Turning over the rocks at…




Sightings from The Catbird Seat

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From The Conspirators: Secrets of an Iran-Contra Insider,

by Al Martin

People in the media often ask me to give them examples of frauds that began in Iran-Contra and continue to this day, albeit under different names.

It’s essentially the same fraud and the same cast of characters.

The examples I always give (about which I have substantive information, since I was involved in all three of the original frauds and also involved in marketing some of the partnerships for the secondary fraud) are the Ocean Reef Development Group, Ltd., the Omni Development Group, Ltd., and the Tri-Lateral Investment Group, Ltd.

Who are the common players who are links between all three deals during Iran-Contra?

They are Frank Carlucci and Richard Armitage.

When Frank Carlucci and Richard Armitage left government service immediately after Iran-Contra (they literally had to leave in order to avoid being subpoenaed as part of the overall coverup), they became principals with Pete Peterson, the infamous Republican player and GOPAC money launderer, in the Blackstone Investment Group, which is a big organization.

Then they simply continued the same real estate development frauds which were begun under Iran-Contra.

This time all the original deals went bankrupt. A certain set of banks got burned. The property reverted to them, and then they refinanced the property again through Blackstone.

Subsequently they entered into an arrangement with another similar sounding company (there’s always been some confusion) the Capstone Development Group, which was also a post-Iran-Contra creature.

They are two separate organizations.

Some people will try to claim that Capstone was simply a subsidiary of Blackstone.

It is not. It is a separate company. Look at the directors. They are none other than Larry Eagleburger and Bernie Aronson, former co-workers of Frank Carlucci and Assistant Secretary of State, Richard Armitage.

However, the real estate frauds continued essentially until the early 1990s. It’s interesting to note how former government officials who were in the Reagan-Bush Administration during Iran-Contra profit by subsequent frauds – post-Iran-Contra frauds, if you will.

For instance, in 1994-95, there was the great Mexican Diversion Fraud, when Blackstone immediately opened an office in Mexico City to take advantage of American taxpayers’ money being lent to Mexico vis-a-vis the OCED and OPEC and other United States lending and/or guaranteeing agencies.

The opportunity to commit fraud against the United States Treasury during that Mexican bailout was just like a walk in the park.

You buy a busted out Mexican company for pennies on the dollar, pump it up, make it look nice, make sure you’ve got your hands out for a twenty or thirty million dollar loan from somebody else, like the IMF, or a direct United States lending agency, and you would be given Brady Bonds which could then be rehypothecated.

And it was such a scam.

Dinnerstein alone documented $130 million of fraud committed by former officials of the Reagan-Bush Administration during the “Great Mexican Turkey Shoot” as it became known.

And then what happened?

The Russian bailout.

Blackstone suddenly opened an office in Moscow and promptly proceeded to do the same thing again. This time they were raping and pillaging the American taxpayer with the same corporate schemes to get money out of U.S. agencies and/or collateral guaranty or fidelity instruments that could be rehypothecated.

It’s exactly the same scheme.

It was another $38 million of fraud according to our estimates at the time.

To follow fraud from the Iran-Contra period and to continue to do it to this day – just look at where the Blackstone Investment Group is opening up offices in the world….

Visit one of the best sites on the internet at: www.almartinraw.com/

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Bush Donor Profile

Stephen A. Schwarzman
Occupation: President, CEO & Co-founder
Employer: Blackstone Group
Home: New York City, NY

Stephen Schwarzman joined Lehman Brothers investment bank (see Stephen Lessing) in 1972, eventually heading its mergers and acquisitions unit. In fact, Schwarzman initiated the failed 1980s merger of Lehman with American Express. Schwarzman quit in 1985, co-founding the Blackstone Group with his ex-Lehman mentor, Peter Peterson, who was commerce secretary under President Nixon.

Blackstone leveraged connections to become the biggest buyout fund in the world. Early Blackstone hires included Reagan Budget Director David Stockman and Roger Altman, a top Treasury official under Carter and Clinton. Blackstone also hired Paul O’Neill as a senior advisor right after President George W. Bush ousted his first treasury secretary.

Blackstone’s far-flung Hospitality Services Division went on a 1990s hotel-buying binge that started with lower-end franchises and expanded to luxury hotels such as London’s Savoy and Washington’s Watergate.

Blackstone’s hospitality division became Cendant Corp. in a disastrous 1997 merger with CUC International that combined hotel assets with Avis rental cars and real estate franchises Century 21, ERA and Coldwell Banker.

The next year Cendant reported that it was slashing its reported earnings over the past three years by $650 million due to widespread accounting fraud at CUC. Cendant sued Ernst & Young (see Les Brorsen) for certifying CUC’s cooked books.

The company, with ex Defense Secretary William Cohen, ex-Canadian Prime Minister Brian Mulroney and Craig Stapleton (see Dorothy Stapleton) on its board, then settled investor lawsuits for a record $3.1 billion.

Ex-Cendant Vice Chair E. Kirk Shelton was convicted of federal fraud charges in 2005.

American International Group (see Hank Greenberg and Ned Cloonan) invested $1.4 billion in Blackstone in 1998.

The $38 million that Schwarzman paid for a Park Avenue apartment in 2000 set a Manhattan record.


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Financial Bonanza behind the 9/11 Tragedy:

Who are the Financial Actors
behind the WTC?

by Michel Chossudovsky, Global Research

On October 17, 2000, eleven months before 9/11, Blackstone Real Estate Advisors, of The Blackstone Group, L.P, purchased, from Teachers Insurance and Annuity Association, the participating mortgage secured by World Trade Center, Building 7.1

April 26, 2001 the Port Authority leased the WTC for 99 years to Silverstein Properties and Westfield America Inc.

The transaction was authorised by Port Authority Chairman Lewis M. Eisenberg.

This transfer from the New York and New Jersey Port Authority was tantamount to the privatisation of the WTC Complex. The official press release described it as “the richest real estate prize in New York City history”. The retail space underneath the complex was leased to Westfield America Inc.

On 24 July 2001, 6 weeks prior to 9/11 Silverstein took control of the lease of the WTC following the Port Authority decision on April 26.

Silverstein and Frank Lowy, CEO of Westefield Inc. took control of the 10.6 million-square-foot WTC complex. “Lowy leased the shopping concourse called the Mall at the WTC, which comprised about 427,000 square feet of retail space.”

Explicitly included in the agreement was that Silverstein and Westfield “were given the right to rebuild the structures if they were destroyed”.

In this transaction, Silverstein signed a rental contract for the WTC over 99 years amounting to 3,2 billion dollars in installments to be made to the Port Authority: 800 million covered fees including a down payment of the order of 100 million dollars. Of this amount, Silverstein put in 14 million dollars of his own money. The annual payment on the lease was of the order of 115 million dollars.5

In the wake of the WTC attacks, Silverstein is suing for some $7.1 billion in insurance money, double the amount of the value of the 99 year lease.

Silverstein Properties Inc. is a Manhattan-based real estate development and investment firm that owns, manages, and has developed more than 20 million square feet of office, residential and retail space.

Westfield America, Inc. is controlled by the Australian based Lowy family with major interests in shopping centres. The CEO of Westfield is Australian businessman Frank Lowy.

