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Saudis Secretly Bought Stake in Marina Leases : Real estate: County supervisors approved the multimillion-dollar deal involving public land.

First Of Two Parts

November 12, 1989|JEFFREY L. RABIN and WILLIAM C. REMPEL | TIMES STAFF WRITERS

Saudi Arabian businessmen and arms brokers with close ties to the royal family head a group of Middle Eastern investors who secretly acquired a major stake in leases on public land in Marina del Rey, The Times has learned.

The billionaire Al-Ibrahim brothers--Abdul Aziz and Khalid, brothers-in-law of King Fahd--concealed their interest in the multimillion-dollar marina deal behind a Century City front company and an elaborate network of corporate shells in California, the Caribbean and Europe, according to sources and documents obtained by The Times.

An American adviser to the Ibrahims subsequently confirmed details of their hidden interest in the transaction, which was approved last August by the Los Angeles County Board of Supervisors despite the investors' refusal to disclose their identities.

At the time, supervisors ignored the advice of private and public counsel to obtain the identities of new leaseholders and instead accepted assurances from the investors' attorneys and accountants that their clients were not involved in criminal activities. The county's acquiescence in the secrecy was also criticized on grounds that the public has a right to know the identities of those who operate and profit from the use of public property.

The deal gave the Ibrahim group 49.9% ownership of the marina's three existing hotels, a planned luxury hotel, two apartment complexes, office buildings, shops, restaurants and more than 1,000 boat slips. It could involve an ultimate investment of $300 million.

A two-month Times investigation has found that the secrecy-shrouded marina deal is the latest addition by the Ibrahims and their partners to an expanding U.S. real estate portfolio that could exceed $1 billion. Already their hidden interests include properties from Florida to the Midwest to California.

Secrecy is common to all of their transactions, but the Marina del Rey deal is the only known U.S. investment by the Ibrahim group in publicly owned land.

San Francisco attorney Khalid Al-Mansour, the adviser speaking on behalf of the Ibrahims, described the investors as "old Middle East money" from such countries as Saudi Arabia, Kuwait and Qatar. He would not identify them further except to say that they are not heads of state or their families.

But Marina del Rey developer Abraham M. Lurie, who sold half of his interest in long-term marina leases to the Middle East group, was told in an August, 1988, letter proposing terms of the deal that the investor was "a member of the Saudi Arabia royal family" who insisted upon anonymity. The Times reviewed a copy of that letter, which was prepared by an intermediary.

A source close to the Ibrahims confirmed published accounts that the brothers manage the financial affairs of King Fahd's youngest son, Prince Abdul Aziz Al-Fahd, who is also their nephew. Mansour denied that the prince is involved in the marina deal, and The Times could not independently determine whether any portion of the marina investment was made on behalf of the young prince.

Sources said virtually everyone involved in the marina deal was first required to sign a confidentiality agreement with the Saudis.

Suit Over Brokers Fee

One businessman, investment banker Jack Eskenazi of Encino--who signed a secrecy agreement but now has filed suit saying he and his partners were deprived of a $3.2-million brokers fee--said it was always understood that ownership was "a straight line to the Ibrahims." No negotiating decisions were made without consulting them, he said.

Another source said Abdul Aziz Al-Ibrahim, the elder of the brothers, negotiated final terms of the transaction by phone from his yacht in the Mediterranean.

In recent years the Ibrahims have emerged as prominent financiers in the Middle East, using their access to the royal family. Their sister, Moona, is a wife of the king and the mother of Fahd's 17-year-old son. The brothers gained international attention when they appeared on Fortune magazine's first list of billionaires published two years ago.

The Ibrahims have also become chief agents for the kingdom in brokering multibillion-dollar aircraft and weapons acquisitions from their offices in London, Paris, Geneva and Riyadh, according to published accounts in Europe.

More recently, they launched an aggressive real estate investment campaign across the United States, telling one American business associate that they are "in an acquisition mode" and are willing to invest more than $1 billion here.

The Times has confirmed that since late 1983 the Ibrahims and their investment group have also acquired mostly vacant land near Disney World in Florida, a complex of office towers near Chicago's O'Hare International Airport, a hotel next to the Mayo Clinic in Rochester, Minn., and interest in various other U.S. property, including some of the Ritz Carlton hotels.

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