JP Morgan & the Saudi Oil Colony


By Dean Henderson

Excerpted from Chapter 3: The House of Saud & JP Morgan: Big Oil & Their Bankers in the Persian Gulf…
With 261 billion barrels of crude oil lying beneath its soil, Saudi Arabia remains the lynchpin in the international oil grab presided over by the Four Horsemen.  As Joseph Story, Middle East analyst and former ARAMCO executive once said, “Only one factor is involved in where the price of oil is going to go, and that is Saudi Arabia”.
In 1933 Standard Oil Company of California (Socal) negotiated the first oil concession in Saudi Arabia with Saudi Finance Minister Abdullah Sulaiman.  The Saudis were to get a 30,000 British pound loan and 5,000 pounds for the first year’s rent, all payable in gold.  But US President Franklin Delano Roosevelt (FDR) had just embargoed gold exports in response to the Great Depression and Socal’s request for an exemption was turned down by FDR’s Secretary of State Dean Acheson.
Socal circumvented the embargo by procuring the gold from the London branch of Morgan Guaranty Trust.  When the Saudis asked Socal officials what they should do with their newfound wealth, Socal recommended depositing it at Morgan Guaranty Trust.  The Saudis complied.
In 1938 Socal, which later changed its name to Chevron, struck oil in both Saudi Arabia and Qatar and founded the Arabian American Oil Company (ARAMCO).  Chevron quickly brought in Standard Oil of New Jersey (later Exxon), Standard Oil of New York (later Mobil) and Texaco as partners.  This American half of the Four Horsemen would grow ARAMCO into the largest oil company in the world, nearly three times the size of Royal Dutch/Shell.
While British Petroleum (BP) and Royal Dutch/Shell, the two European Horsemen, owned the biggest share of the Iraqi Petroleum Company and dominated the Iranian Consortium, the US Horsemen now had their talons into the biggest prize yet, ARAMCO.
Other agreements were struck in the region as well.  Chevron and Texaco formed a marketing arm known as Caltex, while jointly owning Bahrain Petroleum Company.  BP joined with the Mellon family-controlled Gulf Oil to develop oilfields in Kuwait.  By 1949, BP and Royal Dutch/Shell controlled 52% of Middle East oil reserves, while five US oil giants – Exxon, Mobil, Chevron, Texaco and Gulf-controlled 42%. [1]
ARAMCO soon boasted both the largest oilfield in the world at Ghawar and the biggest offshore field in the world at Safaniya.  It also laid claim to expansive oilfields at Berri and Abqaiq.  All told ARAMCO now controls over one-quarter of the world’s crude oil reserves.  In the wake of the 1973 Arab oil embargo, ARAMCO embarked on the most expensive single industrial project in the history of mankind, a massive petrochemical and refining complex at Jubail.  The company also runs the world’s largest deep water port at Ras Tanura on Saudi Arabia’s Persian Gulf shoreline. [2]

While British Petroleum (BP) and Royal Dutch/Shell, the two European Horsemen, owned the biggest share of the Iraqi Petroleum Company and dominated the Iranian Consortium, the US Horsemen now had their talons into the biggest prize yet, ARAMCO.