The Blackstone Group, a private investment bank with offices in New York and London, was founded in 1985 by its Chairman, Peter G. Peterson, and its President and CEO, Stephen A. Schwarzman.

In addition to its Real Estate activities, the Blackstone Group’s core businesses include Mergers and Acquisitions Advisory, Restructuring and Reorganization Advisory, Private Equity Investing, Private Mezzanine Investing, and Liquid Alternative Asset Investing.

Blackstone chairman Peter G. Petersen is also Chairman of the Federal Reserve Bank of New York and Chairman of the board of the Council on Foreign Relations (CFR). His partner Stephen A. Schwarzman is also a member of the Council on Foreign Relations (CFR). Peter G. Petersen is also named in widow Ellen Mariani’s widow civil RICO suit filed against. George W. Bush, et al.

Kissinger McLarty Associates, which is Henry Kissinger’s consulting firm has a “strategic alliance” with the Blackstone Group “which is designed to help provide financial advisory services to corporations seeking high-level strategic advice.” (www.blackstone.com) .

For details on the insurance claims pertaining to the WTC, see Centre for Research on Globalization, The WTC Towers Collapse: an Enormous Insurance Scam (selected articles), http://www.globalresearch.ca/articles/WTC312A.html , 19 December 2003…

Michel Chossudovsky is the author of War and Globalization, the Truth behind September 11, Global Outlook, 2002


For more on the 9-11 Coverup, GO TO > > > The Eagle Hooded


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From PBS Frontline:


Mikhail Khodorkovsky

Mikhail Khodorkovsky, 40, Russia’s wealthiest man, made his first fortunes in banking. Born in 1963, he was raised in a communal apartment in Moscow by factory worker parents. As a child, he talked of becoming a factory director, and later he became an active member in Kommosol (Communist Youth League). He studied economics at the Mendeleeva Chemical Technical Institute, and in 1987, with several of his fellow classmates, opened a cooperative, selling computers and designing software. By 1990, Khodorkovsky had founded Menatep, a bank with profits rumored to be supplemented by funds controlled by various Kommosol, Central Committee and KGB groups attempting to divert state funds. When the old order collapsed, Menatep provided credit to state enterprises and regional offices while they waited for the new government to establish financial flows. Khodorkovsky also set up a market for state vouchers, and at this time he gained control of several enterprises. Through his holding company, Rosprom, Khodorkovsky snatched up chemical, construction, textile, mining and oil enterprises. In 1995, he won a controlling stake in the oil giant Yukos for less than $500 million — today it is Russia’s largest oil company with market capitalization of $15 billion. In 2003, he became a main target of the Kremlin’s anti-oligarch crackdown. After raiding his offices and arresting Khodorkovsky’s close business associate, investigators went after several other people and companies affiliated with Khodorkovsky for fraud, tax evasion and even murder. In October 2003 Khodorkovsky was seized at gunpoint by Russian federal agents on charges of fraud and tax evasion.

Estimated Worth:
$8 billion

Current Position:
Founder, Menatep Group

Major Holdings:

Other Interests:
Bank Menatep, Trust Investment Bank and Menatep International Financial Alliance; investment firms Global Asset Management, the Blackstone Group, the
Carlyle Group and AIG Capital Partners: information technology company Sibintek; telecom operators MKS, Macomnet, Metrocom, Rascom and Magistral Telecom; and, through his Open Russia Foundation, several Russian news publications

Political Connections:
Khodorkovsky cultivated relationships with government officials through his bank, Menatep, which served the accounts of many state enterprises and regional governments. Three years before his acquisition of oil company Yukos, Khodorkovsky was appointed to the Ministry of Fuel and Energy. In 1996, he was among the Big Seven, Russia’s most influential bankers who backed the reelection of President Boris Yeltsin. Khodorkovsky’s longtime partner, Leonid Nevzlin, is a senator in the Federation Council (the upper chamber of the Russian parliament; seats in the Federation Council are appointed). Despite an informal pact Russian oligarchs made with Putin in 2000 that they would stay out of politics, Khodorkovsky has become increasingly involved in the Kremlin’s affairs. He has financed two liberal opposition parties, Yabloko and the Union of Right Forces, upsetting Putin’s dominance in the Russian parliament.

New Plays:
In April 2003, Khodorkovsky announced his intention to merge Yukos with competitor Sibneft to create the fourth-largest oil company in the world. Although antimonopoly officials have approved the merger, with the ongoing investigations into Khodorkovsy’s activities, it may be delayed.

Khodorkovsky lives with his wife and four children in Moscow. He frequently travels to the United States. He reportedly dined with
Condoleezza Rice last year and recently was a guest at Herb Allen’s Idaho ranch, along with Bill Gates, Warren Buffett and other luminaries, for an annual telecommunications executives meeting.

After a series of dubious business practices, Khodorkovsy has struggled with a poor public image. In 1998, his bank Menatep collapsed, yet Khodorkovsky managed to protect himself, despite damage to his depositors and creditors. (The bank also defaulted on a $236 million loan from Western banks.) In 1999, he moved the location of a Yukos shareholders meeting 160 miles from Moscow without advance notice to minority stockholders, keeping them from voting against the sale of Yukos’s assets to an offshore company. That same year, he prepared a large issue of new shares that diluted the stake of American investor Kenneth Dart, who claimed Khodorkovsky defrauded him of millions of dollars. Recently, however, Khodorkovsky hired a Washington, D.C., public relations firm, and he is presenting himself as a crusader for stockholder and investor rights. Khodorkovsky donated $1 million of Yukos profits to the U.S. Library of Congress, and he set up the Open Russian Foundation, with
Henry Kissinger as a member of its board of trustees, to donate to museums, hospitals and universities. In 2001 and 2002, Khodorkovsky’s net worth increased fourfold.


Special Update – Oct 28, 2003

Just five days before FRONTLINE/World’s broadcast of “Rich in Russia,” Russian oligarch Mikhail Khodorkovsky was seized at gunpoint by Russian federal agents in Siberia while refueling his private jet. Khodorkovsky’s dramatic arrest and detention on charges of fraud and tax evasion follows a months-long government investigation of his company Yukos. Khodorkovsky claims the attack is politically motivated, because he has bankrolled the campaigns of opposition party candidates running in the December 2003 parliamentary elections. (President Vladimir Putin is preparing to seek a second term in March 2004.) If convicted, Khodorkovsky could face up to ten years in prison.

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September 29, 2005

Emmis Sells 4 Stations to Blackstone, SJL

Katy Bachman, MediaWeek

Emmis Communications announced Thursday it has reached an agreement to sell another four of its TV stations to affiliates of the Blackstone Group, a private investment firm and the SJL Broadcast Group for $259 million. The sale follows the Indianapolis-based company’s strategy, announced in May, to sell its TV station group to improve its financial position and concentrate on its radio business.

The sale of KOIN-TV, the CBS affiliate in Portland, Ore.; KHON-TV, the Fox affiliate in Honolulu; KSNW-TV, the NBC affiliate in Wichita, Kan.; and KSNT-TV, the NBC affiliate in Topeka, Kan., leaves Emmis with three more TV stations to divest.

In August, Emmis sold nine of its 16 TV stations for $681 million in three separate transations, bringing total TV sales to $940 million. With three more stations to sell, including a station in Orlando, the 20th largest TV market, Emmis is easily on its way to bring in more than $1 billion, as analysts have estimated.

