As their young family grew, Zaki and Tammam added a pair of rooms to the suite at the Yamama. But, before long, the place was far too small. And anyway, by then, the rest of the hotel had been taken over by the United States Air Force and converted into quarters for their flight crews. So in 1981 the Yamani’s built a large, Moorish-style house in Riyadh, complete with indoor fountains and pools.
Just before moving out of the Yamama, they gave a party for a group of US senators on a junket through the Middle East. One of the Americans was checking out Yamani’s bookshelves when he spotted Paul Erdman’s novel, “The Crash of ‘79.” The plot centered around a bunch of Arab oil moguls who were out to ruin the West.
“Sheikh Yamani?” The senator picked it up and showed it with ironic amusement to his host. “Have you read this?”
Yamani nodded, “Only part of it. I stopped at the point where I was assassinated!”
*****
Even before “The Crash of ‘79” hit the bestseller lists, the American public had become obsessed with the possibility that Arab oil moguls could indeed ruin the West.
Much to Yamani’s growing discomfort, a groundswell of public opinion put the issue on the front pages, and a lot of very influential men climbed on the bandwagon.
Among them were: Jack Anderson, a Pulitzer Prize winning investigative reporter and syndicated columnist; Frank Church, chairman of the Senate Subcommittee on Multinational Corporations; Henry “Scoop” Jackson, chairman of the Senate Committee on Energy and Natural Resources; Benjamin Rosenthal, chairman of the House Subcommittee on Commerce, Consumer and Monetary Affairs; Howard Metzenbaum, chairman of the Senate Subcommittee on Antitrust, Monopoly and Business Rights; Edward Kennedy, chairman of the Senate’s Judiciary Committee; and, John Shenefield, Assistant US Attorney General and head of the Justice Department’s Antitrust Division.
As an international lawyer with two advanced degrees from American schools, Yamani didn’t feel especially threatened by any particular investigation, as long as he could meet it head on. He knew he had lots of cards he could play. But he wanted to meet each challenge on a one-to-one basis.
With enough experience to know that the cumulative effect of all these hearings could directly influence western public opinion for years to come, particularly where Saudi Arabia was concerned, he could not afford to get caught up in a political game with the American Congress. Nor could he take on the American press.
It was, however, obvious to him that many Americans believed some serious soul-searching was both long overdue and not without precedent.
In 1951 a Federal Trade Commission staff report, titled “The International Petroleum Cartel,” traced the then 22-year history of the major oil companies and their stranglehold on the production, refining, transportation and marketing of crude oil from the Persian Gulf. With that report in hand, the Department of Justice began to champion the growing antitrust mood of America.
However, Secretary of State Dean Acheson felt that such an inquiry could get in the way of American interests in the Middle East. He knew he’d have to enlist the help of the international oil companies in an effort to reopen the nationalized Iranian oil properties, so the last thing he wanted was a bunch of writ-happy lawyers scaring off the oil companies.
The Justice Department turned a deaf ear to the State Department and proceeded with their case, intending, if they deemed it necessary, to file criminal charges against the major oil companies. But Acheson held a trump card. Unlike those over-zealous Justice Department lawyers, he had access to the Oval Office. So he took his case directly to Harry Truman, who settled the issue by siding with Acheson.
When General Eisenhower arrived at the White House and John Foster Dulles took over at Foggy Bottom, there was no doubt at all but that State’s views would win out over Justice’s criminal case.
That’s when the Justice Department changed gear, now looking at the possibility of a civil action aimed at the Aramco four, plus Gulf. They originally wanted to include BP and Shell but decided it would be pointless as both would argue, with almost certain success, that they were beyond US jurisdiction.
In the end, the civil case fell by the wayside because US national security and Europe’s heavy reliance on Persian Gulf production were just too important to Eisenhower and Dulles.
It was another two decades before antitrust talk was heard again on Capitol Hill.
