Birds that drink from cesspools.


Sightings from The Catbird Seat

~ o ~

Conspiracy Theories

Carlyle’s Mysterious Connections…

Is it Time for Sodium Pentothal?

By Jay Salomon, Taipan Online

February 26, 2002

Back in the early 90s–during the previous round of Middle Eastern terrorism – Taipan recommended EG&G (EGG:NYSE), a maker of high-tech airport security equipment.

I was asked to do a follow-up.

For days, I found nothing about this large defense contractor. It was no longer traded. Then, I discovered that EG&G had been taken over by the Carlyle Group, an enterprise about which I knew nothing.

Months later–and after exhaustive research–I begin my reports on the Carlyle Group, an almost secret society and a multibillion-dollar powerhouse about which almost no one knows anything. And that’s exactly the way Carlyle wants to keep it.

Carlyle earns special attention not only because of its huge presence in the defense sector, but also because of the imposing list of persons in its employ, either directly or as consultants. I doubt the names of James Baker, Frank Carlucci, and John Major will ring hollow with any reader.

Add to them ex-President George H. W. Bush and (in a more convoluted way) current President George W. Bush and you have only a brief listing of the individuals who may be using their influence to generate profits and policies.

But don’t think for a minute that Carlyle houses only very conservative Republicans–this company includes high rollers of many political persuasions. Not to mention a long association with the Bin Laden family and assorted Saudis and other internationals who carry some dubious baggage.

As an investigative journalist, I would expect an enterprise like Carlyle to be on the radar screen of many who ply my trade. It may be so. But the mainstream press has been incredibly silent on the large number of issues raised by the activities of Carlyle.

The most inquisitive and successful of the fact-finders has been the Guardian. But a recent article demonstrates the problems raised by Carlyle’s refusal to discuss much of anything. For information for an October report on the Carlyle/Bin Laden connection, Carlyle referred the Guardian to someone outside the company who reported himself only as a “source familiar with the relationship.” And this source did little more than “confirm” that the Bin Laden crowd was no longer connected to Carlyle.

At the time, the Guardian noted that Carlyle did not employ anyone at its Washington headquarters to deal with the press.

Since then, Chris Ullman has been named vice president for corporate communications–and the long-blank website (which used to contain nothing but a disclaimer stating that “the Carlyle Group does not provide investment or other services to the general public”) has now been revitalized. But the news section of the website has not one offering of any news following the November 13, 2001, announcement of Mr. Ullman’s appointment.

Of course, my job normally would be to stick a foot in the Carlyle door and try every bit of subterfuge to talk to Mr. Ullman.

That’s the way this game is traditionally played.

Carlyle has been uniquely successful in avoiding the scrutiny of the mainstream press as well as public regulatory oversight of its activities. But more and more articles, mostly web-based and nontraditional, are surfacing about it.

And there’s no guarantee that once the ball starts rolling, mainstream press coverage will be any less hostile than that on the web.

What’s more, certain members of Congress are beginning to take an interest in the intriguing convergence between influence and profits at Carlyle.

The Enron situation will fuel the need to know more about the activities of the company and its principals. For several weeks, the former head of the SEC, Arthur Levitt, was lauded on most of the talk shows for his unsuccessful attempts to limit the ability of accounting firms like Arthur Andersen to both “account” and “consult.”

I was struck by the fact that Levitt was only identified by his former job–never a mention of his current position. Not once did anyone ask: “Thanks for being on our show, Mr. Levitt. What have you been doing since you left the SEC?”

For the record, Levitt is Carlyle’s “senior adviser.”

When was the last time any executive of a worthy company did not use free airtime to give a plug to his enterprise?

Back to Enron.

We have the Bush family position in Carlyle and the family’s strong ties with former Enron head, Ken Lay, coinciding with a scandal inside and outside the Beltway that threatens the integrity of significant portions of our financial system. And that’s potentially just a sideshow compared to the questions raised by Carlyle-owned United Defense’s important position as the eleventh largest defense contractor in the United States.

One troubling Enron question leads to an even more troubling question about United Defense.

In the case of Enron, the Administration has proudly stated that its close ties to the company did not influence its decisions, as witness the fact that no effort was made to bail Enron out. And, so far as anyone knows, the assertion is true. But many have pointed out that because of the appearance of impropriety a bailout would have involved, the Administration was precluded from doing the very thing that would have been most in the public interest. So, what will it do with a company (to which it has demonstrably even closer ties) if questions of ethics or performance arise in the middle of a contract?

Early in my research, I came across a curious contract handed one Carlyle subsidiary. As I understand it, the Federal Government sought a contractor to assist in the sale of assets seized in drug raids.

But this was not a contract to sell the assets – instead, it was a contract to find a contractor to sell the assets!

Multi-billion dollar Carlyle earned the prize. Talk about apparent bureaucratic waste…

Which brings us to the question at hand – can Carlyle continue its silence much longer? And if it can’t–and it can’t–then to whom should it talk?

I for one would be happy to volunteer….





July 6, 2003

United Defense armed for success

The Courier-Journal

United Defense Industries has been making landing craft and armored vehicles since World War II. The company’s arsenal includes combat vehicles (Bradley armored infantry vehicles), fire support equipment (self-propelled howitzers), combat support vehicles, weapons delivery systems (missile launchers) and amphibious assault vehicles.

The U.S. government [a.k.a. US taxpayers] accounts for almost 80 percent of sales. [I wonder who accounts for the other 20 percent?]

United Defense Industries also has acquired U.S. Marine Repair, a leading non-nuclear ship repair and overhaul company. The Carlyle Group owns 49.5 percent of United Defense, whose directors include such former government heavy-weights as Frank Carlucci (ex-secretary of defense) and Gen. John M. Shalikashvili (former chairman of the Joint Chiefs of Staff).


In Louisville, United Defense makes naval guns at the Greater Louisville Technology Park, formerly the Naval Ordnance Station.

Source: Hoover’s Inc (

[The chart accompanying this article shows revenues for the Quarter ended March 31, 2003, to be $466.5 million vs. $356.4 million for the Quarter ended March 31, 2002. Net income for the respective quarters were $38.4 million vs. $19 million. Earnings per share were 73 cents vs. 36 cents. Stock prices on July 5, 2002 were $21.95 vs. $26.89 on July 3, 2003. Who says nobody wins in a war.]

$ $ $

December 17, 2002

Group takes majority stake
in CSX Lines


WASHINGTON – CSX Corp., the largest eastern U.S. rail operator, on Tuesday sold a majority stake in its ocean transport unit to The Carlyle Group for $300 million in cash and securities as part of its plan to focus the company on its core railroad operations.

Terms of the transaction call for a venture led by Carlyle, one of the largest U.S. private investment funds, to pay $240 million in cash and issue $60 million in securities to CSX in exchange for CSX Lines, its domestic container-shipping business….

With 17 U.S. flag vessels and 22,000 containers, CSX Lines ranks as the largest U.S. ocean transport company, providing transportation services to and from the continental United States, Alaska, Hawaii, Guam and Puerto Rico.

Copyright 2002, Reuters News Service

For more, GO TO > > > Nests on the Rails

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December 18, 2002

Joe Conason’s Journal:

Snow’s job and the dock lockout

As several readers have pointed out, the confluence of CSX chief John Snow’s Treasury appointment and his company’s deal with the Bush-connected Carlyle Group is still more intriguing when another factor is considered: the president’s decision to invoke his Taft-Hartley authority to stop the West Coast dock lockout (and not a strike, as I said earlier), just when that labor dispute was threatening to scuttle the CSX-Carlyle deal.

