Lance's Mysterious Rescuer

Saudi Arabia's Pharaon adds to his U.S. empire

Saudi Arabia's production of mysterious millionaires is almost as impressive as its output of oil-and now one of those little-known Saudis has volunteered to start digging Bert Lance out from under his mountain of debts. Ghaith Pharaon, 37, has offered to buy 60% of the stock in Lance's National Bank of Georgia for $20 a share, or about $4 above market value. Whether other stockholders accept or not, Lance will turn over 60% of his 200,000-odd shares to Pharaon and get a check for about $2.4 million.

Why is Pharaon willing to pay so much for control of a bank that is running in the red, has suspended dividends, and saw the price of its stock sink as low as $8.50 a share before the cash-laden Saudi stepped in? Last week Pharaon met with reporters in Atlanta and brushed aside suggestions that he was trying to win favor with President Carter, who reluctantly last September accepted the resignation of his friend Lance as budget boss. Said Pharaon airily: "Why should I buy influence? If I ever wanted to meet the President, we have ways of meeting him through our own channels."

Instead, Pharaon presented the transaction as a straight business deal. U.S. banks, he believes, are ideal investments for an absentee owner. "They are very highly regulated and restricted," says Pharaon, and can safely be left to the management of others. The National Bank of Georgia, he asserts, has intrinsic values, like a location in a prime growth area. Moreover, he sees bright days ahead once various federal investigations are concluded. "It is a turnaround situation that comes very quickly and very fast," says Pharaon. "In fact, we foresee in 1978 that the bank will be very handsomely in the black."

Judging by his past record, that bullish view may be a trifle myopic. In 1975 Pharaon bought control of Detroit's Bank of the Commonwealth, a rickety go-go institution that had been saved from bankruptcy only by the intervention of the Federal Deposit Insurance Corporation. Despite much talk of expansion, Pharaon in 1976 sold his interest in that bank to a Paris-based company. Nonetheless, he professes great faith in the U.S. banking business. Last September he bought 20% of Houston's Main Bank, in which former Treasury Secretary John Connally is a stockholder.

At first glance, Pharaon's soft features, barely disguised by a mustache and a tiny Vandyke, suggest that he is something of a sybarite. He travels by private jet, owns a chateau in France and once, rumor has it, dispatched a ship to Italy to pick up a pair of porcelain vases. Moreover, his tendency to leave many major decisions to others, combined with a rather offhand manner when discussing business and money, can sometimes leave the impression that he is a self-indulgent hobbyist rather than a hardened executive.

Not so. The son of a political adviser to the Saudi royal family, he received a degree in petroleum engineering from Stanford University, then went on to Harvard for his M.B.A. Eleven years ago he set up shop in Jiddah, the business and financial center of Saudi Arabia, where he founded the Saudi Arabian Research and Development Co. (Redec) with $110,000 borrowed from his father.

Redec, a holding company, now controls much of the lucrative construction business in Saudi Arabia. It also owns pharmaceutical, tire-recapping, steel fabricating and drinking water-bottling plants. Together with an Italian company, it is dredging parts of the Suez Canal. In 1976 Redec's revenues were more than $1 billion. Apart from his banking interests, Pharaon owns a substantial share of International Systems, a modular-housing firm in Mobile, Ala., and is the largest shareholder in Sam P. Wallace Co., a Dallas-based mechanical contracting firm.

Pharaon, fluent in both French and English, likes to give himself the air of a combined cosmopolite and sharp businessman. He says his recreations are traveling and deep-sea fishing. He boasts that he was the first businessman to bring Korean workers to labor-short Saudi Arabia, and is now employing Taiwanese. Nonetheless, he has yet to win acceptance from the international financial community, and the price he is paying for control of Lance's bank is bound to raise money-men's eyebrows.

This file is automatically generated by a robot program, so viewer discretion is required.