Since the earliest days of the Arab oil embargo - from the end of the Nixon years, through Ford and well up to the end of the Carter administration - hundreds of thousands of letters had poured in to Congress, the White House and the Justice Department suggesting that the major oil companies and the Arab producers were somehow in cahoots, that they were openly holding the American public to ransom with tremendous price increases at the gas pumps.
Jack Anderson chided lawmakers, “For evidence that Aramco secretly encouraged Saudi Arabia to boost prices, the Senate should subpoena the records of all meetings with Saudi Oil Minister, Ahmed Zaki Yamani.”
In January 1974, Senator Frank Church opened his Multinational Corporations Committee hearings on the oil industry, hoping to uncover the trail which led the United States to depend so heavily on Arab oil.
Having just pulled off a resounding success by exposing the sleazy depths to which ITT’s management had stooped in their efforts to topple the regime of Chile’s Marxist President Salvador Allende, Church now concerned himself with the time-frame from the beginning of the participation negotiations in Tehran to the oil embargo. He wanted to re-examine the premise, “What’s good for the oil companies is good for the United States.”
The nine-volume committee report was published in 1975. It concluded: “The critical issue was how well the companies and the government used the two and a half years before the October War to prepare for the crisis which was clearly foreseeable at the time of the Tehran-Tripoli Agreements. The time was not used very well. The US Government had no energy policy.”
Henry Jackson then got his committee to report on the question of “Access to Oil - The United States’ Relationships with Saudi Arabia and Iran.”
This became a televised “inquisition” of oil company executives that delighted an American public sick of queues at petrol stations and worried that the great American economy could be threatened by “camel drivers.”
“The American people want to know why oil companies are making soaring profits,” Jackson levied his accusations at the men testifying before him. “The American people want to know whether major oil companies are sitting on shut-in wells and hoarding production in hidden tanks and at abandoned service stations.”
The committee’s report, published in December 1977, raised even more issues than it tackled by warning, “Dependence on oil imports in turn is equal to dependence on OPEC oil. To date the Saudis have played a moderating role within OPEC. But the Saudis have also indicated their unwillingness to continue to stand alone in OPEC councils. They do not like to appear to be opposing other Arab regimes. They have suggested that the United States should ask its other OPEC-member friends, that is, Iran, to moderate their price positions as well.”
At about the same time, the State Department drew some disquieting conclusions. In a classified 1977 report by the Bureau of Intelligence and Research titled “Discounts in Disguise: Price Shaving by Members of OPEC,” the assertions were made that the multinational oil companies provided essential support to OPEC’s system of maintaining artificially high crude oil prices; and, that the multinationals provided individual OPEC countries with a mechanism for policing the other members’ compliance with cartel prices by providing information on the quantities of oil moved and the prices paid.
“Unless that information is generally available,” suggested Congressman Benjamin Rosenthal, chairman of the House Subcommittee on Commerce, Consumer and Monetary Affairs when he unearthed the report in 1980, “individual member countries could get away with price shaving or secret discounting to such an extent that cartel unity would be undermined and price erosion would occur.”
That was followed by Senator Howard Metzenbaum’s plea to the Justice Department to undertake an immediate investigation into claims that Exxon, Texaco, Socal and Mobil were acting irresponsibly by making up to $7 billion a year in profits by taking advantage of Saudi Arabia’s lower crude prices and not passing those lower prices on to the consumer at the petrol pumps.
During a hearing of the Senate Judiciary Committee, Ted Kennedy questioned Assistant Attorney General John Shenefield about OPEC’s relationship with the major oil companies.
Shenefield: “It could be argued that OPEC is not a cartel and, while OPEC may set a price, the actual task of ensuring that aggregate output is sufficiently small to sustain that price in the marketplace is performed by the oil companies.”
Kennedy: “If that statement were correct, would that or would that not be a clear violation of the antitrust laws?”
Shenefield: “Assuming some impact on the US commerce, which I think we can assume, my off-the-top-of-the-head reaction would be that it would be, yes.”