Did the president misuse his power to help a business that pays his father and his advisor James Baker III, along with a raft of other Bush cronies?

Will anyone in the Senate dare to ask the obvious questions about this strange coincidence when Snow is confirmed?

Maybe the AFL-CIO, which has been complaining about Snow’s stewardship of CSX, will prod its friends on the Hill.

Snow’s job

Something as spectacular as the Trent Lott implosion always obscures other fascinating news, such as a curious coincidence that attended the appointment of CSX chief executive John Snow as the new treasury secretary.

While he pondered a new role in the Bush administration, his company has been negotiating a major deal with the Carlyle Group, corporate home of James Baker III and George Herbert Walker Bush….

The deal reportedly was held up for a while in late October by the West Coast dockworkers’ strike, which caused the Carlyle suits deep concern over the CSX unit’s future revenues. But with the strike concluded, the deal was done.

As Daniel Gross explained in Slate last week, Snow is a former government bureaucrat turned “access capitalist,” a not-very-successful CEO with a big appetite for perks and a lavish hand with political contributions. He wasn’t a great choice for Treasury, but his profile is typical of this administration.

The most striking aspect of his appointment, now that we know about his firm’s deal with Carlyle, is that he convinced the CSX board last year to award him a new contract that includes millions of dollars in severance benefits — if he leaves the company to “fulfill an appointment to public office.”

I always thought that those fat CEO contracts were meant to keep talented executives.

So here are a few questions for his confirmation:

When did he start to discuss a government position with the Bush White House?

When did his deal negotiations with Carlyle begin?

Why did he ask for special severance benefits if he accepted a government appointment?

And why did CSX essentially pay him to leave?

Exactly how does that benefit the company’s stockholders?

~ ~ ~

For more poop on Treasury Secretary John Snow, GO TO > > > The Snow Birds

And for more on CSX, GO TO > > > Nests On the Rails


November 22, 2002

Gerstner to Be Carlyle Group Chairman

Former IBM Chief Brings Long List of
Contacts to Private Equity Firm

By Greg Schneider, Washington Post Staff Writer

Carlyle Group, the Washington-based private equity firm with a reputation for hiring political heavyweights, snagged an industrial celebrity yesterday when it announced that former IBM chief executive Louis V. Gerstner Jr. will become its chairman.

Gerstner will succeed Reagan administration defense secretary Frank C. Carlucci on Jan. 7, and Carlucci will become chairman emeritus.

Credited with restoring International Business Machines Corp. to its position as an icon of American business, Gerstner, 60, retired as chief executive of IBM in March. . . .

…Continued at Louis V. Gerstner


November 29, 2002


By Maureen Dowd, The New York Times

WASHINGTON – Prince Bandar is known as the Arab Gatsby.

Rising from a murky past in a racist society, born in a Bedouin tent as the son of an African palace servant impregnated by a Saudi prince, to a glamorous present as dean of the Washington diplomatic corps.

Tossing glittery parties with celebrity entertainment at his sumptuous mansions in Aspen and England’s Wychwood, a royal hunting ground once used by Norman and Plantagenet kings.

Smoking cigars and bragging about his fighter-jock exploits – flying upside down 50 feet above the ground – at parties at his McLean, Va. estate overlooking the Potomac, “where there was more chilled vodka in little shot glasses than I’ve ever see,” as one guest recalled.

Flying off in his private Airbus to hunt birds in Spain with his friends former President George H.W. Bush and Norman Schwarzkopf, entertaining the current President Bush’s sister, Doro, at his Virginia farm, and palling around on the D.C. social circuit with Dick Cheney, Colin Powell, George Tenet, Brent Scowcroft and Bob Woodward.

Spinning a smoky web of intrigue with his cigars and CIA operations, helping finance the contras.

So if Bandar bin Sultan is Gatsby, his wife, Princess Haifa, must be like the careless Daisy, her voice full of money that could have ended up supporting two of the Saudi hijackers.

And those 15 Saudi hijackers would be “the foul dust that floated in the wake” of the Arab Gatsby’s dreams.

His new dream is that Saudi Arabia will help America get rid of Saddam, and then the anger over Saudi involvement in 9/11 will fade and the cozy, oily alliance between the countries can get back on track.

All the millions the Saudis have spent since 9/11 on a charm offensive could not save them from Newsweek’s Michael Isikoff and Evan Thomas, who drew fresh tracks between charitable checks Haifa wrote and two hijackers.

The princess says she feels as if a bomb has been dropped on her head – an unfortunate metaphor given the fact that Saudi terrorists funded by Saudi charities turned planes carrying innocent Americans into bombs.

She is rarely seen around Washington, abiding by Saudi customs sheltering women. But she entertains at her many homes, and powerful friends – including Barbara Bush and Alma Powell – called on Monday night to buck her up.

The case inflamed public suspicion that the Saudi government is more involved than it admits, and that the Bushies are less zealous about getting to the bottom of the Saudi role than they should be.

Some senators charge that the FBI has pulled its punches, and that the royal family, as Richard Shelby puts it, has “got a lot of answering to do.”

Gen. Tommy Franks has already spent a fortune setting up a new base in Qatar because the Saudis are still dithering about letting us use our old bases in their country.

Noncommittal on the future, and uncooperative on the past, the Saudis have been stingy about helping the FBI with 9/11. The administration has helped the Saudis be evasive, with Dick Cheney stonewalling congressional investigators.

It would probably be far easier for America to reduce its dependence on Saudi oil than for the House of Saud and the House of Bush to untangle their decades-long symbiosis.

Bandar, the representative of an oil kingdom, is so close to the Bushes, an oil dynasty, that they nicknamed him Bandar Bush.

He contributed ver $1 million to the Bush presidential library.

The former president is affiliated with the Carlyle Group, which does extensive business with the Saudis.

It was terribly inconvenient for all the friends of the bin Sultans when the trail of checks led to the Saudi Embassy.

Many influential people in Washington were averting their eyes from the embarrassment. The prince and his panicky wife were defending themselves to The New York Times’ Patrick Tyler while Bandar anxiously flipped among seven television screens in their pool house to catch the latest news.

The Bush crowd was praying it wasn’t a last-days-of-disco scene similar to the one when the shah of Iran was overthrown by Islamic fundamentalists, and the jet-setting Iranian diplomats had to pour all the liquor down the drain at their embassy.

Will the Arab Gatsby end like the original – “borne back ceaselessly into the past”?

For more, GO TO > > > The Eagle Hooded


May 3, 2002

Chemical Weapons Mishandled, Worker Says

Incinerator near Salt Lake City is destroying stockpile

by Robert Gehrke, Associated Press

WASHINGTON – Managers at the nation’s only chemical weapons incinerator encouraged workers to cut corners so a deadly nerve agent stockpile could be destroyed before the Winter Olympics in nearby Salt Lake City, a plant employee says.

Brenda Mugleston, who has worked for eight years at the Tooele Chemical Agent Disposal Facility, told The Associated Press workers were promised a $750 bonus for meeting the deadline. She said they felt pressure from managers to increase productivity and they sometimes mishandled weapons.

Mugleston said she feared workers and the public were being endangered and told managers but nothing was done. She also reported problems to the Occupational Safety and Health Administration.

Stuart Young, attorney for EG&G Defense Materials, which runs the incinerator for the Army, said Mugleston’s allegations are being investigated and “at this point we don’t have any reason to believe there are any immediate health, safety or environmental concerns.