“We are engaged in discussions [for the remaining stations]. The entire process has been slowed down because of Hurrican Katrina,” said Jeff Smulyan, chairman and CEO for Emmis, during the company’s quarterly conference call.

Headquartered in Montecito, Calif., SJL Broadcast Group was formed in 1983 to build a group of network-affiliated TV stations. The group currently owns and operates five stations in San Luis Obispo, Calif.; Erie, Penn.; Hungtington, W.V.; Altoona, Pa.; and Binghamton, N.Y.

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January 28, 2006

On-air criticism lands KHON’s
Moore in hot water

The station’s new ownership disputes charges of lost quality

By Erika Engle. Honolulu Star-Bulletin

The new owners of KHON are not happy with their top-rated news anchor.

At issue are remarks by Joe Moore at the end of the 6 o’clock news Thursday evening, reprinted in yesterday’s Star-Bulletin and repeated by Moore yesterday during the also top-rated “Perry and Price Show” on KSSK-FM 92.3/AM 590.

“What was said last night was not the truth,” said Sandy Benton, chief operating officer for Montecito Broadcast Group LLC, which has changed its name from SJL Acquisition LLC. “I need to address it with Joe.”

Moore had said Montecito “is a virtual company with no office building.”

Benton said there is a home office. “Of course there is. It’s in Montecito (Calif.),” she said.

Montecito’s founder, president and chief executive officer, George Lilly, lives in Montecito. He could not be reached for comment.

Regarding the 35 job cuts the company has announced for KHON, Moore said, “A small percentage of people will be replaced by automation. The rest will severely reduce our ability to serve the community in the manner in which you, and we, have become accustomed.”

Benton countered, “We have every intention of serving the community to the same degree it has been served in the past. If somebody had asked, we would have told them that. In fact, we did tell them that.”

Asked if the commitment could be maintained with one-third less staff, she said, “I think you continue to forget that a good percentage of (the job cuts) will be automation.”

It has not been announced who will be laid off at KHON.

Benton said she is aware that Moore has a track record of being outspoken.

“I don’t mind that he’s outspoken, but I don’t want to see inaccuracy flying out of here like that. I don’t know if our airwaves is the place to be outspoken,” she said.

Moore has four years remaining on his contract.

Wrapping up the 10 o’clock news Thursday night, Moore thanked the 6 p.m. viewers who had communicated support to the KHON newsroom during the night.

He declined further comment yesterday afternoon.

Emmis Communications Corp., which announced last year it was selling KHON and three mainland television stations to Montecito, completed the sale of KHON yesterday.

Emmis still owns and operates KGMB in Honolulu, WVUE in New Orleans and WKCF in Orlando, Fla., stations for which it is seeking a buyer.


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From:           Paul Craig – Treasurer IBB Local 484

To:               thecatbird@the-catbird-seat.net

Subject:      Locked out Boilermakers L-484

Date: Sun, 18 Dec. 2005

Dear Brothers and Sisters:

The boilermakers Local 484 of Meredosia Illinois have ben locked out from the Celanese Co. since June 5th, 2005, after the company broke off negotiations. Attached is the information that we have sent out to other supporters. Check out our struggles at www.boilermakers484.org….

In Solidarity,

Paul Craig

IBB 484

For more, GO TO > > > www.lockout484.org/index.htm

Note: Celanese Co. is majority owned by Blackstone Group.

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July 9, 2004

Outrigger selling 2 resorts

By Allison Schaefers, Honolulu Star-Bulletin

Outrigger Enterprises Inc. has agreed to sell its Waikoloa Beach Marriott and Wailea Marriott resorts to affiliates of Blackstone Real Estate Advisors of New York for an undisclosed price.

The Wailea Marriott is a 521-room hotel on 22 beachfront acres in the Wailea Resort on Maui. The Waikoloa Beach Marriott is a 545-room hotel that sits on 16 oceanfront acres on the shore of Anaehoomalu Bay on the Big Island’s Kohala Coast….

Both hotels, which have been operated by Outrigger through a franchise agreement with Marriott International, will continue to be affiliated with Marriott International after Blackstone’s acquisition. The sale is expected to close as early as July 30, said David Carey, chief executive of Outrigger Enterprises….

Under various management contracts and its two hotel brands, Outrigger Hotels & Resorts and Ohana Hotels & Resorts, the company operates or has under development 51 hotels and resorts throughout the Pacific region, Carey said.

Blackstone, a private investment firm, is most recently known in Hawaii for having sold the Hyatt Regency Maui for $321 million in cash last year to Host Marriott Corp.

The company owns the Marriott Grosvenor Square Hotel in London, the Westin St. Francis in San Francisco and the Hyatt Capitol Hill in Washington, D.C.

Outrigger could not comment on what will happen to employees at the two hotels.

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September 10, 2003

Blackstone, Apollo and Goldman Sachs to Acquire Ondeo Nalco from Suez for $4.2 Billion

A consortium of private equity firms comprised of The Blackstone Group, Apollo Management, L.P., and Goldman Sachs Capital Partners (collectively, the “Investor Group”) has signed a definitive agreement to acquire Ondeo Nalco from Suez S.A. in a transaction valued at $4.2 billion.

Nalco is the world leader in providing water treatment and process chemicals and services to companies in the general industrial, pulp and paper, and energy sectors. With over 10,000 employees and operations in 130 countries, the company provides innovative applications and solutions for the water and industrial process needs of over 60,000 customers. Nalco generated revenues of over $2.5 billion in 2002 and is based in Naperville, IL.

The transaction will be funded with approximately $3.2 billion of senior and subordinated debt financing and the remainder in equity provided by the Investor Group, and is expected to close in the fourth quarter of 2003, subject to customary regulatory approvals.

Following the transaction, Nalco will operate as an independent company.

Source: The Blackstone Group

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July 30, 1998

AIG to Invest $1.35 Billion in
The Blackstone Group and Its Funds

From Business Wire

NEW YORK – American International Group, Inc. (AIG) and The Blackstone Group today announced the initiation of a long-term investment agreement valued at approximately $1.35 billion. Under the terms of the agreement between the two firms, AIG will acquire a 7% limited partnership interest in The Blackstone Group and its affiliated companies for $150 million. In addition to its investment in The Blackstone Group, AIG has agreed to invest over a number of years an estimated $1.2 billion as a limited partner in future private equity, real estate, and other funds The Blackstone Group sponsors.

The formalization of this relationship comes after years of close cooperation between AIG, the global insurance and financial services organization, and Blackstone, the private merchant bank.

M.R. Greenberg, Chairman and Chief Executive Officer of AIG, has served as an Advisory Director of The Blackstone Group since Blackstone established its first advisory board in 1989….

Blackstone’s co-founders, Peter G. Peterson (Chairman) and Stephen A. Schwarzman (President and CEO), said in a joint statement, “AIG is one of the very best managed and most profitable financial services organizations in the world. … We deeply appreciate the fact that AIG has decided to make an equity investment in our firm and a major new long-term commitment to our funds….”