By this point Church had returned to the battle.
He ordered the staff of the Subcommittee on Multinationals to write a report on Saudi oil production and to look into what previously undisclosed understandings might exist between the four Aramco partners and Saudi Arabia.
Over strenuous objections from the oil companies, the committee staff - with the full power of the United States Senate to enforce compliance – subpoenaed, and eventually received, the documents they were after.
Yamani was furious.
As far as he was concerned, this was Saudi Arabia’s business and whatever went on between Saudi Arabia and Aramco was of no concern to this congressional committee.
He summoned the then US Ambassador to Saudi Arabia, John West, and told him, “Under no circumstances will Saudi Arabia tolerate this material being made public. The files subpoenaed include Aramco documents and they are the property of Saudi Arabia. Their release constitutes an invasion of national privacy. It doesn’t matter what the documents are, or what the committee intends to do with the report. This is a matter of principle.”
These days he still thinks he was right to take the position he did. “In some countries, information about oil reserves and reservoir behavior are not only classified but to reveal that information is a crime covered by capital punishment. In this case we were singled out from all the oil producers in the world by a group of Americans working for the Zionist lobby. Their aim was to show that Saudi Arabia is not really a country which can solve America’s energy problems. Our refusal to be singled out was very clearly a matter of principle. The committee was politically motivated. So we acted in a political manner. We refused to allow a public discussion to be based on secret information about our natural resources, which would of course have been revealed to the media. There is no other country they could have singled out.”
Among other things, the committee was anxious to look at the 1977 agreement that finalized the Saudi takeover of Aramco.
Again, Yamani was unyielding. “It did not concern the committee. At that point, there was only a draft of an agreement. It wasn’t yet an agreement. It was a matter not yet approved by the Saudi government. It was not for publicity. It wasn’t even for our colleagues in OPEC to see. It was only our affair. No one else’s.”
West, a former governor of South Carolina, says that he relayed Yamani’s concern back to the State Department. “Of course I kept Secretary of State (Cyrus) Vance informed. I reported back to Washington that Yamani was adamant that the records of Aramco should not be turned over. As he pointed out, in some countries like Iraq and Iran, giving away oil exploration data is a capital offence. It’s deemed to be classified for reasons of national security.”
But West was personally in a position to do more than simply keep Vance informed. He jumped the chain of command and went straight to the White House. “I was in an unusual situation. Much of whatever effectiveness I had as an Ambassador to Saudi Arabia was based on the perception that I had a direct pipeline to President Carter. Which I did. I didn’t use it, except very rarely. But I did use it on occasion. On this issue, yes, I did go to Carter.”
Unbeknownst to the committee, the White House took a position. The committee staff had put together a 130-page report, then set a date for the five subcommittee senators to vote on whether or not to make it public. Suddenly Saudi Arabia’s friends stood up to be counted. Included in the list of oil company executives who lobbied the subcommittee hoping to cool their ardor was Clifton Garvin of Exxon.
“I didn’t have to ask anyone to do that,” Yamani responds in a defensive tone. “They knew our feelings. They knew that we held them responsible if they gave away any information about Saudi Arabia. They knew that their relationship with us would have been damaged. We have, in the past, even refused to give as much as 10 percent of that information to our partners in OPEC. Why should we have supplied such information to a public inquiry in the United States? It was our private business.”
Still, he’s asked, what if Garvin and Co. had been subpoenaed and forced to testify?
He answers sharply, “That’s hypothetical.”
Next came Joe Twinam, the Deputy Assistant Secretary of State in charge of Arabian Peninsula Affairs. He warned the five senators that, should their report be released to the public, not only would it serve seriously to embarrass the Saudis, the Saudis would find a way to retaliate. He reminded the committee that they could always use oil as a political instrument to make their feelings felt.
Then Cyrus Vance personally intervened. He telephoned several members of the subcommittee to say that releasing their findings would impair relations between the United States and Saudi Arabia. He insisted that the Saudis would look upon this as interference in their sovereign rights.