Mugleston said she has reported the problems to OSHA and provided a letter saying the agency is investigating. Agency spokesman Bill Wright said whistle-blower laws preclude him from identifying complainants.

Army spokeswoman Nancy Ray said the Pentagon is pleased with the work EG&G has done.

“It’s absolutely a professional operation,” she said.

Tooele, located 40 miles west of Salt Lake City, is home to the Pentagon’s incinerator, created to destroy 13,616 tons of the chemical weapons stockpile.

Other incinerators are being built in Anniston, Ala.; Umatilla, Ore., and Pine Bluff, Ark.

The incinerator was forced to shut down for several months in the summer of 2000 after a tiny amount of GB nerve agent escaped from its emissions stack.

The Centers for Disease Control and Prevention said the amount was small enough that it did not endanger the public. Plant managers say it is the only time nerve agent was released.

Mugleston’s allegations come as the plant prepares to process VX nerve agent, which the CDC and Environmental Protection Agency say is 36 times more deadly than the sarin gas the facility has been handling and much more difficult to detect….

Continued at: EG&G Defense Materials



February 14, 2002

Marisco sued over
Kalaeloa drydock

The dock was intended for native Alaskan use, competitor
Pacific Shipyards contends

By Russ Lynch, Honolulu Star-Bulletin

A Hawaii shipyard business has sued a local competitor and a native-Alaskan tribal business for what it says is a racketeering scheme to take over a surplus Navy floating drydock intended for use in Alaska.

The dock was intended to be used for the economic benefit of natives at St. Paul Island, Alaska, and instead has been put to work in competition with private enterprise in Hawaii, according to complainant Pacific Shipyards International.

The consortium of two Hawaii-owned local shipyards filed a federal racketeering and corrupt practices complaint yesterday against Alaskan Aleut business Tanadgusix Corp. and rival Oahu ship-repair business Marisco Ltd.

The lawsuit says Marisco is using the surplus drydock, donated by the Navy to Tanadgusix, for ship repair work at Kalaeloa, formerly the Barbers Point Harbor, when the conditions of the Navy’s gift exclude its use outside Alaska.

Meanwhile, Pacific Shipyards invested about $4.5 million to bring a new floating drydock to Hawaii and is getting unfair and illegal competition from Marisco’s use of the donated equipment, the lawsuit says.

Marisco did not return calls and the Alaska business could not be reached yesterday, but the lawsuit says they tried repeatedly to get permission to keep their equipment in Hawaii and were denied by the U.S. General Services Administration.

The lawsuit cites GSA letters saying the drydock was for use in Alaska only, for the benefit of the natives at St. Paul Island, Alaska, near Anchorage.

In their initial pitch to the state of Alaska and the federal government, the Alaskans said the drydock, called Ex Competent but officially AFDM-6, would be repaired at Marisco and towed to St. Paul Island.

The drydock, which is sunk under vessels and then floated until the ship to be repaired is dry, was worth more than $5 million according to federal documents filed with the lawsuit.

Then Tanadgusix, normally known as TDX, wrote to the government saying moving the equipment to Alaska wasn’t financially feasible, it couldn’t economically be used “anywhere but where it presently resides in Hawaii” and that allowing it to be used in Hawaii would immediately begin to benefit the Alaskan natives.

The GSA replied use outside Alaska would be illegal….

… Continued at United States Marine Repair.

< < < FLASHBACK < < <


December 17, 2000

In Congress, sharing of leadership unwise idea

By Jerry Burris, Advertiser Editorial Section Editor

You will soon be hearing and reading a lot about “bipartisanship” and “power-sharing” and even “co-leadership” in the coming weeks as the new Congress gears up in Washington.

The U.S. House is almost evenly divided and the Senate is split precisely, with 50 Democrats and 50 Republicans. . . .

All this leads some to suggest that the Senate, particularly, should carve up power equally among Democrats and Republicans.

But the word from Hawai‘i Sen. Dan Inouye, surely about a canny a student of Senate politics as there is, is this:

Don’t count on it.

“We’re not going to have co-chairmen,” he says. “No way.”

“I don’t believe in a co-chair.”

It is simply in the nature of the political process, Inouye said, that at the end of the day someone has to be in charge. That means a single chair of the committee with votes sufficient to make a binding decision.

This doesn’t mean there’s no room for collegiality, Inouye said, or a fair sharing of the work and responsibility.

He practices what he preaches on the Senate Appropriations Committee, where he has shared power and influence for years with Alaska Sen. Ted Stevens.

Inouye and Republican Stevens work closely together.

Although the Republicans currently are in charge, Stevens frequently turns the gavel and responsibility on the Appropriations Defense Subcommittee over to Inouye.

In previous years, when the Democrats had the upper hand, Inouye would do the same for Stevens….


February 1, 2002


By: Citizens for a Sound Economy


With budget deficits looming, instituting fiscal reform has become monumentally important. September 11 made certain budget debates inconsequential, but we also found that there were many politicians that wanted to use the tragedy to further their pork barrel spending. Now members of Congress want to raise taxes to help offset this new spending.

When asked at the end of the legislative session on December 21st how Alaska made out in the Defense appropriations bill, Senate Appropriations Chairman Ted Stevens said, “like a bandit.” . . .


April 9, 2002

Pork list shows rise
from 2001 spending

By Stephen Dinan, The Washington Times

A youth-outreach program in Missouri expected to spend $273,000 to combat “Goth culture” was among the $20.1 billion that Congress doled out for pet projects in fiscal year 2002, according to the “Pig Book” released today.

The “Pig Book,” the annual report on pork projects from Citizens Against Government Waste, calculates the number and dollar total of earmarked projects from parking garages to grants to universities.

The 8,341 “earmarked” projects are 32 percent more than last year’s 6,333, and the $20.1 billion appropriated represents an increase of 9 percent over 2001. . . .

Earmarks are projects that Congress says must be funded; the rest of the appropriations are left up to executive departments and agencies to spend. The Bush administration has been critical of earmarks, arguing that they take away agencies’ discretion to spend money properly.

The book’s authors say specific earmarks are hurting the nation’s ability to fight the war on terrorism.

“Here is a simple math equation that doesn’t need federal funds: in fiscal 2001 there was $18.5 billion in pork-barrel spending and Pentagon officials predict an $18 billion shortfall in the defense budget to fight the war on terrorism,” the report says.

But John Scofield, spokesman for Republicans on the House Appropriations Committee, said they have made a conscious effort to avoid earmarking counterterrorism funds. He also said earmarks aren’t a real problem overall….

The kings of pork are in the Senate, and it’s a bipartisan group, the report says.

The three top states in terms of earmarks-per-capita are Alaska, Hawaii and West Virginia —— and Sens. Robert C. Byrd, West Virginia Democrat; Ted Stevens, Alaska Republican; and Daniel K. Inouye, Hawaii Democrat, all sit on the Senate Appropriations Committee….

Continued at: United States Marine Repair

$ $ $

Life Was Good, and Then…

PETER CHUNG, a young buy-side analyst in the Carlyle Group’s Seoul office, sent the following e-mail message to a group of 11 recipients––including one at UBS Warburg and another at Credit Suisse First Boston––on Tuesday, May 15, 2001, via Carlyle’s system.

One or more of Mr. Chung’s “friends” loosed it, and it has been circulating around Wall Street since.

According to Bloomberg News, Mr. Chung resigned from the firm on Friday. Neither he nor Carlyle returned calls for comment.