For more, GO TO > > > Allied World Assurance; AIG: The Un-American Insurance Group; The Carlyle Group; The Chubb Group; Dirty Gold in Goldman Sachs; Marsh & McLennan: The Marsh Birds

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February 16, 2000

American International Group, Inc., the Blackstone Group L.P. and Kissinger Associates, Inc. Announce a New Strategic Advisory Venture

From Business Wire

NEW YORK – American International Group, Inc. (AIG), The Blackstone Group L.P. and Kissinger Associates, Inc. announced today the establishment of a new venture to provide financial advisory services to corporations seeking high level independent strategic advice.

Each party to the venture brings unique value, skills, and relationships. Kissinger Associates, which is chaired by former U.S. Secretary of State Henry Kissinger, is a strategic advisor to CEOs and senior executives of numerous global corporations. AIG is the leading international insurance and financial services organization with an unmatched worldwide network, and it also sponsors private equity funds in many parts of the world, particularly in Asia.

The Blackstone Group, in addition to sponsoring private equity, real estate, liquid alternative asset, and mezzanine funds, is a pioneer in cross-border mergers and acquisitions and has advised on hundreds of billions of dollars worth of M&A and restructuring assignments.

Together, the three firms will enjoy excellent access to business leaders worldwide and will offer a unique set of client services. The venture will operate globally and will take advantage of the existing relationships between the partners.

AIG has an ownership interest in Blackstone and is an investor in several of Blackstone’s private equity funds;

AIG and Blackstone have a joint venture, specializing in restructuring and M&A advisory services in selected Asian countries.

Henry Kissinger chairs both AIG’s International Advisory Board and the advisory boards of several AIG-sponsored Infrastructure Fund….

Henry Kissinger, Chairman of Kissinger Associates said, “Hank Greenberg, Pete Peterson and I have been close friends and business associates for decades. This venture of our three firms is a great opportunity to provide a new level of service to multinational companies in the contemporary political and economic framework.”….

Kissinger Associates, which is chaired by the former U.S. Secretary of State Henry Kissinger, is a leading consulting firm based in New York City. Thomas F. McLarty, formerly Presidential Chief of Staff and Latin American Envoy, recently joined the Firm as Vice Chairman.

Kissinger Associates provides strategic and geopolitical consulting services to multinational corporations, including assistance in forming joint ventures and guidance in solving business problems in foreign countries….

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May 10, 2003


Blackstone M&A chief
builds a team

Tony James is hiring while others cut staff

By Luisa Beltran, CBS.MarketWatch.com

NEW YORK (CBS.MW) — While the rest of Wall Street sheds bankers and reels under a declining equities market, Hamilton “Tony” James is quietly building a merger and acquisition team at the Blackstone Group.

James, who oversees Blackstone’s private equity and M&A investment banking groups, is looking to hire about 75 bankers, at all levels, by 2004. Blackstone currently has 25 bankers within its M&A ranks, and hopes to add five to 10 in the short term.

“We are in the process of team building,” James said. “Once we get the team together, we’ll start transitioning client relationships and doing deals.”

James hopes to have the team in place next year and will be focusing on sectors such as media and telecommunications, financial institutions, health care, and energy and power. The Blackstone M&A team will likely be paired up with full-service firms such as Goldman Sachs and Merrill Lynch on deals.

Such high-profile plans come during a drought for mergers. The number of global announced transactions has dropped this year by nearly 12 percent to 8,215 deals, while valuations fell 8 percent to $360.2 billion, according to data from Thomson Financial.

Because of the Iraqi conflict, many dealmakers have put M&A on hold. James believes the current dry spell is due not only to war but also a general lack of confidence, which is causing deals to stall. It’s not that companies are shunning deals, he said, but they are starting transactions and then pulling out.

“Companies are reluctant to get committed,” James said. “They still like shopping but they are stopping short of making the ultimate commitment.”

A switch

At Donaldson, Lufkin & Jenrette, James earned his stripes by successfully housing private equity within an investment bank. Such an arrangement allowed the private equity team to gain leads from the investment bank.

“At CSFB [Credit Suisse First Boston] and DLJ, we showed over 15 years that you can run those business in a completely conflict-free way and have synergies by having them so closely aligned,” James said.

He also founded DLJ’s merchant banking business in 1985, which made the firm “tons of money,” one former co-worker told CBS.MarketWatch.com.

So it was a natural fit last November when James jumped to the Blackstone Group from CSFB, where he had been chairman of investment banking and private equity. CSFB is the banking unit of Credit Suisse Group.

New York-based Blackstone is the acquisitive private-equity firm which last year acquired TRW‘s automotive business for $4.7 billion. This year, Blackstone is believed to be in talks to buy the Vivendi Universal‘s theme parks.

“It a great fit,” said Charles Ward, president of Lazard. “He will add a lot to both sides of Blackstone — the private equity and the investment bank.”

Ward and James have been seen as the driving forces behind Credit Suisse Group’s $11.5 billion acquisition of DLJ in 2000. Once Credit Suisse acquired DLJ, Ward and James were co-heads of investment banking and private equity at CSFB before each left the firm at different times.

While James played a role in the megamerger, DLJ shareholders were happy to sell, he said. “The management team decided to sell the company,” James said. “At end of the day, I was the senior remaining executive from DLJ that was trying to make the merger integration work.”

The settlement

James joined Blackstone shortly before regulators clinched a $1.4 billion settlement with 10 investment banks, including CSFB, last December. A formal pact, signed on April 28, requires the firms to sever certain links that exist between investment bankers and stock analysts.

The Securities and Exchange Commission, including regulators such as New York state Attorney General Eliot Spitzer, accused CSFB along with Merrill Lynch and Citigroup’s Salomon Smith Barney, of issuing fraudulent reports to win lucrative investment banking business.

“Many of the big firms went way overboard in pursuit of short-term profits,” James said. “For everyone’s sake, I hope we put it behind us because all it does is weaken the public trust in the capital markets.”

James declined to comment on the fraud allegations against CSFB.

But the problems on Wall Street are proving to be a boon to Blackstone. Clients are now coming to James because they are looking for an adviser who is conflict-free and has an unblemished record, he said.

“That is exactly what Blackstone is. Conflict-free,” said James’s old boss, John Chalsty, the former chairman and CEO of Donaldson, Lufkin & Jenrette.

“They don’t have to provide analyst research.”

The DLJ connection

DLJ was also conflict-free when it was co-founded in 1959 by current SEC Chairman William Donaldson. DLJ started as a pure provider of institutional research and didn’t begin a serious move into investment banking until the early 1980s.

James, 52, joined DLJ in 1975 when the firm had just a few bankers. He became head of M&A in 1982. Under James, DLJ blossomed into a leading investment bank, advising Qwest on its $48 billion buy of US West in 1999.

“Initially, Tony was involved in nearly every deal,” said Chalsty, who is now chairman of Muirfield Capital Management. “As we grew he continued to have a role in nearly every deal we were involved in. He was a remarkable banker.”

But some claim that the problems at CSFB over analysts’ conflicts were inherited from DLJ. “DLJ went from being a pristine research house to the house that kicked around analysts to get global finance business,” said analyst Richard Bove, of Hoefer & Arnett.

The cult of James

As an investment banker, James holds the uncharacteristic title of being known as a “people person.” One of his strongest talents is dealing with the many egos of an investment bank, former co-workers said….

Clients are also a top priority for James. But unlike other rainmakers, he doesn’t take them to basketball games and he rarely goes on fishing trips. Also, James doesn’t golf. “CEOs can afford all the basketball games that they want themselves,” he said.