The vote was three to two against making the report public.
That’s when Jack Anderson revealed in his column that Saudi secrets were being protected by “oil moguls” on the subcommittee.
To avoid a nasty public debate on their own motives, the three members who voted against publication of the original 30 page report agreed to release a watered-down version. It was a mere 37 pages long.
Topics removed from the first draft included Saudi- gathered evidence of Aramco’s gross mismanagement, disputes between Yamani’s ministry and Aramco officials regarding production levels, accusations by the Saudis that Aramco had overproduced and that Aramco had relied on deceptive accounting to explain reserves. Quotation marks, names of Saudi officials quoted and the names of the oil companies concerned were also deleted. Nor was it mentioned that the report had been based on documents subpoenaed from the oil companies.
That Yamani and the Saudis got their way with the various congressional committees was one thing. That they then had to face the US Department of Justice was another game altogether.
Public pressure to take legal action against the oil companies and the never-ending petrol pump price increases was growing. So the Justice Department’s Antitrust Division opened an investigation into the supply and pricing practices of the major international oil companies.
Of prime concern here was the possibility that Exxon, Socal, Mobil and Texaco might have had both the incentive and the ability, independent of the Saudi Arabian government, jointly to limit the production of Saudi crude and, in so doing, increase world crude prices.
John Shenefield headed the Antitrust Division in those days. “A staff was assembled. There are people whose lifetimes are devoted to disentangling these kinds of things. PhD economists are involved alongside trained investigators, lawyers and accountants. The staff that was assigned to this was at one time or another pretty sizable.”
At one point it consisted of no fewer than 50 people, including 13 attorneys, 4 economists, 16 para-legals and 17 secretaries.
The next step was a massive request for documents from seven American and four foreign corporations. Included within the scope of the investigation were Aramco (addressed in New York), British Petroleum (London), Compagnie Francaise des Petroles (Paris), Exxon (New York), Gulf (Pittsburgh), Mobil (New York), Royal Dutch Petroleum (The Hague), Shell Oil (Houston), Shell Transport and Trading Company (London), Standard Oil of California (San Francisco) and Texaco (New York).
Of course, as soon as the investigation became known to them, each and every one of the companies concerned protested this intrusion into their confidential business affairs. Mountains of correspondence went back and forth.
Lawyers for the American-based corporations were well aware that the Justice Department could, by using the court system, force the issue and demand that the requested documents be produced regardless of their commercial confidentiality. Yet, they also knew that by being “benignly benevolent” they could stonewall the issue, if need be, for years. Their apparent game plan was to respond to every Justice Department request, asking why certain documents were necessary, asking for clarification on every point, suggesting that these documents were irrelevant, pinpointing obscure cases which supported their opinion, appealing against Division interpretations that did not favor their cause, then asking for extensions to deadlines whenever they were finally forced to hand over documents.
Obviously, by turning the post office into a tennis court, keeping the volley of letters going as long as possible, the corporate lawyers hoped that a change of administration might bring about a change of management at the Justice Department, and the whole matter would just disappear. Anyway, because the world also changes, the longer these things are dragged out, the less chance there is that the end product will actually matter.
As for the four foreign-based corporations, they could afford to sit tight, knowing that unless their own governments agreed to cooperate - an unlikely prospect - there was little the US Justice Department could seriously expect in return besides a polite “Sorry, no thank you,” reply.
Comments Shenefield, “Why did we send civil investigation demands (CIDs) to foreign majors when we couldn’t necessarily enforce them? Because you never know if they’re going to comply. It has always seemed to me, perhaps naively so, if companies wish to do business in the United States, they may have some concern about adhering to US law. It seems to me also possible that governments of, say. Great Britain and France, or other countries that we think of as close friends, will give us, as we give them, sufficient running room for their companies to assure respective governments of their willingness to comply with US law. So it didn’t strike me as silly at the outset to proceed on the basis that, yes, we might well get some compliance from them.”