Re: Living Like a King.

So I’ve been in Korea for about a week and a half now and what can I say, LIFE IS GOOD….

I’ve got a spanking brand new 2000 sq. foot 3 bedroom apt. with a 200 sq. foot terrace running the entire length of my apartment with a view overlooking Korea’s main river and nightlife . . .

Why do I need 3 bedrooms?

Good question …… the main bedroom is for my queen size bed … where CHUNG is going to fu*k every hot chick in Korea over the next 2 years (5 down, 1,000,000,000 left to go) …… the second bedroom is for my harem of chickies, and the third bedroom is for all of you fu*kers when you come out to visit my ass in Korea.

I go out to Korea’s finest clubs, bars and lounges pretty much every other night on the weekdays and everyday on the weekends to (I think in about 2 months, after I learn a little bit of the buyside business I’ll probably go out every night on the weekdays).

I know I was a stud in NYC but I pretty much get about, on average, 5-8 phone numbers a night and at least 3 hot chicks that say that they want to go home with me every night I go out.

I love the buyside … I have bankers calling me everyday with opportunities and they pretty much cater to my every whim – you know (golfing events, lavish dinners, a night out clubbing). The guys I work with are also all chill – I live in the same apt building as my VP and he drives me around in his Porsche (1 of 3 in all of Korea) to work and when we go out.

What can I say … live is good … CHUNG is KING of his domain here in Seoul

So … all of you fu*kers better keep in touch and start making plans to come out and visit my ass ASAP, I’ll show you guys an unbelievable time … My contact info is below … Oh, by the way … someone’s gotta start fedexing me boxes of domes … I brought out about 40 but I think I’ll run out of them by Saturday . . .



– James Verini (This column ran on page 25 in the 5/28/01 edition of The New York Observer.)

* * * * *

From Spice Trader, Hong Kong i mail:

The one thing executives at the Carlyle Group were dreading most happened yesterday.

The Peter Chung superstud story was picked up by the South Korean press.

The Chosun Ilbon, a daily newspaper, printed the tale in a disapproving tone, headlined: “Email by Carlyle Exec Brings Shame to Banking Sector.”

Worse still, the paper left out Peter Chung’s name, and instead printed the names of the top people involved with the Carlyle Group.

The group’s Seoul office is run by Kim Byung Ju, the son-in-law of Park Tae Joon, a former prime minister of South Korea.

The board of advisers includes former United States president George Bush.

Until now, Peter Chung’s much-distributed boastful email about his stunning sexual exploits was no more than a cause of hilarity in the east Asian financial community.

But executives fear he may have blackened the name of the US company, which is the largest shareholder of Korea’s KorAm Bank.

The newspaper article said: “The email has been causing a stir in international financial circles and has embarrassed Korea, as the email reveals a sleazy side to the local banking industry.”



A Global Agenda for the U.S. President

By Frank Carlucci, Robert Hunter, and Zalmay Khalilzad

The authors co-chaired Transition 2001, a panel of 54 American leaders in foreign and defense policy who were convened by RAND to forge a bipartisan agreement on the central tenets of U.S. national security policy and to offer bipartisan recommendations to the new U.S. president.

Frank Carlucci, a RAND trustee, was secretary of defense from 1987 to 1989.

Robert Hunter, a senior advisor at RAND, was ambassador to NATO from 1993 to 1998.

Zalmay Khalilzad, corporate chair for international security studies at RAND, was assistant deputy undersecretary of defense for policy planning from 1991 through 1992 and director of President George W. Bush’s Department of Defense Transition Team in December 2000 and January 2001.

The conclusions of the panel are summarized below. . . .

Dear Mr. President:

Ten years after the end of the cold war, the United States finds itself with unrivaled military, economic, political, and cultural power. However, we are still struggling to understand what we must do abroad to support our interests and values, what are the limits of our power, and what we can do with others to help shape the kind of world in which we want to live. In the past decade, we learned anew that America cannot retreat from the world, that isolationism is impossible. We learned that American economic and military strength are as important as ever and that much of the world still depends on us to be engaged–and to lead.

Yet American power and purpose alone cannot suffice to meet the array of global challenges to the welfare of the United States, of our friends and allies, and of the planet as a whole. Thus, we advocate selective global leadership by the United States, coupled with strengthened and revitalized alliances. The United States, together with its democratic allies in Europe and Asia, possesses an unparalleled ability to meet tomorrow’s challenges. However, without the help of these allies, many emerging challenges will prove beyond our capacity to manage. Thus, strengthening our alliances is essential to America’s future and should form the bedrock of U.S. engagement abroad.

None of this can be done without a price. The array of new global challenges and opportunities will significantly increase the demand for U.S. diplomacy and other nonmilitary involvement abroad. Therefore, nonmilitary spending on foreign policy and national security should increase substantially as well.

Thus, Mr. President, we urge that you ask Congress for a 20 percent hike in spending for the U.S. Department of State, for payment of U.N. dues, and for other critical nonmilitary requirements of foreign policy. We also recommend that you seek about a 10 percent increase in defense spending, or about $30 billion more for procurement plus another $5-$10 billion for property maintenance, recruitment, targeted pay raises, retirement, and medical care….

For much more, GO TO > > > Rand Corporation


January 8, 2002

Carlyle’s way

Making a mint inside “the iron triangle”
of defense, government, and industry.

By Dan Briody, Red Herring Magazine

Like everyone else in the United States, the group stood transfixed as the events of September 11 unfolded. Present were former secretary of defense Frank Carlucci, former secretary of state James Baker III, and representatives of the bin Laden family.

This was not some underground presidential bunker or Central Intelligence Agency interrogation room. It was the Ritz-Carlton in Washington, D.C., the plush setting for the annual investor conference of one of the most powerful, well-connected, and secretive companies in the world: the Carlyle Group.

And since September 11, this little-known company has become unexpectedly important.

That the Carlyle Group had its conference on America’s darkest day was mere coincidence, but there is nothing accidental about the cast of characters that this private-equity powerhouse has assembled in the 14 years since its founding. Among those associated with Carlyle are former U.S. president George Bush Sr., former U.K. prime minister John Major, and former president of the Philippines Fidel Ramos.

And Carlyle has counted George Soros, Prince Alwaleed bin Talal bin Abdul Aziz Alsaud of Saudi Arabia, and Osama bin Laden’s estranged family among its high-profile clientele.

The group has been able to parlay its political clout into a lucrative buyout practice (in other words, purchasing struggling companies, turning them around, and selling them for huge profits)–everything from defense contractors to telecommunications and aerospace companies. It is a kind of ruthless investing made popular by the movie Wall Street, and any industry that relies heavily on government regulation is fair game for Carlyle’s brand of access capitalism. Carlyle has established itself as the gatekeeper between private business interests and U.S. defense spending.

And as the Carlyle investors watched the World Trade towers go down, the group’s prospects went up.

In running what its own marketing literature spookily calls “a vast, interlocking, global network of businesses and investment professionals” that operates within the so-called iron triangle of industry, government, and the military, the Carlyle Group leaves itself open to any number of conflicts of interest and stunning ironies.

For example, it is hard to ignore the fact that Osama bin Laden’s family members, who renounced their son ten years ago, stood to gain financially from the war being waged against him until late October, when public criticism of the relationship forced them to liquidate their holdings in the firm.

Or consider that U.S. president George W. Bush is in a position to make budgetary decisions that could pad his father’s bank account.