Instead, he tries to understand client issues and gives them the fairest advice he can. James pointed to long relationships with Sealed Air and Costco Wholesale.

“You always put the client’s interest first,” James said. “Always tell them exactly what you think. And never do anything for the fee or because it’s in your firm’s interest.”

It is this strategy, which caused some former co-workers to say: “Clients love Tony James.”

“My clients always stay with me,” he said.

Luisa Beltran is a reporter for CBS.MarketWatch.com in New York.

© 1997-2003 MarketWatch.com, Inc. All rights reserved.

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The Unbearable Goodness of Being Greedy

By Shamarukh Mohiuddin with Kate Cloud and Nikhil Aziz

Treasury Secretary Paul O’Neill’s confidence in the “genius” of capitalism, even as corporate scandals continue to unravel might be ironic, but it is certainly not surprising. The defense of unfettered capitalism has been a trademark of the contemporary U.S. conservatism ever since the political Right wedded moral traditionalism with libertarian free market principles. Now, in the wake of a corporate crisis that has global implications, the Right stands ready once again to justify a free-market system that has sustained it for years….

Telecom giant Qwest Communications recently admitted to overstating revenues by over $1 billion for the last three years. Frequent additions to the list of corporate malefactors, since Enron, makes one wonder how a “few bad apples” could be an apt description of the current scenario in corporate America. It is notable that even some doyens of big business leadership such as Pete Peterson, Nixon’s Secretary of Commerce and now chairman of the Blackstone Group, have started smelling a “rotting orchard” (interview with Jim Lehrer on PBS NewsHour, 07/12/02)….

In spite of the government’s empty rhetoric that strict regulations are needed, Right Wing commentators constantly assert that the market is able to self-regulate. The Right’s market fundamentalist prescription, per columnist Steve Chapman, is for government to “step aside” and let the market run its course (www.townhall.com, 07/11/02).

James L. Gattuso of the conservative Washington think tank, Competitive Enterprise Institute, has an equally ingenious solution. He agrees that accounting standards need tightening, but “this can and should be done,” he says, “through private, rather than political, regulatory bodies.” (www.cei.org, 07/28/02). The Heritage Foundation offers a similar solution in its 07/12/02 issue of the Backgrounder.

And what about President Bush’s resolve to punish those “corporate criminals.” Bush, perhaps, has hopes that a discourse on morality (while posing in front of Corporate Responsibility logos) would serve the dual purpose of spotlighting those “bad apples” and helping the public forget about his Harken boardroom dealings.

Throughout right-wing commentary, one topic is seldom touched upon: the fate of ordinary corporate stakeholders. Every time a scandal breaks, hundreds upon thousands of ordinary workers are laid off. It is as if these workers are being treated as collateral damage while the market runs its course. Collateral damage will probably include millions more who would likely suffer if Social Security funds were put into the stock market. The conservatives’ aggressive attempt to privatize Social Security, just before the corporate scandals, has now subsided to a whisper, at least temporarily. Still, there are many who continue to adhere to their privatization agenda….

One of those values –– greed –– is defended by the Right as both unavoidable and useful. Chapman argues in his column that capitalism functions to “channel greed into activities that provide broad benefits.” Trefgarne supports this argument when he posits that since markets are based on human nature, it is only inevitable that they will “fall victim to humors and passions, such as greed and fear.” He says that the very fact of the corporate scandals taking place shows that “rather than the markets failing, they are working”.

Like many supporters of unfettered capitalism he fails to mention for whom they are working.

The current Administration’s close ties to Enron, Halliburton and Arthur Andersen, demonstrate the links between economic and political actors. While many of our leading politicians, regardless of party affiliation, are now trying to distance themselves from corporate fraud, they cannot erase their long history as both beneficiaries and benefactors of the fallen corporations.

Arthur Anderson’s promotional video from 1996 shows Vice President Dick Cheney (then CEO of Halliburton) applauding the accounting firm for providing advice “over and above the just sort of normal by-the-book auditing arrangement.” (www.commondreams.org/headlines02/0710-01.htm).

And not so long ago, President George W. Bush, a long time friend of Enron’s Kenneth “Kenny Boy” Lay, was the head cheerleader for the superiority of US business leaders. While campaigning in 2000 he said corporate CEOs were “revolutionizing how businesses conduct their business.” (C-Span, 01/04/01). In light of current events, this statement rings devastatingly true.

Even though Enron was just the beginning, administration officials are insisting that “no new laws are needed to reform corporate America, only enforcement of existing laws”, as pointed out economist Paul Krugman. (Op-ed, New York Times, 08/13/02). Accordingly, the Bush Administration championed a bill that allowed minimal accounting reforms after trying to block it. When the bill was passed, it “began issuing ‘guidance’ to federal prosecutors that will undermine the law’s intent on whistle-blower protection, document shredding and more.”

Bush and Co., as Krugman observes, “just don’t get it.”

Shamarukh Mohiuddin was a PRA intern in the summer of 2002


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From The Conspirators: Secrets of an Iran-Contra Insider, by Al Martin

THE FINAL REPORT of the Congressional Select Committee, chaired by Christopher Cox of California, has been released. His co-chairman Nelson Dix of Washington, is a Democrat but essentially controlled by Republican interests, who’s very close to the defense industry within the State of Washington.

They have released this Cox Report, wherein thy mention that illicit transfers of high technology American weapons in exchange for political money have been going on for over twenty years.

Of course, they just mention it as a matter of state policy.

In their draft report, they mention only two defense contractors – Loral and Hughes Electronics. The only reason these two were mentioned is because they have already been previously exposed vis-a-vis the illicit transfer of high technology weapons to China.

However, no mention was made of political money in exchange for Department of Commerce permits allowing these defense contractors to export weapons and technology. Furthermore, no other defense contractors were mentioned in the draft report of the Select Committee….

Back to 1978 – the balance had been restored in the sub-continent vis-a-vis our interests, namely that India, although technically a non-aligned state and the second power of the non-alighed association of states, was in fact a Soviet satellite.

India was financed by the Soviet Union. They received all of their arms from the Soviet Union. In the United Nations, they would consistently vote with the Soviet Union. Although they maintained the facade of independence and paid lip service to the west, they were in fact a de facto Soviet state.

Pakistan was very pro-United States. Having been extensively armed by the United States, it resumed its theater political and military position by being hostile towards India and keeping India in check.

It was also hostile toward the Soviet Union and moving once again closer to the People’s Republic of China, particularly the People’s Army and the Public Security Bureau (PSB).

These events relate essentially to earlier doctrines – doctrines that had originally been discussed in 1971 when Nixon first broke the ice with China with his meeting with Zhou Enlai.

These were later consolidated into a CIA policy in 1973, which literally became known as the “Colby China Doctrine.”…

Colby’s concept was to contain Soviet expansionism in all spheres simultaneously by supporting opposite factions….

The policy towards arming China began to change in 1986, when relationships between the United States and the Soviet Union began to thaw to some degree. They continued to thaw in the years thereafter.

Some of my fellow cohorts knew – for instance, in discussions I had with Elliot Abrams in 1986 (he was the Assistant Secretary of State for Latin American Affairs) – what the bigger picture was.