The one company that obviously required some special handling was Aramco. Shenefield knew there were documents in Aramco’s files concerning Saudi Arabia. He also knew he could count on Yamani to do everything in his power to prevent Aramco from turning them over.
“No, the Saudis wouldn’t cooperate,” Shenefield says. “We asked for documents from Aramco and the gist of their response was that the Saudi government didn’t understand the whole point of this and it was causing them some embarrassment. They wanted further explanation and elaboration about it.”
Further explanations and elaborations were duly sent to Aramco for the Saudis’ perusal.
The reason the matter had to be handled delicately by both sides was because both sides realized that, regardless of Saudi objections, the Justice Department could legally demand to see any documents on US soil. But such a demand would undoubtedly bring with it repercussions from the Saudis.
That was a situation Shenefield wanted to avoid.
The seven American companies managed to hem and haw and stall for over a year, until they had no choice but to turn over more than 125,000 documents.
Then, in October 1978, Aramco’s attorneys notified the Justice Department that Yamani, acting for the Saudi Arabian government, had expressly forbidden the removal from Saudi Arabia of any documents responsive to the CIDs.
By June 1979, the Antitrust Division concluded that additional information would be required, so a second round of CIDs was issued.
For diplomatic reasons, in the face of resistance from Yamani to any documents dealing with Saudi Arabia, the seven domestic companies were informed by the Justice Department that only non-Saudi-related materials had to be complied with during this second round of CIDs. That is, at least until the question of the Saudi-related materials could be dealt with.
By coincidence, this happened at the same time that Exxon and Socal were forced to make disclosures about Saudi reserves and production capacity to the Church subcommittee.
Because the Antitrust Division did not want to be confused with the Church subcommittee, Shenefield felt he might be able to reason with Yamani and avoid the kinds of problems that could develop if he subpoenaed the materials he wanted.
Perhaps Yamani couldn’t recite Kingman Brewster’s antitrust law lectures word for word, but he knew what the American antitrust laws were all about, he knew how the Justice Department worked, he had seen the power of the Senate Foreign Relation Committee and there was no doubt in his mind that Saudi Arabia had a fight on its hands.
Then, too, like all lawyers, he knew that the longer you take to put the gloves on, the greater the possibility the other guy will lose interest and just go away.
In November 1979, he met US Treasury Secretary G. William Miller who was on an official visit to Saudi Arabia. Although the trip was totally unrelated to the Justice Department investigation, Miller broached the subject of the investigation. Yamani admitted his concern. At the very least, Yamani said, he would prefer that the investigation not inquire into Saudi oil production, capacity, reserves or pricing policies. Miller tried to reassure Yamani that confidential information would be kept confidential. But Yamani merely had to point to the Church subcommittee to prove that wasn’t the case. Anyway, Miller suggested, the materials the Justice Department wanted were already in the possession of American companies and on US soil and could legally be subpoenaed. Yamani remained firm that the CIDs would not be answered.
Shenefield heard about Miller’s meeting with Yamani while attending a briefing in the Situation Room at the White House. “It was just after the hostage taking in Tehran. By this time I was Associate Attorney General and I was representing the Justice Department at those Situation Room meetings every morning. Somebody from the Treasury reported that they’d just had a contact on this investigation and that Yamani was concerned about it. One of the early issues in connection with the Iranian hostage matter was, were actions that might be taken by the United States likely further to constrict oil supplies in any way? This became relative in that context. No decision was made there about the investigation itself. And none would have been appropriate in that forum. But enough people there realized that we at the Justice Department were quite determined to pursue the investigation.”
Attorney General Benjamin Civiletti instructed Shenefield to send Yamani a telex which might reassure him that no precipitous CID enforcement action was contemplated.
That message, hand-delivered to Yamani in mid-January 1980 by Ambassador West, proposed that the Justice Department was willing to send responsible officials to Riyadh to explain first-hand to Yamani the purpose of the investigation and the methods available for protecting the confidentiality of sensitive information.