But for the Carlyle Group, walking that narrow line is the art of doing business at the murky intersection of Washington politics, national security, and private capital; mastering it has enabled the group to amass $12 billion in funds under management.

But while successful in the traditional private-equity avenue of corporate buyouts, Carlyle has recently set its sites on venture capital with less success. The firm is finding that all the politicians in the world won’t help it identify an emerging technology or a winning business model.

Surprisingly, Carlyle has avoided the fertile VC market in defense technology, which now, more than ever, comes from smaller companies hoping to cash in on what the defense establishment calls the revolution in military affairs, or RMA. Thus far, Carlyle has passed up on these emerging technologies in favor of some truly awful Internet plays. And despite its unique qualifications for early-stage funding of defense companies, the firm seems to have no appetite for the sector.

Despite its VC troubles, however, the Carlyle Group’s core business is set for some good times ahead. Though the group has raised eyebrows on Capitol Hill in the past, the firm’s close ties with the current administration and its cozy relationship with several prominent Saudi government figures has the watchdogs howling.

And it’s those same connections that will keep Carlyle in the black for as long as the war against terrorism endures.

For the 11th-largest defense contractor in the United States, wartime is boom time. No one knows that better than the Carlyle Group, which less than a month after U.S. troops began bombing Afghanistan filed to take public its crown jewel of defense, United Defense, a company it has owned for nearly a decade.

That this company is even able to go public is testament to the Carlyle Group’s pull in Washington.

United Defense makes the controversial Crusader, a 42-ton, self-propelled howitzer that moves and operates much like a tank and can lob ten 155-mm shells per minute as far as 40 kilometers. The Crusader has been in the sights of Pentagon budget cutters since the Clinton administration, which argued that it was a relic of the cold war era–too heavy and slow for today’s warfare.

Even the Pentagon had recommended the program be discontinued. But remarkably, the $11 billion contract for the Crusader is still alive, thanks largely to the Carlyle Group.

“This is very much an example of a cold war-inspired weapon whose time has passed,” notes Steve Grundman, a consultant at Charles River Associates, a defense and aerospace consultancy in Boston. “Its liabilities were uncovered during the Kosovo campaign, when the Army was unable to deploy it in time. It is exceedingly expensive, and it was a wake-up call to the Army that many of its forces are no longer relevant.”

But the Carlyle Group was having none of that.

While it is impossible to say what U.S. secretary of defense Donald Rumsfeld was thinking when he made the decision to keep the Crusader program alive, people close to the situation claim to have a pretty good idea. Mr. Carlucci and Mr. Rumsfeld are good friends and former wrestling partners from their undergraduate days at Princeton University.

And while Carlyle executives are quick to reject any accusations of them lobbying the current administration, others aren’t so sure. “In this particular effort, I felt that they were like any other lobbying group, apart from the fact that they are not,” said one Washington, D.C., lobbyist with intimate knowledge of the Crusader negotiations, noting the fine line between lobbying and having a drink with a old friend.

According to Greg McCarthy, a spokesperson for Representative J.C. Watts Jr. (R: Oklahoma), whose district is home to one of the Crusader’s assembly plants, the Carlyle Group’s influence was indeed felt at the Pentagon. “Carlyle’s strength was within the DoD, because as a rule someone like Frank Carlucci is going to have access,” says Mr. McCarthy. “But they have other staff types that work behind the scenes, in the dark, that know everything about the Army and Capitol Hill.”

Perhaps even more disconcerting than Carlyle’s ties to the Pentagon are its connections within the White House itself. Aside from signing up George Bush Sr. shortly after his presidential term ended, Carlyle gave George W. Bush a job on the board of Texas-based airline food caterer Caterair International back in 1991. Since Bush the younger took office this year, a number of events have raised eyebrows.

Shortly after George W. Bush was sworn in as president, he broke off talks with North Korea regarding long-range ballistic missiles, claiming there was no way to ensure North Korea would comply with any guidelines that were developed.

The news came as a shock to South Korean officials, who had spent years negotiating with the North, assisted by the Clinton administration. By June, Mr. Bush had reopened negotiations with North Korea, but only at the urging of his own father.

According to reports, the former president sent his son a memo persuasively arguing the need to work with the North Korean government. It was the first time the nation had seen the influence of the father on the son in office.

But what has been overlooked was Carlyle’s business interest in Korea. The senior Bush had spearheaded the group’s successful entrance into the South Korean market, paving the way for buyouts of Korea’s KorAm Bank and Mercury, a telecommunications equipment company.

For the business to be successful, stability between North and South Korea is critical. And though there is no direct evidence linking the senior Bush’s business dealings in Korea with the change in policy, it is the appearance of impropriety that excites the watchdogs.

“We are clearly aware that former President Bush has weighed in on policy toward South Korea and we note that U.S. policy changed after those communications,” says Peter Eisner, managing director at the Center for Public Integrity, a watchdog group in Washington, D.C., which has an active file on the Carlyle Group.

“We know that former President Bush receives remuneration for his work with Carlyle and that he is capable of advising the current president, but how much further it goes, we don’t know.”

While the Center for Public Integrity looks for its smoking gun, others in Washington say hard evidence is unimportant. “Whether the decisions made by the former president are a real or apparent conflict of interest doesn’t matter, because in the public’s eye they’re equally as damaging,” says Larry Noble, executive director and general counsel of the Center for Responsive Politics. “Bush [Sr.] has to seriously consider the propriety of sitting on the board of a group that is impacted by his son’s decisions.”

And the controversy is expected only to increase as Carlyle’s investments in Saudi Arabia are scrutinized during the war on terrorism.

Mr. Eisner says that very little is known about Carlyle’s involvements in Saudi Arabia, except that the firm has been making close to $50 million a year training the Saudi Arabian National Guard, troops that are sworn to protect the monarchy.

Carlyle also advises the Saudi royal family on the Economic Offset Program, a system that is designed to encourage foreign businesses to open shop in Saudi Arabia and uses re-investment incentives to keep those businesses’ proceeds in the country.

But the money flowing out of Saudi Arabia and into the Carlyle Group is of even more interest. Immediately after the September 11 attacks, reports surfaced of Carlyle’s involvement with the Saudi Binladin Group, the $5 billion construction business run by Osama’s half-brother Bakr.

The bin Laden family invested $2 million in the Carlyle Partners II fund, which includes in its portfolio United Defense and other defense and aerospace companies.

On October 26, the Carlyle Group severed its relationship with the bin Laden family in what officials termed a mutual decision. Mr. Bush Sr. and Mr. Major have been to Saudi Arabia on behalf of Carlyle as recently as last year, and according to reports, the Federal Bureau of Investigation is currently looking into the flow of money from the bin Laden family. Carlyle officials declined to answer any questions regarding their activities in Saudi Arabia.

But for all the questions, Carlyle has stayed clean in the eyes of the law. Lobbying laws in Washington, D.C., are ambiguous at best, requiring only that former politicians observe a one-year “cooling-off period” before they reenter the lobbying scene on behalf of industry. It is playing within this gray area that has given the Carlyle Group some of the best returns in the business.

After David Rubenstein, a former aide in the Carter administration, and William Conway Jr., former chief financial officer of MCI Communications, hooked up at New York’s Carlyle hotel in 1987 to form the company, the Carlyle Group spent two lost years investing in a hodgepodge of companies.

It wasn’t until 1989, when the company brought in Mr. Carlucci, fresh off his two-year stint as U.S. secretary of defense, that Carlyle got serious in government.

In 1991 the company made a name for itself by facilitating a $590 million purchase of Citicorp stock for Prince Alwaleed bin Talal.