The Republicans withing the Reagan-Bush regime knew as early as 1986 that there was a potential scandal brewing, if the extent of indirect weapon transfers to the People’s Republic of China in exchange for Chinese money ever came out.

This became an increasing detriment due to the shift in global strategic policy from a hardline towards the beginning of a thaw between the US and the Evil Empire of the Soviet Union.

By this time (1986-1987), the Chinese began to be regarded as a destabilizing force geopolitically, whereas before they had been considered a stabilizing force.

The Soviet Union had not been particularly concerned about our weapons transfers to China for twenty years (from 1966 to 1986) insofar as Chinese strategic nuclear weapons had all been concentrated around the facilities where China produced nuclear weapons, namely Lop Nor.

By 1986, however, much to our chagrin, Chinese strategic assets had been well dispersed throughout the country in mobile launchers and in silos.

We also became increasingly aware that the bulk of Chinese strategic forces was in fact aimed at the United States, not at the Soviet Union, as had been commonly presumed earlier – and as the Chinese had informed us earlier.

Therefore, there was a period from 1986 to 1990 where weapons technology transfers and sales to China via intermediaries were temporarily scaled down, just at the Soviet Union began to convert from a communist country to a capitalist country.

However, when it became apparent in 1990 that the Soviet Union was effectively unraveling, we returned to the situation that we were in previously. This time it was for a different reason. It was that Russia was now a destabilizing factor because of its own internal political chaos.

Therefore, a renewed effort with China to bolster Chinese technology and to bolster the production of strategic systems in China was looked at as a restabilizing influence against influence against Soviet internal instability instead of external adventurism, as it had been ten years prior.

In 1991-1992, at the very end of the Bush administration, technology and weapons transfer to China was ramped up again, which served Mr. Bush well in terms of the amount of Chinese money that came into his 1992 presidential campaign.

However, this in not to say that the Chinese didn’t hedge their bets.

They had traditionally given money to both parties for years through a variety of artifices. Before 1992, the bulk of political campaign contributions had always been given to Republicans.

In 1992, even the Chinese sensed there was a shift coming. They made sure, for the very first time, that the Democratic National Committee started to get six-figure Chinese money.

Fast forward to today, that amount of money has increased. The policy of covertly arming China has really not changed. As Larry Klayman at Judicial Watch is correct in pointing out, we are “Japanning” China….

What he’s saying is that by allowing China, ostensibly a hostile nation, to have “most favored nation” status with the United States regarding trade policies, we are allowing China to exercise a $3 to $4 billion a month trade deficit with the United States.

Much of this trade deficit is then used to purchase weapons, which are used to build strategic thermonuclear weapon systems pointed at the United States.

The long and short of it is that the American citizen acting in his capacity as both a taxpayer and a citizen is essentially arming China to point weapons at the United States.

And that is the real nub and the real sizzle of the scandal….

What we have not discussed is the money coming through a variety of Chinese agents. The crossover between the Republicans and the Democrats vis-a-vis surreptitious Chinese political money coming into the national committees of both coffers has been worked consistently over twenty years by the same intermediaries.

This is what has already been publicly revealed about Charlie Trie and John Huang, for instance, and the 147 other Chinese that commonly mentioned in the media as being “The Gang of 147″ identified by Congress.

The banks, which are the root of the money, start from the Bank of China and filter out through the Hong Kong branch of the Hong Kong and Shanghai Bank, the Industrial Bank of Indonesia, and the Riady family.

The notion of Clinton’s closeness to the Riady – this isn’t new. None of this is new. The Riady family was also very close to the Bush people. It’s just that when the money for Republicans left the Industrial Bank of Indonesia, it simply took different routes.

It is Chinese money (and this is little known) that principally caused the formation of the Nugan Hand Bank.

When that fell apart and became exposed and some people in Australia died to make sure it stayed covered up, there was simply a new artifice created for Democrats.

Money from the Riady group was coming directly into Arkansas banks, principally through the Stephens Investment Group. It was simply a different artifice when the money went from the Orient to the United States.

When it got to the Democrats, it was simply a different set of banks and a different set of brokerage firms. In Republican times, the money had often been filtered through Merrill Lynch.

Now the money is filtered through Stephens Investment Group and other smaller brokerage firms close to Clinton or other Democrats.

What has come to light recently is the Democrat side of the equation. This includes the connection of Ron Brown, the DNC, Chinese weapons and licensing by the Commerce Department for export of armaments and high-technology weapons, which were winding up in China being mislabeled and so forth.

You start to understand the role of Ron Brown in all of this. And you start to understand why he had to go.

Ron Brown suddenly died at the very same time the FBI received conclusive information that John Huang and Charlie Trie and a few others were not only just Chinese businessmen, but were in fact reserve officers (not just in the PSB) but of the MSS, the Chinese Ministry of State Security.

If this were to become publicly known (the FBI already knew it and had leaked some of this information, but not the proof to back it up, to Burton’s committee), FBI Director Freeh has recognized the political implication.

This would constitute treasonable conduct by the Clinton administration….

It also represents treasonable conduct by the Bush administration. I imagine that’s why certain Republicans aren’t all that enthralled about investigating it.

Look at the Republicans who are the most reticent in supporting a new and expanded probe into Chinese money for Chinese weapons. They are the very same Republicans of the old Bush group who were very close to the defense industry before and continue to derive much money from the defense industry.

It struck me with some humor that the members of the Congressional Select Committee investigating this includes the second most senior Republican member. It’s none other than Congressman Porter Goss, who has the distinction of having received more defense money from Loral and Hughes Electronics than anyone else.

So if anyone is looking for any astounding revelations from the select committee, or even the Defense Intelligence Oversight Committee, which is also loaded with Republicans close to the defense industry, I wouldn’t bet on it….

An interesting little double feature of this on the Republican side is how they’re making money three ways to Sunday on this thing.

In 1991, the first people who set up export companies in the Soviet Union were all part of the Old Bush Gang.

Frank Carlucci and Dick Armitage set up an export company, Blackstone Investment Group, operating ostensibly for the CIA to purchase potentially wayward nuclear materials out of the Soviet Union. This also involved some technology that people weren’t aware of.

The stuff was getting repackaged and then surreptitiously sold back to China.

In other words, how can you sell the same nuclear components and technologies five different times in ten years and keep selling them to the same parties back and forth?

It’s incredible. But, as I’ve said before, you could write a separate book on this….

Anyway, I think I’ll end it here because otherwise if I start getting into the banks, it’s just endless – following this Chinese money around. And then how it gets looped into deals in the United States and looped into transactions that are so far removed, you would never believe that they originally extended from Chinese money.

They get guaranteed from all sorts of esoteric little agencies that don’t have anything to do with the Department of Defense.

It’s almost laughable.

For more, GO TO > > > Crouching Dragons-Hidden Rats; Flying High in Hawaii; The Indonesian Connection; The Secret Nests: CIA; Year of the Dragon

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From “Agents of Influence: How Japan Manipulates America’s Political and Economic System,” (copyright 1990)

by Pat Choate

JAPAN’S ECONOMIC PROPAGANDA techniques are remarkably similar to America’s political propaganda techniques. A quick way to understand how Japan spreads its propaganda in America is to look at how America spreads its own propaganda elsewhere.