“The problem here was,” explains West, “that it was too easy to confuse the Church committee’s demands with the demands of the Justice Department. The Church committee said they would keep the information they obtained confidential. But everybody knew that was a farce. Nothing that went through a congressional investigation, especially if it could be used as anti-Arab propaganda, was ever kept confidential. So the assurances by the Justice Department that the information they wanted would be treated on a confidential basis were not given much credence by Yamani.”
Shenefield goes on, “What we were trying to do, first of all, was to reassure Yamani that we were concerned about, and willing to talk to him about, how to protect Saudi interests while getting our own investigation moving forward. We didn’t want to take a position that would seem to him brusque and oblivious of his concerns. Secondly, we wanted to open up, if possible, a sort of negotiation, hoping that the Saudis would be, in some respects, responsive to our needs. The telex was a kind of opening round in that negotiation which culminated in a visit to Riyadh to meet with Yamani.”
With three other Justice Department attorneys in tow, Shenefield arrived in Riyadh in March. “We spent the earlier part of the visit with one of Yamani’s subordinates, sitting around in a large circle, drinking coffee and talking about the substance of the investigation. We went over the CIDs with this subordinate and some of his colleagues, item by item. And we came away from that meeting heartened because there seemed to be some flexibility and willingness to be discriminating among the various items of the CIDs.”
But first impressions can be deceptive.
A day or so later, Shenefield and the others met with Yamani.
“It’s odd,” Shenefield says, “because one thing that struck me was that the ministry, for all its importance, seemed to be so lightly guarded. I was amazed by it. There was a checkpoint but, as I remember, there were only two security officials anywhere in evidence with automatic rifles. It struck me that given Yamani’s problems in Vienna, at least to the naked eye or to the untrained observer, the place was very lightly defended. Then, you walked down long halls and there wasn’t much activity. In the United States, in an office building, you’d see secretaries and people working. There you tended to see men in Arabic dress, sitting around in the offices, smoking and talking and there wasn’t much evidence of any work going on.”
Yamani greeted them at the end of the hall and ushered them into his office.
“His office was extraordinarily rich,” Shenefield recalls, “It was magnificent. He was extremely cordial. And I admit I was absolutely fascinated by him.”
After the usual greetings, Yamani and three of his assistants, all in white robes, sat facing the four Americans, all in dark suits, while servants hovered around them pouring coffee. Yamani was interested in knowing where each of his guests had gone to law school. One had been to NYU and Shenefield’s degree was from Harvard. Yamani was very much in his element, so they chatted about that for a while.
“The beginning part of the meeting was taken up with having coffee and light discussion,” Shenefield says. “Our small coffee cups were constantly being refilled. None of us was aware, until we drank a lot more coffee than any of us would have preferred, that there’s a way of holding your cup up and shaking it that signifies you’ve had enough. Until you did that they were just going to pour more coffee. So we were sitting there drinking too much coffee and all the time we were trying to figure out how to cut it off.
Once they got down to business, Shenefield saw first hand just how difficult a negotiator Yamani can be. “He was very attentive. He’s obviously a very bright man. But he was totally non-committal. We left that meeting a little non-plussed because we seemed to be getting conflicting signals. John West assured us that this was all quite orthodox, and that he thought he might perhaps be able to intercede with Yamani, and that we might get some further assistance or at least indication of willingness to be of assistance. But time just dragged on. I think there was another letter or two in an effort to pursue the matter, all to no end. The documents were never forthcoming. The companies, of course, threw up their hands. There was nothing they could do, we were assured, until Yamani spoke. And, of course, he never spoke.”
In the weeks that followed, several informal discussions took place between West and Yamani. They resulted in a series of letters between Shenefield and Yamani which appeared, at least to the Justice Department, to have narrowed down some of the differences. Concessions to Yamani by the Justice Department included the agreement to drop their inquiry into several sensitive areas such as Saudi oil exploration, reserves, production capacity and government sales.