Shortly thereafter, Carlyle snatched up defense contractors Harsco, BDM International, and LTV, turning the companies around and selling them to the likes of TRW, Boeing, and Lockheed Martin.

The Carlyle Group has diversified its holdings since then, investing in everything from bottling companies to natural-food grocers. In the process, it has become one of the biggest, most successful private-equity firms in business, with annualized returns of 35 percent.

(Judging by the early numbers from some of their funds, however, like many other private-equity funds, 2001 will be a considerably less profitable year for Carlyle.)

“They are the new breed of private equity, acting more like a large mutual fund of private companies,” says David Snow, editor of, a Web site that tracks private-equity firms. The numbers are impressive: Carlyle employs 240 people, as opposed to the 10 or 12 typical of most private-equity firms. It has ownership stakes in 164 companies, which collectively employ more than 70,000 people.

George Soros invested $100 million in the group’s funds; the California Public Employees’ Retirement System is in for $305 million.

Carlyle has succeeded by raising money first, then finding the talent to manage it. For instance, it raised a fund for buying out telecom companies and hired William Kennard, the former U.S. Federal Communications Commission chairman, to run it….

But the struggles in its VC business may be offset, at least temporarily, by the expected windfall from the war on terrorism. The federal government has already approved a $40 billion supplemental aid package to the current budget, $19 billion of which is headed straight to the Pentagon. Some of the additional government spending is likely to find its way into Carlyle’s coffers.

The Bush administration isn’t afraid to mix business and politics, and no other firm embodies that penchant better than the Carlyle Group. Walking that fine line is what Carlyle does best.

We may not see Osama bin Laden’s brothers at Carlyle’s investor conferences any more, but business will go on as usual for the biggest old boys network around.

As Mr. Snow puts it, “Carlyle will always have to defend itself and will never be able to convince certain people that they aren’t capable of forging murky backroom deals. George Bush’s father does profit when the Carlyle Group profits, but to make the leap that the president would base decisions on that is to say that the president is corrupt.”

Additional reporting by Lawrence Aragon, Mark Chediak, Julie Landry, Christopher Locke, Eric Moskowitz, Mark Mowrey, and Michael Parsons.



A spectre is haunting Europe.

The Carlyle Group

Alfred Mendes looks at a single US investment corporation
and asks some pertinent questions about
democracy, terrorism and power.

It is quite extraordinary, and not a little frightening, how little attention is paid to the unexpressed aims of Corporate America in its on-going act of achieving global economic and political domination. Whereas its expressed aims, such as promoting a ‘‘new’’ and ‘‘humanitarian’’ world freed of ‘‘terrorism’’, are constantly propounded in both print and speech, the causal problems underlying these recent crises (of which ‘‘terrorism’’ is the most prominent) are not being examined rationally.

That Americas’ expressed aims are false can be readily proven:

(1) financed to the tune of $2 billion and armed by the USA, its NATO ally, Turkey, has been ‘‘ethnically cleansing’’ its Kurdish minority for the past decade & a half – within view, as it were, of a US Intelligence Base just outside Diyarbakir – while it, the USA, has been bringing its ‘‘humanitarian values’’ to the Balkans;

(2) those two paradigms of ‘‘terrorism’’ – Osama bin Laden and Saddam Hussein – could not have achieved power without the active assistance of the USA.

To understand more clearly the role being played by this superpower, it is first necessary to accept the fact that the US Administration is – and has been for decades – under the control of its capitalist corporations, a group wielding enormous power due to its vast industrial capacity and world-wide capital investments – to say nothing of its cabalistic, cohesive nature.

To confirm this, one has only to scan the lists of the top individuals in both the US Administration and the corporate boards over the past few decades to see the close linkage between the two. As for the post of President: this is an executive post carrying such autocratic power that the Corporate Establishment ensures that ‘‘their man’’ is elected.

This election is, in effect, an auction, as exemplified by the fact that oil companies contributed $1.8 million towards George W. Bush’s campaign in the year 2000 – thirteen times as much as they gave his opponent!

Again, the Electric utilities donated $447,000 to Bush, but only $65,000 to Al Gore, etc. And, inasmuch as the President-to-be appoints administrators who are, in effect, the policy-makers, the Corporate Establishment – as the highest bidder in the ‘‘auction’’ – ensures that it is well-placed in the seat-of-power. Is this the form of democracy the Athenians had in mind!?

The following recent news report epitomises this close bond between government and business concisely: on the 27th September ‘01, the Wall Street Journal revealed that the bin Laden family firm in Saudi Arabia was a major investor (1 of 450 such investors) in the prestigious American investment firm, the Carlyle Group, and that George Bush Snr., on behalf of this group, had brokered the deal.

The report added that the FBI had subpoenaed the bin Laden family’s bank records, there being doubt that the family had broken all ties with Osama.

This calls for a closer examination of the Carlyle Group in order to unearth more germane facts., and an efficient way to accomplish this is to begin by listing the senior officers of the company – with very brief (incomplete) C.V’s added.

(It should be noted here that the European Chairman is John Major, the ex-British PM, but he warrants no further mention in this article as he is of little import to the subject in hand).

Chairman: Frank C. Carlucci – His ties with the US Administration go back to the ‘70’s, (Dept. of Health, Education & Welfare, etc.) and – more importantly – includes stints as Deputy Director of CIA (‘‘78 – ‘‘81) under Carter; Deputy Secretary of Defense (‘‘81 – ‘‘82) and National Security Adviser (‘‘87 – ‘‘89) both under Reagan.

Senior Counselor: James Baker III. Chief of Staff (‘‘81 -‘‘85), and Secretary of Treasury (‘‘85 – ‘‘89) both under Reagan; and Secretary of State (‘‘89 – ‘‘93) under Bush Snr.

Broker: George Bush Snr. Director of CIA (‘‘76 – ‘‘77) under Ford; Vice-President (‘‘81 – ‘‘89) under Reagan; and President (‘‘89 – ‘‘93).

The Corporate Establishment can readily be portrayed as a complex web of interlinked companies and executives, and the fact that Carlyle holds ownership stakes in 164 companies and ranks as the eleventh largest defence contractor in the US further emphasises its pre-eminence within this web, and the somewhat disproportionate links to the intelligence services listed above is reflected in its ownership – via BDM International – of the CIA-front company, Vinnell Corp., which has been operating under contract in Saudi Arabia since 1975.

It is of pertinence to note here (if only to stress the close relationship between the Administration and the corporate establishment) that BDM’s President & CEO is one Philip Odeen who served as Chairman of Clinton’s National Defense Panel.

Another filament of this web: in 1990 George W. Bush – now President – was on the board of directors of one of Carlyle Group’s subsidiaries, Caterair, an airline catering company.

It needs little delving into the background of the senior Carlyle officers listed above to trigger memories of events that have a direct bearing on today’’s crisis of ‘‘terrorism’’.

(1) One week after his inauguration as President, and with Vice-President Bush Snr. by his side, Reagan called a cabinet meeting to discuss ‘‘terrorism’’ – the overthrow of Iran’s Shah by the Ayatollah Khomeini still fresh in memory. As reported by Bob Woodward in his book The Veil, Anthony Quaint, the State department’s expert on terrorism, stated at that discussion that “it’s possible for a terrorist group to strike directly at the United States in the United States. The United States is vulnerable”. Now, 20 years later, the US government can hardly claim they were not forewarned!