America operates two propaganda program – one is overt, the other is covert. The overt program is operated by the U.S. Information Agency (USIA), which diffuses information about American culture, history, and political positions. USIA employs all the standard public relations techniques – hosting lunches, arranging interviews, distributing literature, providing American guest speakers, stocking libraries, arranging cultural exchanges, sponsoring conferences, and financing trips to America for students, academics, and foreign opinion leaders.

America’s covert propaganda program is directed by the Central Intelligence Agency. By any measure, this is a massive undertaking. Loch Johnson estimates that fully 40 percent of CIA secret operations are propaganda programs.

The substance of this covert propaganda is carefully monitored ot ensure that it reflects the nuances of the government’s current policies. Policy papers describing the intended message are prepared by the CIA and reviewed by the State Department – even the White House. To spread its propaganda, the CIA has recruited several hundred memebers of the foreign media. Johnson says:

“The CIA secretly provides a flood of supportive propaganda distributed through its vast, hidden network of “media assets”: reporters, newspaper and magazine editors, anchormen, television producers, camermen, broadcast technicians – the whole range of media personnel. Whatever foreign policies or slogans the White House may be pushing at the time … (there have been hundreds of such propaganda “themes” over the years) … the CIA will likely be advancing these same ideas through its covert channels.”…

In addition to advancing specific U.S. themes, the CIA also uses its media assets to boost politicians and opinion leaders in other countries whose positions are favorable to the United States and to tarnish those whose positions are not. Other nations do the same, including Japan.

Why do foreign journalists free-lance as CIA propaganda promoters? Money is generally the biggest incentive. Most work for a regular CIA salary or on a piece/rate basis. Others volunteer. Ideology, patriotism, personal affinity for Americans, social ties, and entrapment have each served as bonds. Some work for America as a means of professional advancement: in return for their assistance, the CIA, the Defense Department, and the State department give them privileged access to officials, scoops, and inside information. Others are unaware that they are being used. Regardless of the reason, the end result is the same.

Japan’s propaganda techniques are similar to those used by America. Much like an enormous Wurlitzer organ, Japan pumps out a steady flow of propaganda through thousands of outlets – books, speeches, reports, conferences, television, editorials, articles, and whisper campaigns….

The overt propaganda largely is concerned with providing foreigners a better understanding of Japanese history and culture. It is managed by government agencies like the Japan External Trade Organization (JETRO) and Japan’s Foreign Ministry, and surfaces in an array of official government publications.

Japan’s covert propaganda, on the other hand, has little to do with history and culture. Not surprisingly, it aims to develop the Japanese economy, its industries and its exports. MITI and a slew of Japanese agencies, foundations, companies, and trade associations work quietly to further this end. Often, they see to it that others – including Americans in the pay of Japan – further it for them.

A representative example of how the Japanese Wurlitzer works is its program to blunt critcism of Japan’s rapidly growing, highly visible investments in many of America’s most productive and most critical industries.

After the Reagan Administration began its radical devaluation of the dollar in 1985, Japan used its newfound purchasing power to acquire undervalued American assets. The Japanese of such prominent properties and companies as Rockefeller Center, CBS Records, and the Firestone tire company generated sharp but generally unfocused political criticism….

[One of the entities involved in the Rockefeller Center purchase was Kamehameha Schools Bishop Estate.]

In mid- and late 1988, conferences on foreign investment became an American growth industry. Many were conducted by think tanks that were funded – in part or whole – by Japanese sponsors. Others were organized by accounting and law firms that had hefty Japanese client bases or by trade associations with extensive Japanese membership.

Japanese companies urged still other policy organizations to hold foreign investment symposia. Lawrence Baer, president of the Global Economic Action Institute (GEAI), a think tank funded largely and initially by the Unification Church, says a Japanese trading company approached him in 1988 aand encouraged GEAI to sponsor a conference on foreign investment. The group complied. The roster of forum participants featured leading Wall Street bankers, most of whom were helping the Japanese buy more American assets.

All of these conferences were strikingly similar. For the most part, the speakers were well-known investment bankers, lawyers, ex-officials, or academics with personal or professional ties to Japan. Two of the most prominent speakers on this conference circuit were Elliot Richardson and Peter Peterson.

Besides being founder, general counsel, and head of the Association for International Investment, Richardson is a senior partner in the law firm of Milbank, Tweed, Hadley & McCloy. One of the firm’s clients is the government of Japan.

Peterson, once Secretary of Commerce, is chairman of the Blackstone Group, a well-known Wall Street investment bank that is partially owned by Japanese investors….

After the 1988 election, President Bush said that Americans should mute their criticism of foreign investment, lest foreign investors refuse to finance the federal budget deficit….

Japan got the Administration’s message. Soon after Bush’s announcement, a Japanese diplomat reported that his embassy had concluded that the foreign investment issue was no longer a pressing political problem….

In the spring of 1989, MITI contacted Japanese investors and “suggested” that they be “sensitive” about making conspicuous purchases in America. The warning came at a propitious moment. The Bush Administration was considering whether to declare Japane an unfair trader. When the Administration decided to give Japan a simple slap on the wrist, Japanese purchases of prestigious American assets soon began surging again.

In the fall of 1989, Japanese investors bought Columbia Pictures, then New York’s Rockefeller Center. At the same time, ex-President Reagan was paid a well-publicized $2 million for making a speaking tour of Japan. In combination, these three events put Japanese investment back into the public spotlight. The Japanese Wurlitzer went back to work.

On November 1, 1989, Richard Whalen’s firm WIRES sent a 23-page foreign investment report to America’s newspaper editors, columnists, and foreign editors. It looked like an official news release or wire report. The report’s principal message: “In an increasingly interdependent world economy, investment across borders is both inevitable and beneficial to the U.S.”

The balance of the report argued that Japanese and other foreign investment was good for America, and that the Exon-Florio Amendment in the 1988 Trade Act which gave the President the authority to investigate and block foreign acquisitions that threaten national securityis bad.

Americans with ties to Japan echoed the same message in op-ed pieces, interviews, and speeches….

It’s not surprising, Japanese investors provide much of the new money on which Wall Street depends. And Japanese investors now own an extensive financial stake in may of American’s leading investment firms. Nomura Securities, for instance, owns 20 percent of Wassertein, Perella, the prominent merger and acq1uisition (M&A) specialists. Yamaichi Securities holds 20 percent of the Lodestar Group, which is led by the ex-vice chairman of Merrill Lynch & Company and former chairman of Morgan Stanley & Company.

Sumitomo Bank bought a 12.5 percent share in Goldman, Sachs for $500 million in 1986. Former Federal Reserve chairman Paul Volcker works for Fuji-Wolfensohn, a joint venture to which Fuji Bank contributed $52.5 of the $55 million start-up capital….

One of the most prominent Wall Street firms that broker Japanese purchases of American assets is the Blackstone Group, which is 20 percent owned by Nikko Securities.

Blackstone has been the investment banker for many Japanese acquisitions of prestigious American companies, including the Sony buyout of CBS Records and Columbia Pictures.

In the process, Blackstone has prospered. Financial World reports that Blackstone chairman Peter Peterson earned at least $15 to $25 million in 1988.

To attract more business, Blackstone ran a full-page advertisement in Japan’s largest daily business journal, Nihon Keizai Shimbun. The ad, written in Japanese, encouraged Japanese companies to continue their acquisitions of American firms. It extolled the economic advantages of such investments … As the ad makes clear, Blackstone also offers the Japanese political advice about how to keep these acquisitions “friendly” ones.