Believing they’d finally arrived on common ground with the Saudis, in January 1981 the Antitrust Division requested that Aramco’s lawyers initiate talks with Yamani regarding possible limited compliance with the outstanding CIDs. But that was the last the Justice Department ever heard about the matter.
Yamani had effectively brought the “International Oil Investigation” to a halt.
Carter left office and Ronald Reagan moved into the White House.
Having gently warned the Carter administration that, unless the potentially embarrassing investigation was terminated, Saudi Arabia would retaliate against the United States, Yamani now let Reagan officials know that the investigation “was a thorn in the side of US - Saudi relations.”
William Baxter was Reagan’s appointment to head the Antitrust Division.
Now a professor at the University of California at Berkeley Law School, Baxter says, “The investigation had dragged on for a number of years and then gone into a period of inactivity, but it was still officially open. At some point in time I wrote quite a long memo explaining why I felt it was appropriate to close it.”
It looked as if the Reagan crowd would, in this instance, let bygones be bygones. Although in January 1983, the four Aramco partners came close to inadvertently scoring an own-goal.
During the first week of the new year, as Baxter was tying up what loose ends remained in the dormant inquiry, a very private dinner took place in Yamani’s 18th-floor suite at the Intercontinental in Geneva.
Only five men were present.
Sitting around the large oval mahogany table at the far end of the living room were Yamani, plus the chief executive officers of the four Aramco partners: Bill Tavoulareas from Mobil, Clifton Garvin from Exxon, George Keller from Socal and John McKinley from Texaco.
The dinner table talk that night was that the major oil companies could not continue paying $34 for $30 Oil.
Yamani was sympathetic. He too wanted to see the price of oil come down, eventually. But at this point he refused to commit himself to a widely speculated cut of $1.50 in the Saudis’ officially posted prices.
“All we did was meet,” Socal’s chairman George Keller claimed at the time. “We certainly did not solve any problems. I hope we did not create any new ones.”
By new ones he meant with the Justice Department.
The Sherman Antitrust Act makes it very clear that competitors who discuss prices together are in violation of the law.
The reporters who heard about the private dinner knew they were on to something as soon as there was an official announcement from the Saudi oil ministry which labeled as “misplaced speculation,” any reports that a price reduction had been discussed that evening.
“We spoke in general terms,” Yamani insists. “We would never discuss the specifics of pricing. Come on, those four men know the law. I know that if we had started to talk about prices, three of them would have gotten up and left the room. Let me tell you, when it comes to talk of prices, all four of them are cowards.”
John Shenefield believes Yamani’s assessment of the four American executives is basically correct. “There are certain things you can do only with great risk, and one of them is to talk price in a setting where you are totally unprotected. Yamami understands that. He might not care about it, but he’s a man of subtlety and sophistication so he’d understand just how far anyone in the room could go.”
As best the Justice Department could ascertain, if they didn’t talk about price it was because they knew they couldn’t. If they did talk about price, none of them would ever admit it.
By the end of 1983, Baxter decided that he could not make a case to suggest that any private agreements regarding crude oil production or pricing had taken place beyond those in effect. He couldn’t establish that anything was going on under the table. Nevertheless, he wrote in his conclusion to the investigation that there was evidence to suggest that between 1974 and 1977, and perhaps even as late as 1979, the four Aramco partners “may” have had the ability to exercise market power by controlling Saudi crude production within the Saudi government’s imposed limits.
Proving it would have been near impossible.
And even if he could have proved it, in the world of 1983, it was probable there was no relief or remedy that would make any sense.
The case was closed.
However, Baxter did take the trouble to add in his report, “It is always possible that a response to the civil investigation demands would have provided evidence of an actionable antitrust violation.”
So, could there have been something in Yamani’s files that might have produced a different result?
The only person who knows for sure is Zaki Yamani. And, on grounds of principle, he isn’t saying.
*****