(2) As reported by Leslie Cockburn in her book Out Of Control covering the Nicaraguan Iran/Contra crisis: while the notorious Lt. Col. Oliver North was serving “on the Interdepartmental Group on Terrorism and on the Terrorist Incident Working Group, both of which reported to the Crisis Pre-Planning Group and the Special Situation Group, both of which in turn shared the same chairman: Vice-President George Bush”, the US government was, at the same time, engaged in trading guns for drugs, as revealed by one of the pilots so engaged, ‘‘Mickey’’ Tolliver, in a CBS interview in 1987 (Cockburn had worked for CBS since 1978).

On one trip he had carried 28,000 lbs. of guns and ammunition to the Contra supply base in Honduras, and returned with a 25,360 lb. load of marijuana – landing at Homestead Air Force Base in Florida!

(3) In the aftermath of the disastrous bombing of both the US Embassy and the US Marine Base in Beirut in ‘83, there ensued a spate of hostage-taking. America accused Iran of aiding the suspect ‘‘terrorist’’ groups guilty of these activities.

Result: America arranged for Israel to sell 508 TOW missiles to Iran in exchange for the release of the hostages!

(4) In the aftermath of the Lockerbie bombing in ‘86, America for the first 2 or 3 years accused Iran (once again) and Syria of responsibility for the act – only to drop all accusations against them when it became necessary to co-opt Syria as an ally in the inevitable war against Iraq, the new ‘‘Satan’’.

There were a number of other subsequent events of a similar ‘‘terrorist’’ nature, and in retrospect, it is clear that America was using the term ‘‘terrorism’’ in order to conceal their real aim, which was to achieve economic and political domination on a global scale – as expressed in the opening sentence of this article.

This subject of terrorism is best treated by drawing attention to the crux of the problem – the inequity and bias inherent within the capitalist system itself, whereby a comparative few garner profit from the labour of many, inevitably fostering that most dangerous of emotions: frustration.

Is not frustration the mother of terrorism?

And would not the most rational means of solving this problem be to examine the source of this frustration? Which is precisely why America cannot afford to take this rational road: to do so would mean questioning the system itself – Mammon forbid!

In view of the foregoing, is it not thus reasonable to harbour grave doubts as to the validity of America’s declared aim in this conflict with Afghanistan?

A further delving into the background of the listed Carlyle officers is called for here – and whom better to start with than its chairman, Carlucci.

As noted in his C.V. above, he had strong ties with the intelligence agencies, as confirmed by Philip Agee in his book, On The Run: “Carlucci had been on the team in Kinshasa when Patrick Lumumba was assassinated and the Congolese revolution stopped. Then he worked four years in Brasil following the military coup in 1964”.

Agee was in Portugal not long after the April ‘75 coup by the communist-led Armed Forces Movement had overthrown the dictatorship of Salazar – as a result of which, President Ford had sent Carlucci as ambassador to Portugal.

As Agee writes: “If the new ambassador, Frank Carlucci, was any indication, the Ford administration was determined, both alone and in concert with European allies to stop the revolution”…”He would be in charge of coordinating all efforts to ‘‘save Portugal”.

But more pertinent to his role in later years were the many directorships he held, among which were General Dynamics, Westinghouse Electrics, the Rand Corp.-and Ashland Oil (among others).

He had also been a college classmate of Donald Rumsfeld, the present Secretary of Defense.

Perhaps his most interesting relationship was with the very right-wing Dr. Constantine Menges of the Hudson Institute who had worked for Carlucci in the Department for Health, Education and Welfare.

As Bob Woodward revealed in The Veil: “ In a 1980 article (The New York Times), Menges stated that events in Iran, Afghanistan and Nicaragua marked a turning point in the invisible war between radical and moderate forces’ for control of oil (this authors italics), in the Middle East and Central America”.

This was a significant slip-of-the-tongue on the part of Menges, and was to prove correct. After the collapse of the USSR, the American oil companies wasted no time in moving in on the Caucasian oil & gas fields (see author’s article “The Thin End Of The Wedge”).

In ‘81, William Casey, Director of CIA, made Menges Intelligence Officer for Latin America, a position he held until, in 1983, and on the advice of Carlucci, he was transferred to the National Security Council, under Reagan.

It is of significance to note that Carlucci was not the only one of the three Carlyle officers covered by this article to be connected to an oil company (he was chairman of Ashland Oil); Bush Snr., had founded the oil drilling firm, Zapata; and last – but not least – Baker is on the board of the Azerbaijan International Oil Co. (AIOC) as legal representative, which should please him as his good friend from the days of the USSR, Eduard Shervardnadze, is President of neighbouring Georgia.

It is necessary to note here that, contrary to the generally accepted belief that the US troops recently deployed in Uzbekistan was the first such deployment on ex-Soviet soil, Reuters reported, in June of this year, 2001, that 4000 troops from eleven countries (including the USA) held NATO exercises near the Georgian port of Poti on the Black Sea, and were welcomed whole-heartedly by Shervardnadze, who stated that this was “confirmation of the readiness of our country to move towards deeper Euro-Atlantic integration.”

This, from the man who was Foreign Minister of the USSR when it collapsed! (Any causal linkage here?).

The filaments of the oil web are too numerous to be covered in detail in an article of this length, but, with the AIOC fresh in mind, a few more examples of the role played by oil companies in the sensitive area of the Caucasus region would not be amiss. As its name implies, AIOC is an Azerbaijan consortium – in which US oil companies hold a 40% stake.

Two of these companies are Amoco and Pennzoil.

(1) Zbigniew Brzezinski, who had been National Security Advisor to Jimmy Carter, was on Amoco’s payroll, and

(2) General Brent Scowcroft, who had been National Security Advisor to George Bush Snr., was on Pennzoil’s payroll. But, had not the US Congress in ‘92 passed Section 907 of the Freedom Support Act to restrict US assistance to Azerbaijan until such time as it, Azerbaijan, stopped its offensive and adopted a more ‘‘humanitarian’’ attitude to its neighbours, Armenia and Ngorno Karabahk?

The answer is found in the short paragraph of the Act which reads: “Section 907 does not prevent Trade and Development Agency guarantees and insurance for US firms, or Foreign Commercial Service operations, or the activities of the Overseas Private Investment Corporation (OPIC) and the Export-Import Bank. Thus, US businesses are not placed at a competitive disadvantage.” (authors’ italics).

1997 saw the formation of the Central Asia Gas Pipeline consortium (Centgas) with the intention of running a 790-mile-long pipeline from the gas fields of Turkmenistan through neighbouring Afghanistan to Multan, in Pakistan (at a cost of $1.9 billion) – with a possible future extension to New Delhi, in India (cost: $600 million).

This was a project under the control of the California oil company, UNOCAL, who held the controlling stake of 46.5% in the consortium.

At the instigation of UNOCAL, a Taliban ministerial delegation held talks in Washington with the US Undersecretary of State, Karl Underforth, in December 1997 to discuss this pipeline project – but, due to the ever-worsening instability in Afghanistan, UNOCAL aborted the project in December 1998.

However, as reported in the Pakistani publication “Business Recorder” in 2000, the remaining members of Centgas Delta Oil Group of Saudi Arabia, the Turkmenistan government, Indonesian Petroleum, ITOCHU of Japan, Hyundai of South Korea and the Crescent Group of Pakistan – had not given up hope.

The crucial point to note here is that, without the participation of an American oil partner such a project is impossible, and given the very influential clout carried by the oil industry in the US Administration (as noted above), it is reasonable to assume that these considerations would have been in the forefront of the minds of the US government officials, and would thus have played a crucial role in determining America’s response to Afghanistan in the aftermath of the WTC bombing.

