgan as well. Morgan made loans to the Saudis based on oil revenues which the Saudis were receiving from ARAMCO, revenues which originated from Morgan ARAMCO accounts and were recycled back into Morgan Saudi accounts.
Just as the Shah of Iran enjoyed an exclusive relationship with David Rockefeller’s Chase Manhattan, so was the House of Saud intertwined with the Morgan Guaranty Trust.
Morgan Guaranty came into being when the old JP Morgan Bank split into three parts after the passage of the Glass-Steagal Act of 1933, which aimed to curb the power of Wall Street banks who many saw responsible for the Crash of 1929. Morgan Stanley filled the role of investment bank, Morgan Guaranty Trust became the commercial bank and JP Morgan & Company became an exclusive private bank for the world’s super-rich, including the Bechtel family.
In 2000, Chase Manhattan the JP Morgan tentacles, unhindered after the late-1990’s repeal of Glass-Steagal, merged to form JP Morgan Chase. The mega-banks of Rockefeller and Morgan, which for decades had recycled petrodollars for Twin Pillars Iran and Saudi Arabia, were now one.
Bechtel insider Sulaiman Olayan is a director of Morgan Guaranty Trust’s International Council. His Olayan Group is the largest private investment firm in the Middle East and controls big chunks of Saudi Bechtel, JP Morgan Chase, Occidental Petroleum and CS First Boston. J.P. Morgan Chase, ARAMCO and Bechtel use Olayan as their joint venture liaison to the House of Saud.
In 1950, the Saudi monarchs began collecting royalties on ARAMCO profits. ARAMCO owners Exxon, Mobil, Chevron and Texaco lobbied the US government for tax credits on royalties paid to the Saudis, so the US taxpayer footed the bill. This was coupled with the ridiculously low taxes these companies were paying into US government coffers.
In 1974 Mobil and Texaco were taxed at a rate of 1.6%. Chevron coughed up 4.3%, while Exxon gave a generous 5.9% of its profits to US Treasury. Even these figures are artificially high, since often multinational corporations declare profits through subsidiaries in places like Panama or Hong Kong where there are no corporate taxes, while declaring only losses in the US. Often these corporations pay no US taxes. Some even get tax rebates.
The year the Saudis began receiving royalties, the current US/Saudi oil for arms quid pro quo was launched. Assistant Secretary of State George McGhee negotiated the US/Saudi Security Agreement. Oil had become the driving force in the post-WWII boom occurring in the US. ARAMCO became the vital economic link bridging Saudi Arabian crude with increased US gross domestic product.
As evidence mounted that the Saudis were sitting atop the bulk of the world’s oil deposits, ARAMCO took on national security status at the State Department. Saudi Arabia has 261 billion barrels in oil reserves. No other nation has much over 100 billion barrels in reserves, though Iraq, Iran, Kuwait and the United Arab Emirates all hover near that figure. Russian and Central Asian estimates are still subject to debate.
Export-Import Bank loans, guaranteed by US taxpayers, began gushing into Saudi Arabia in a frantic rush to finance infrastructure to handle this newfound oil. Bechtel led a pack of hungry US engineering firms like Fluor Daniel, M.W. Kellogg and Foster Wheeler, who, paid by the Saudis with these Ex-Im Bank loans, built oil refineries, pipelines, deep-water ports and drilling platforms for the ARAMCO consortium. The financial infrastructure to handle recycled oil revenues also had to be built.
In 1952, on the heels of the US/Saudi Security Agreement, the Saudi Arabian Monetary Agency (SAMA) was created as the Kingdom’s Central Bank. By 1958 SAMA was run by Pakistani native Anwar Ali, later adviser to King Faisal. Anwar had been Chief of the International Monetary Fund’s Middle East Department. He recruited three Western bankers as SAMA advisers.
Known as the Three Wise Men or White Fathers, these Western bankers called the shots at SAMA, with Ali serving as figurehead. The most powerful of the three was John Meyer, Jr., chairman of Morgan Guaranty’s International Division and later chairman of the entire Morgan mother ship. The White Fathers funneled SAMA petrodollar royalties into Morgan Guaranty accounts. In turn Morgan served as well-paid investment counselor to SAMA. Anwar Ali’s son even landed a job at Morgan Guaranty.
Dean Henderson is the author of five books:Big Oil & Their Bankers in the Persian Gulf: Four Horsemen, Eight Families & Their Global Intelligence, Narcotics & Terror Network, The Grateful Unrich: Revolution in 50 Countries, Das Kartell der Federal Reserve, Stickin’ it to the Matrix & The Federal Reserve Cartel. You can subscribe free to his weekly Left Hook column @www.hendersonlefthook.wordpress.com