The Saudi government claims to have nationalized its domestic oil sector.  The glossy ARAMCO World, which tends to show up in public libraries and dentist offices throughout the US, is the propaganda arm of the company.  It boasts that the Saudi government took a 25% stake in ARAMCO by 1973, increased its stake to 60% in 1974 and by 1980 owned 100% of ARAMCO, now known as Saudi ARAMCO.  The real story is a bit more complex.
Until at least 1988, the four US oil giants operated ARAMCO, even if the Saudi government did, in fact, own it.  Exxon’s 1990 10K filing to the US SEC lists Exxon Overseas Corporation as a wholly-owned subsidiary, then states that Exxon Overseas owns a 28.33% stake in Arabian American Oil Company.  Until he suffered a massive stroke, King Fahd had chaired the Supreme Council of Saudi ARAMCO, but board members include the former chairmen of Exxon and Chevron as well as a prominent US banker. [3]
No matter who actually owns ARAMCO, the Four Horsemen still call the shots through management contracts, service agreements and joint venture activity.  These downstream niches are where the real profit margins are to be found and the Four Horsemen have generally been moving in this direction since the early 1980’s in their worldwide operations.
Aramco Headquarters in Dhahran, Saudi Arabia.  Image via Eagleamn [Public domain], via Wikimedia CommonsSaudi ARAMCO joint ventures include a huge refinery at Yanbu known as Mobil Yanbu Refining Company and an equally massive refinery at Jeddah which is 50%-owned by Royal Dutch/Shell.  Mobil owns a majority interest in Luberef, a Saudi base oil refiner and in Petrolube, a blender which exports to over 40 different countries.  Mobil and Royal Dutch/Shell are 50% owners of two ethylene crackers, one at Yanbu and one at Jubail Industrial City.
Shell owns 50% of Saudi Petrochemical Company and Saudi Arabian Markets & Shell Lubricants, 49% of both Al Jomaih & Shell Lubricating Oil and Modern Automotive Services Company, and 25% of Peninsular Aviation Services Marketing.  Motiva is a Shell/Saudi joint venture in the US, with refineries at Norco and Convent, Louisiana. [4]
Exxon owns and operates both the Al Jubail Petrochemical Company – by far the largest facility in Jubail Industrial City – and Exxon Chemical Arabia, Inc.  Its Essochem Belgian subsidiary has a joint venture with the wealthy Saudi Algosaibi family known as Oil Field Chemical Company.
Texaco has two joint ventures with Saudi ARAMCO in the United States: Texas Refining & Marketing and Star Enterprises. [5]  Sappco-Texaco Insulation Products is a venture between Texaco and Saudi Olayan Group, which is controlled by Sulaiman Olayan.  As of 1990, Texaco got 92% of its US-bound crude oil from Saudi Arabia.
According to Platt’s Oilgram News, Saudi ARAMCO also supplies Big Oil with discount crude,giving them $5/barrel off the posted spot price of whichever grade of crude the Horsemen are buying.  ARAMCO official James McPherson resigned in disgust because the company was holding back from direct competition with the US Horsemen.  McPherson then revealed a $17 million ARAMCO tax fraud to Saudi authorities.
Abdullah Tariki, Saudi Director of Petroleum and Minerals, went public with the charges and announced new transit fees that would be charged the Horsemen to compensate for the rip-off.  Within days of the proclamation Tariki was driven from office by King Fahd himself. [6]
