Peace Facts

compiled by Lisa Ann Pierce, WAMM

Question:

What do the following individuals have in common?

Frank Carlucci, former U.S. secretary of defense
James Baker III, former U.S. secretary of state
William Kennard, former U.S. FCC chairman
Robert E. Grady, former deputy assistant to President George H.W. Bush
George H.W. Bush, former U.S. president
John Major, former U.K. prime minister
Bakr bin Laden and the bin Laden family, Saudi Arabia
Prince Alwaleed, Saudi Arabia
George W. Bush, U.S. president

Answer:

The Carlyle Group.

The Carlyle Group has quietly become one of the world’s largest private equity firms and, through its holdings, one of the largest defense and government contractors in this nation. They specialize in corporate buyouts of highly regulated industries. Their clients have included billionaire George Soros, Prince Alwaleed bin Talal bin Abdul Aziz Alsaud of Saudi Arabia, and the bin Laden family of Saudi Arabia.

The Carlyle Group has built an empire of defense contractors and telecommunications firms by utilizing Washington insiders and their connections, walking a thin line between the old boys’ network and the highly regulated practice of lobbying.

Frank Carlucci, former U.S. secretary of defense, was hired in 1989. He parlayed his military contractor know-how (and know-who) into a Carlyle defense boom, buying up smaller contractors, rehabilitating them, and reselling them to the big dogs like Lockheed Martin, TRW, and Boeing. Currently, he sits on the Board of Directors for United Defense, along with three other Carlyle-connected directors. He is also a trustee at the RAND corporation, a major Washington, D.C., think tank, where Carlucci chairs the Middle East Public Policy Advisory Board.

James Baker III, former U.S. secretary of state, who represented George W. Bush in his pursuit of the Florida electorate, is senior counsel for Carlyle. William Kennard, former chair of the Federal Communications Commission, was hired to operate Carlyle’s telecom buyouts, which have included dealings with Qwest, Nortel Networks, and Global Crossing—all implicated in accounting scandals along with Enron.

Incidentally, Carlyle’s CFO is a former Senior Manager at Arthur Andersen, auditors to Qwest, Global Crossing, and Enron. And Carlyle partner Robert Grady, former deputy assistant to President George H.W. Bush, has served on the advisory board for Enron.

Former President George H.W. Bush serves as senior advisor to the Carlyle Group. Both Bush and former U.K. Prime Minister John Major have visited Saudi Arabia on behalf of the Carlyle Group, offering services to the Binladen Group, a major construction business operated by Bakr bin Laden, the infamous Osama bin Laden’s half-brother. The bin Laden family is reportedly estranged from Osama and, following public pressure after the September 11, 2001, attacks, the family is no longer engaged in business with the Carlyle Group.

The elder Bush has come under similar pressure to resign his position and divest from Carlyle. Last September, Judicial Watch called on Bush to dissociate himself from the firm, citing apparent conflicts of interest created for George W. Bush as he makes foreign policy decisions that could directly impact the value of his father’s estate.

For example, when George W. Bush ended negotiations with North Korea over long-range ballistic missiles, the former president wrote to his son in an effort to convince him of the importance of working with North Korea. George W. Bush reversed his policy. It should be noted that the senior Bush helped open the Korean market for Carlyle, which has significant interests in Korea’s KorAm Bank and a telecom company named Mercury.

Arguably, the Carlyle Group could enjoy a close relationship with George W. Bush even if the senior Bush did resign from the firm. In 1991, well before George W. Bush was made president, the Carlyle Group placed Bush on the board of Caterair International (a Texas airline food catering business).

The Carlyle reaches into the Pentagon as well. Secretary of Defense Donald Rumsfeld is a friend to Carlucci. In fact, the two of them were together on the wrestling team at Princeton. Rumsfeld is clearly part of Carlyle’s old-boy network, but he has shown some independence from the firm, as evidenced by his decision to kill the Crusader program, a major contract for United Defense, where his wrestling buddy sits on the board.

One wonders about the depth of influence the Carlyle Group enjoys in Washington, D.C., particularly in the areas of government purchasing and regulation. But one also wonders about their reach into areas of policy-making. The firm is generating a significant amount of money from the defense sector, both in the U.S. and abroad. Now, in these days after September 11, 2001, they are enjoying a remarkable opportunity for profit in this so-called “war on terrorism.”

A major source for this article was Dan Briody in Red Herring, a technology business magazine.