The promise is not hollow. Three of the firm’s key officers give Blackstone its political leverage: Peterson, Secretary of Commerce under President Nixon and onetime head of Lehman Brothers; David Stockman, who directed OMB in the first Reagan Administration; and Roger Altman, Assistant Secretary of the Treasury in the Carter years and an economic adviser to presidential candidate Michael Dukakis in 1988.

Not surprisingly, Peterson and Stockman are two of the nation’s strongest advocates for keeping America’s markets open to Japanese exports and investment. Both men write articles, address conferences, and advise policymakers on the topic.

At the same time, Peterson heads both the prestigious Council on Foreign Relations and the Institute for International Economics – a Washington think tank that has been most effective in enforcing a rigid “free trade” orthodoxy over the past decade….

For more on think tanks, GO TO > > > Drowning in Think Tanks

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From Mills Law Firm website ( http://www.millslawfirm.com/media/media05.html):

Couple’s class-action suit settled for $98.5 million

by Mary Fricker

A $98.5 million settlement reached in Chicago in a class-action suit begun by a Santa Rosa couple could be shared by 165,000 real estate investors.

The settlement reached Monday is one of the five largest securities class-action settlements in U.S. history, according to San Rafael attorney Robert Mills, who represented David and Ilene Albert. . . .

“I’m so glad for the part that I played in this,” David Albert said Wednesday. “I’m glad for the rest of the investors. It’s not often that you can take an action like this and have it turn out so well. “

The defendants in the case were Chicago-based VMS Realty Partners, once a high-flying real estate syndicator, and more than 45 associates and affiliates involved in selling sophisticated real estate investments.

The case took two years and produced 20 million documents that a team of attorneys, including Mills, had to warehouse in Chicago, enter into computers and analyze.

Although the Albert’s started the case alone in 1989, a flood of other lawsuits soon followed. A judge eventually consolidated the suits into one case with about 30 plaintiffs, 50 defendants and 39 law firms.

“I hadn’t the slightest idea when I started how big this would be,” Albert said. “But slowly I began to see the enormity of the thing.”

The plaintiffs alleged in general that the VMS empire engaged in a pattern of deception to attract investors. The defendants, in agreeing to the settlement, did not admit wrongdoing.

The $98.5 million will be divided as follows:

As many as 165,000 shareholders will share $45 million in cash, which is already in escrow. The exact amount that each investor, including the Albert’s, will receive depends upon how many respond to notices of the settlement, Mills said.

Sources close to the case estimated that if most investors respond, they will get about 15 to 30 percent of their original investment.

Most of the shareholders own stock in eight troubled VMS investment funds. Those funds will receive money, notes, real estate and other benefits worth at least $48.5 million, in a complex workout of the labyrinthine VMS empire.

The shareholders hope that with the $28.5 million infusion, the funds will be able to survive and eventually return a profit. The funds severed their ties with VMS Realty Partners last year and changed their name to Banyan. . . .

The funds’ share of the $98.5 million that must be paid in the settlement is $25 million to $30 million, so they will pay out in cash about what they will receive in assets from the settlement.

Plaintiffs’ attorneys will be paid $25 million, by court order.    

The Albert’s bought shares in VMS Mortgage Investors Fund in 1988, and by June 1989 they were concerned enough about the performance of their investment to contact Mills, who specializes in representing small investors in securities litigation.

Mills brought in the nation’s leading law firm in shareholder litigation, Milberg Weiss Bershad Specthrie & Lerach of New York and San Diego.

Among the defendants in the VMS case were numerous VMS entities – partnerships, trusts, mortgage companies and others; former VMS officers, directors and trustees; Prudential-Bache Securities Inc. (now Prudential Securities, Inc.); several Xerox subsidiaries; securities brokers; real estate appraisers; accountants; and other professionals associated with the VMS operation.

Prudential-Bache was the key brokerage house marketing the VMS investments, and Xerox Corp.’s credit subsidiary was a partner-investor.

The plaintiffs alleged VMS and its associates failed to disclose to investors the riskiness of the investment, issued deceptive prospectuses, hid financial problems and overvalued real estate.

They decided to settle, they said, because of the generous terms, the financial weakness of some of the defendants and the difficulty in proving fraud by the defendants in the complex transactions, among other reasons.

Defendant attorney Barry Gross in Chicago said the defendants settled because the funds’ stock was depressed by the litigation and they believed it was time to move forward.

Gross said the stock value of the funds has gone up more than $40 million in the two months since it was first announce in September that a settlement was in the works.

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January 26, 2001

Maui Hyatt sold for $200 million

By Andrew Gomes, Advertiser Staff Writer

New York based private investment bank The Blackstone Group has contracted to buy the Hyatt Regency Maui Resort for an estimated $200 million from KM Hawaii Inc., an affiliate of Japan-based transportation company Kokusai Jidosha, according to people familiar with the deal….

Founded in 1985 in part by the former chief executive of Lehman Brothers, Blackstone has been looking for upscale hotel investments in Hawai`i for several years. In 1998, the company unsuccessfully pursued one of Waikiki’s finest, the Halekulani.

People with knowledge of the Maui Hyatt deal said a purchase agreement for the 806-room Ka’anapali hotel —— Maui’s largest —— has been reached, and said Hyatt, which manages the property with about 1,000 employees, may be taking a small ownership interest in the hotel in exchange for a long-term management contract with Blackstone. . . .

If completed, the Hyatt sale would follow sales of four other major properties in 1998: the Maui Marriott Resort for $152.5 million; the Westin Maui for $132 million; the Grand Wailea for $263.5 million; and the Kea Lani for an undisclosed amount.

The Hyatt Regency Maui, trophy of the Ka‘anapali resort, also has been attractive to buyers. It was developed for $80 million in 1980 by luxury resort developer Christopher Hemmeter and sold to KM Hawai‘i by Chicago real estate firm VMS Realty for $325 million in 1987.

KM Hawai‘i spent about $30 million on renovations in 1990 and 1996. Last year, the hotel opened a $3.5 million spa. . . .

For more, GO TO > > > Dirty Money, Dirty Politics & Bishop Estate; Paradise Paved; Predators in Paradise

# # #






AIG: The Un-American Insurance Group

Allied World Assurance

Aloha, Harken Energy!

Apollo Advisors

Birds in the Lobby

Buzzards of Paradise

A Connecticut Yankee in King Kamehameha’s Court

The Carlyle Group: Birds that Drink from Cesspools

Crouching Dragon ~ Hidden Rats

Dirty Gold in Goldman Sachs

Dirty Money, Dirty Politics & Bishop Estate

Drowning in Think Tanks

Flying High In Hawaii

Homeland Security

The Indonesian Connection

Investigating Investcorp

The Kissinger of Death

The Nature Conservancy

Nests Along Wall Street

The Secret Nests

Tracking the Titan

The Turnstone Birds

Paradise Paved

Parrots in the Newsroom

Predators of Paradise

RICO in Paradise

Vultures of The Sandwich Isles

Woo vs. Harmon

The Xerox Conspiracy

Yakuza Doodle Dandies

Year of the Dragon



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Last update January 5, 2007, by The Catbird Seat.