ARAMCO’s lawyer was John McCloy, who chaired both Chase Manhattan and the World Bank.  McCloy, who helped David Rockefeller wisk the Shah out of Tehran, was one of six “Wise Men” who advised President Johnson and was an influential member of the Warren Commission, which “investigated” the Kennedy assassination.
As of 1990 ARAMCO produced over 8 million barrels of crude oil a day, ensuring the Saudi role as “swing producer”.  During the 1991 Gulf War ARAMCO underwent another expansion and now cranks out an unprecedented 10 million barrels a day.  With the Shah deposed, the Saudi half of the Twin Pillars took on much greater significance.
ARAMCO’s primary construction contractor is Bechtel, a shadowy San Francisco-based private company that is the largest engineering firm in the world.  Laton McCartney’s book Friends in High Placeschronicles Bechtel’s close ties to the US State Department and the CIA, which uses the company as an “asset” due to Bechtel’s penchant for mega-projects in remote areas of the world.  Wherever the Four Horsemen roam, Bechtel eyes and ears are close behind.  In oil-rich Venezuela it constructed the Mena Grande pipeline.  In Saudi Ed Fuller with Cairo delegation led by Senators John McCain and John Kerry with representatives from Bechtel, Mobil, Coca-Cola, Dow Chemical and General Electric.  Image by Taylorbushman via Wikimedia CommonsArabia it built ARAMCO’s “industrial city” at Jubail, the world’s largest industrial project ever.
Bechtel built Japan’s Tokyo Narita Airport and the convention center for the 1998 Nagano Winter Olympics.  It built Egypt’s Aswan Dam, the Euro-Disney Theme Park and San Francisco’s Golden Gate Bridge. Most every dam in the US was built by Bechtel, including the massive Hoover Dam.  It built the nation’s first nuclear power plant for ARCO in Idaho in 1951 and builds most every nuclear and electrical power plant of any size in the world.  It also builds military installations and seaports.  Pick your modern engineering marvel and there is a good chance it was built by Bechtel.  The firm is owned by the Bechtel family and currently run by Stephen Bechtel who in 1973 met personally with King Fahd to plan the Jubail Project.
Bechtel lead the charge to privatize Third World water systems and a major backer of the Free Trade Agreementof the Americas.  In 1999 Bechtel took over the provincial water system of Cochabamba, Bolivia.  According to Bolivian activist Oscar Oliviera of the Coalition for the Defense of Water and Life, the World Bank promoted the water grab on behalf of Bechtel’s Aqua Sentuary subsidiary.
Giving new meaning to the word “privatization”, rural Bolivian farmers saw their private water wells seized by the state and were forced to hook up to the Bechtel grid.  Fees shot up 300% for city dwellers who were suddenly spending 25% of their monthly income on water.  Bolivian peasants responded with four months of blockades and protests from January to April 2000.  A few were killed, hundreds injured and thousands jailed by a Bechtel-beholden Bolivian government. Finally, the government was forced to cancel the Bechtel contract.  In February 2002 at a secret World Bank court, Bechtel sued the provincial government for $25 million, claiming a loss of profits for the next 40 years.

