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Reporting on 9/11/2001
The World Trade Center complex came under the control of a private owner for the first time only in mid-2001, having been built and managed by the Port Authority as a public resource. The complex was leased to a partnership of Silverstein Properties and Westfield America. The new controllers acquired a handsome insurance policy for the complex including a clause that would prove extremely valuable: in the event of a terrorist attack, the partnership could collect the insured value of the property, and be released from their obligations under the 99-year lease. Ownership Change Author Don Paul investigated this and related issues for his 2002 book, which contains the following passage detailing financial aspects and ownership changes of the complex preceding the attack. On April 26 of 2001 the Board of Commissioners for the Port Authority of New York and New Jersey awarded Silverstein Properties and mall-owner Westfield America a 99-year-lease on the following assets: The Twin Towers, World Trade Center Buildings 4 and 5, two 9-story office buildings, and 400,000 square feet of retail space. The partners' winning bid was $3.2 billion for holdings estimated to be worth more than $8 billion. JP Morgan Chase, a prestigious investment-bank that's the flagship firm of its kind for Rockefeller family interests, advised the Port Authority, another body long influenced by banker and builder David Rockefeller, his age then 85, in the negotiations. The lead partner and spokesperson for the winning bidders, Larry Silverstein, age 70, already controlled more than 8 million square feet of New York City real estate. WTC 7 and the nearby Equitable Building were prime among these prior holdings. Larry Silverstein also owned Runway 69, a nightclub in Queens that was alleged 9 years ago to be laundering money made through sales of Laotian heroin. In December 2003, the Port Authority agreed to return all of the $125 million in equity that the consortium headed by Silverstein originally invested to buy the lease on the World Trade Center. The Port Authority rejected a request by the Wall Street Journal to review the transaction. 5 A press report from November 2003 about the same transaction noted that it would allow Silverstein to retain development rights. The lease deal didn't close until July 24th, just 6 weeks before the attack. Insurance Payouts Don Paul also documented the money flows surrounding the loss of Building In February of 2002 Silverstein Properties won $861 million from Industrial Risk Insurers to rebuild on the site of WTC 7. Silverstein Properties' estimated investment in WTC 7 was $386 million. So: This building's collapse resulted in a profit of about $500 million. The insurance money flows involved in the destruction of the original six World Trade Center buildings were far greater. Silverstein Properties, the majority owner of WTC 7, also had the majority interest in the original World Trade Center complex. Silverstein hired Willis Group Holdings Ltd. to obtain enough coverage for the complex. Willis undertook "frenetic" negotiations to acquire insurance from 25 carriers. The agreements were only temporary contracts when control of the WTC changed hands on July 24. After the attack, Silverstein Properties commenced litigation against its insurers, claiming it was entitled to twice the insurance policies' value because, according to a spokesman for Mr. Silverstein, "the two hijacked airliners that struck the 110-story twin towers Sept. 11 were separate 'occurrences' for insurance purposes, entitling him to collect twice on $3.6 billion of policies." This was reported in the Bloomberg News less than one month after the attack. The ensuing legal battle between the leaseholders and insurers of the World Trade Center was not about how the 9/11/01 attack on the WTC could be considered two attacks, when the WTC was only destroyed once. Rather it seemed to revolve around whether the beneficiaries thought it was one or two "occurrences." The proceedings before U.S. District Judge John S. Martin involved a number of battles over the insurers' discovery rights regarding conversations about this issue between insurance beneficiaries and their lawyers. In December 2004, a jury ruled in favor of the insurance holders' double claim. Shortly before the building collapsed, several NYPD officers and Con-Edison workers told me that Larry Silverstein, the property developer of One World Financial Center was on the phone with his insurance carrier to see if they would authorize the controlled demolition of the building -- since its foundation was already unstable and expected to fall. A controlled demolition would have minimized the damage caused by the building's imminent collapse and potentially save lives. Many law enforcement personnel, firefighters and other journalists were aware of this possible option. There was no secret. There was no conspiracy. (FOX News)
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