Giving new meaning to the word “privatization”, rural Bolivian farmers saw their private water wells seized by the state and were forced to hook up to the Bechtel grid. Fees shot up 300% for city dwellers who were suddenly spending 25% of their monthly income on water.

Bechtel has, along with ARAMCO, enjoyed quasi-governmental status for five decades in the Middle East.  Past Bechtel directors include Kennedy CIA Deputy Director John McMahone and Reagan cabinet officials Secretary of State George Schulz, Secretary of Defense Casper Weinberger and Arms Control Adviser Kenneth Timmerman.
George Schultz, who was Bechtel chairman before his Reagan appointment, returned to the Bechtel board in the early 1990’s and also joined the board at Chevron.  CIA Directors Bill Casey and Richard Helms both worked for Bechtel as did Philip Habib, the Carter Middle East envoy who produced the Camp David treaty between Egypt and Israel.
As of 1978 Stephen Bechtel and co-founder John McMahone owned 40% of Bechtel stock,while the other 60% was held by 60 Bechtel executives.  Bechtel owns 15% of Peabody Coal and a big chunk of the Dillon Read investment bank, where Bush Sr. Treasury Secretary Nicholas Brady worked.  Bechtel set up the Fremont Group as a holding company for Bechtel Energy Resources, Bechtel Investments Realty, Crown Pacific, Offshore Bechtel Exploration and Coldwell Banker.  Coldwell is one of the nation’s largest real estate firms and was purchased from the Carlyle Group, where James Baker III, George Bush Sr. and Frank Carlucci now work.  As of 1994 the board of Fremont Group included Stephen Bechtel, Eisenhower Defense Secretary Cordell Hull, George Schultz and Citibank chairman Walter Wriston.
In Saudi Arabian business ventures, foreign companies are required to work through agents who are Saudi nationals.  Bechtel recruited an ARAMCO dispatcher named Sulaiman Olayan to be its partner in forming the Saudi Arabian Bechtel Company.  Olayan, a penniless working class Shi’ite, would own 50% of the new company and became an instant billionaire.  Before the arrival of the Four Horsemen, Saudi Arabia had been a fairly egalitarian society.  So had Kuwait, Oman, Qatar, Bahrain and the United Arab Emirates.  Most modern day billionaire oil sheiks had been truck drivers, mechanics and pearl divers.
The Council on Foreign Relations
Bechtel insider George Pratt Schultz is also the current director at the Council on Foreign Relations (CFR),a powerful US foreign policy think tank whose geopolitical imperatives are, more often than not, adopted by the US State Department.  The CFR was created in 1922 and is headquartered in Harold Pratt House in New York City.  The building was donated by Pratt’s widow, whose husband made his fortune as a partner in John D. Rockefeller’s Standard Oil Company.
The 2013 Jan/Feb issue of CFR's journal Foreign Affairs
Schulz, a relative of Mrs. Harold Pratt, replaced CFR member Alexander Haig to become Reagan’s Secretary of State.  The CFR is the US affiliate of the Royal Institute for International Affairs (RIIA) in London.  Both foreign policy think tanks are loaded with powerful leaders of industry, academia and government.  They hold an enormous amount of sway over US and British foreign policies, providing the glue for the so-called “special relationship” between the US and Britain.
CFR publishes Foreign Affairs, a bi-monthly journal on the global political landscape, which is considered by many in the State Department as a kind of “how-to” guide in conducting foreign policy.  Founding members of CFR included brothers John Foster and Allen Dulles, columnist Walter Lippman, former Secretary of State Elihu Root and Colonel Edward Mandell House, who as adviser to President Woodrow Wilson pushed through the Federal Reserve Act, creating a private US central bank owned by a few wealthy banking families.
In 1912, one year before the Federal Reserve was created, House wrotePhilip Dru: Administrator.  The book describes a conspiracy within the United States bent on establishing a central bank, a graduated income tax and control of both political parties.
Past funding for CFR has come from international financiers David Rockefeller, J.P. Morgan, Bernard Baruch, Jacob Schiff, Otto Kahn and Paul Warburg.  International banks Kuhn Loeb, Lazard Freres, Lehman Brothers (now part of Barclays) and Goldman Sachs – whose directorates interlock – heavily influence CFR proceedings. [7]
CFR members are sworn to secrecy regarding goals and operations.  But Admiral Chester Ward,  a longtime CFR member, let slip that the goal of the group is, “to bring about the surrender of the sovereignty and the national independence of the United States…Primarily, they want a world banking monopoly from whatever power ends up in the control of global government.”
CFR members have dominated every Administration since FDR and most Presidential candidates come from its ranks.  Adlai Stevenson, Dwight Eisenhower, Richard Nixon, John F. Kennedy, Lyndon Johnson, Hubert Humphrey, George McGovern, Walter Mondale, Jimmy Carter, George Bush Sr. and Al Gore are all CFR alumni.  David Rockefeller served as CFR Chairman for some time, giving way to fellow Chase Manhattan chairman/ARAMCO attorney John McCloy.

Founding members of [The Council on Foreign Relations] CFR included brothers John Foster and Allen Dulles, columnist Walter Lippman, former Secretary of State Elihu Root and Colonel Edward Mandell House, who as adviser to President Woodrow Wilson pushed through the Federal Reserve Act, creating a private US central bank owned by a few wealthy banking families.

Every CIA Director since Allen Dulles has been a CFR member, including Richard Helms, William Colby, George Bush Sr., Bill Casey, William Webster, James Woolsey and John Deutsch.  CFR’s Foreign Affairsconsistently advocates US military intervention and is the most widely read periodical at the US State Department.
According to both former Deputy Director of the CIA Victor Marchetti and former State Department analyst John Marks, the CFR is the principal constituency of the CIA, since the elite who run the CFR are the ones who own the overseas assets which the CIA and the US military work to guard. [8]
It is through the CFR that the international bankers and the global intelligence community mingle.  The bankers and the spooks share a common goal of keeping the world safe for global monopoly capitalism. Often intelligence operatives are recruited from the banking houses where their loyalties to the banking elite have been thoroughly tested.  OSS founding father William “Wild Bill” Donovan was an agent for JP Morgan.
The revolving door between banking and intelligence swings the other way as well.  The very best CIA, Mossad and MI6 agents are recruited to become better paid private spooks for multinational corporate and banking empires as documented in Jim Hougan’s Spooks: The Haunting of America – Private Use of Secret Agents.
As author Donald Gibson wrote, “By the early 1960’s the CFR, Morgan and Rockefeller interests, and the intelligence community were so extensively inbred as to be virtually one entity.”[9]
The CFR is also the primary incubator for Presidential cabinet positions.  The Nixon Administration had 115 CFR members, while the Clinton Administration included over 100 CFR alumni.  They included CFR President Peter Tarnoff, National Security Adviser Anthony Lake, Vice-President Al Gore, Secretary of State Warren Christopher, Secretary of Defense Les Aspin and his successor William Cohen, Secretary of Treasury Lloyd Bentsen, CIA Director James Woolsey, Colin Powell, Tim Wirth, Winston Lord, Laura Tyson, George Stephenopoulos and Samuel Lewis.
In the fall of 1998 as impeachment loomed over Clinton, the President rushed to New York to try and muster support from his CFR “handlers”.  As publisher John F. McManus stated, “Bill Clinton knows well that he serves as President because the members of the ‘secret society’ to which he belongs chose him and expect him to carry out its plans.”
JP Morgan Chase
JP Morgan & Co Building, NYC, circa 1914.  Image by Irving UnderhillARAMCO’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, 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 was 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 liaisonto the House of Saud. [10]
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. [11]
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.

As author Donald Gibson wrote, “By the early 1960’s the CFR, Morgan and Rockefeller interests, and the intelligence community were so extensively inbred as to be virtually one entity.”[9]

The year the Saudis began receiving royalties, the current US/Saudi oil for arms quid pro quowas 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. [12]

Dean Henderson is the author of four books: Big Oil & Their Bankers in the Persian Gulf: Four Horsemen, Eight Families & Their Global Intelligence, Narcotics & Terror NetworkThe Grateful Unrich: Revolution in 50 Countries,  Stickin’ it to the Matrix and Das Kartell der Federal Reserve. To subscribe to Dean’s weekly blog,Left Hook, go to

[1] Arabian Oil: America’s Stake in the Middle East. Raymond F. Mikesell and Hollis B. Chenery. University of North Carolina Press. Chapel Hill. 1949. p.57
[2] “Arabian Might”. Economist.12-24-88. p.79
[3] “Saudi Arabia: Saudi Arabian Oil Company Profile”. Oil & Gas Journal. 8-16-93. p.38
[4] “OPEC Members get Rebuilding Pitch”. Pam Radtke Russell, Jaquetta White and Greg Thomas. The Times-Picayune. New Orleans. 9-12-06. p.C8
[5] “Arabian Might”. Economist.12-24-88. p.79
[6] Making Democracy Safe for Oil: Oilmen and the Middle East. Christopher Rand. Little, Brown & Company. New York. 1975. p.109
[7] The Rockefeller File.Gary Allen. ’76 Press. Seal Beach, CA. 1977. p.75
[8] Rule by Secrecy: The Hidden History that Connects the Trilateral Commission, the Freemasons and the Great Pyramids.Jim Marrs. Harper-Collins Publishers. New York. 2000 p.36
[9] Battling Wall Street: The Kennedy Presidency. Donald Gibson. Sheridan Square Press. New York. 1994. p.133
[10] The House of Morgan. Ron Chernow. Atlantic Monthly Press. New York. 1990. p.604
[11] Power, Inc.Morton Mintz and Jerry S. Cohen. Viking Press. New York. 1976. p.216
[12] Chernow. p.606

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