This attack, in affect, had supplied the US with a convenient reason for taking control of Afghanistan under the pretext of destroying ‘‘terrorism’’ when, in fact, already well-ensconced in the nearby ex-Soviet republics of the Caucasus region, this was merely another step in Corporate America’s inexorable advance eastwards in its search for more lucrative markets – for its oil industry in particular.

This poses the obvious, crucial question: which of the two protagonists in this struggle is the real terrorist?

Alfred Mendes was born in Trinidad in 1920 and is of Portuguese extraction. His varied career included wartime service both at sea and in the British Army and work as a coal miner and oil driller in several parts of the world. He has been retired for twenty years.


November 30, 2001

Investigating The
Bush-Bin Laden Connection:

Judicial Watch To File FOIA Lawsuit
Over Carlyle Group Documents

“Judicial Watch…announced that it would be filing a Freedom of Information Act lawsuit against the State and Defense Departments in order to obtain documents concerning the Carlyle Group, an international consulting and investment firm which retains former President George H.W. Bush.

The Wall Street Journal reported in September that the former president…worked for the bin Laden family business in Saudi Arabia through the Carlyle Group. [He] met with the bin Laden family at least twice…

Reports have questioned whether members of his Saudi family have truly cut off Osama bin Laden. Osama’s sister-in-law, in a recent interview with ABC News, said that she believed that members of her family still supported bin Laden…

And documents recently uncovered through Judicial Watch’s FOIA to the Department of Defense show that the Carlyle Group has high-level access to the U.S. government.” . . .

Copyright 2001 All rights reserved.


November 30, 2001

The Carlyle Group Is A Key Player
in Media Consolidation

– With the Help of Colin Powell’s Son

Frank Washington……heads a new company these days called Moon Shot Communications. And his new goal is to make a lot of money in the next several years by buying TV stations across the country, waiting for their value to increase, and then selling them to the highest bidders.

Washington believes the stations will command higher prices if the Federal Communications Commission [under Colin Powell’s son Michael] loosens rules limiting the number of broadcast TV stations a media company can own in the same market — a change he expects to happen over the next few years. The change would uncork a consolidation-driven buying frenzy like the one that began in radio 10 years ago. By buying now and selling later, Moon Shot would try to pocket some fat capital gains.

Washington and four partners are working with investors and the Carlyle Group of Washington, D.C., a major private-equity firm, to line up stations they might buy.

Copyright 2001 All rights reserved.


November 16, 2001

Bush Sr, the Carlyle Group
and the Saudi Royals

From the archives of the Nation: “Carlyle has extensive interests in Saudi Arabia, and it has been pursuing a deal in partnership with SBC, the telecommunications giant (which owns Southwestern Bell, Ameritech, Pacific Telesis and Cellular One), to acquire about 25 percent of the Saudi phone system.

Accompanied by several Carlyle execs, Bush and Major–the leaders of the alliance that pushed Saddam Hussein out of Kuwait in 1991–were out to win friends and influence Saudis on behalf of Carlyle. (Bush, Major and the Carlyle officers also made a stop in Kuwait.)

A day or two after the short session with the Prince [Abdullah], Bush and Major were whisked by the Carlyle team, headed by Carlyle founder David Rubenstein, a former Carter White House aide, to the city of Jeddah.

They spent four hours on a yacht cruising the Red Sea with Saudi business officials and then attended a swank party at a private residence, again hobnobbing with prominent Saudis.

Copyright 2001 All rights reserved.


November 3, 2001

Besides Bombs, Carlyle Group Is
Big in Web Commerce

The Carlyle Group is one of the world’s largest weapons makers, and it controls the largest franchiser of non-cola soft drinks in the world.

According to Publishing Trends, “Carlyle joined the Tribune Company in plunking down a $30 million investment last August for, giving it a minority stake in the online textbook discounter.

According to company documents, the VarsityBooks hit was part of a broader effort at Carlyle to target Internet-related firms with a special $210 million venture capital fund, which has brought on such diverse companies as Blackboard, an online learning firm that sells course website packages to colleges and universities, LatinForce.Net, an e-commerce portal targeting Hispanics in the US and Latin America, and MuniAuction, a website that has auctioned some $6 billion in bonds, notes, and certificates of deposit.”

Copyright 2001 All rights reserved.


November 4, 2001

John Major link to
bin Laden dynasty

Former Prime Minister chairs bank
which invests Osama’s family fortune

By Neil MacKay Home Affairs Editor, Sunday Herald

JOHN MAJOR, the former Conservative Prime Minister, has been linked to the family of Osama bin Laden through his role as the European head of a multi-billion dollar US investment firm which took almost £1.5 million from the terrorist leader’s relatives.

Evidence has also come to light which points towards some members of the bin Laden family still having close ties to Osama as well as links to terrorism, including a previous attack by the al-Qaeda organisation on the USS Cole in Yemen last year. Bin Laden’s family claim they disowned him in 1994 and have repeatedly denounced terrorism.

The Carlyle Group, a Washington DC based merchant bank which has Major as its European chairman, received the funds from the bin Laden family through a London investment arm in 1995. The Carlyle Partners II Fund has now raised an estimated £1 billion.

It was used to buy several aerospace companies. So far the bin Laden family has received more than £1m back in completed investments, but should ultimately make £500m.

Financiers say that the family’s actual contribution was far more than the £1.5m disclosed.

Judicial Watch, the Washington DC legal watchdog organisation, has accused any company which does business with the bin Laden family — through its company the Saudi Binladin Group (SBG) — of ‘disloyalty to the USA’.

The FBI has issued subpoenas to banks used by the bin Laden family seeking records of family dealings. Investigations in the US and UK will also attempt to unravel whether any relative has given financial support to al-Qaeda or Osama bin Laden.

Despite claims that his family have cut off all contact with bin Laden, the terror leader’s stepmother received a phone call from him on the eve of the September 11 attacks in which he told her that ‘something big’ was about to happen and he would not be able to see her again for a long time.

She also attended his son’s wedding in Afghanistan earlier this year.

America believes that two of Osama bin Laden’s brothers-in-law, Mohammad Jamal Khalifa and Sad al-Sharif, are also in contact with him. Both are alleged to have financial connections to al-Qaeda.

Khalifa, who lives in Saudi Arabia, is suspected by US intelligence of using a charity called the International Islamic Relief Organisation to finance Islamic terrorists in the Philippines connected to al-Qaeda.

Vincent Cannistraro, the former CIA chief of counter-terrorism, said Khalifa may also have funded the Islamic Army of Aden, which claimed responsibility for the bombing of the USS Cole.

Al-Qaeda co-ordinated the attack on the American ship.

Khalifa was detained briefly in the USA in 1994 when immigration officials discovered he had been sentenced to death in absentia in Jordan for ‘conspiracy to carry out terrorist acts’.

Bin Laden’s brother, Mahrous, is also connected to an armed attack by Islamic fundamentalists in Saudi Arabia in 1979. He befriended Syrian members of the Muslim Brothers, an Islamic fundamentalist group, in exile in Saudi Arabia.

They later used bin Laden company trucks to smuggle arms into Mecca when at least 500 dissidents invaded and seized the Grand Mosque. All the men who took part in the attack were beheaded.

Mahrous was arrested but later freed. He is currently the manager of SBG at its Medina offices.

John Major’s private secretary, Arabella Warburton, refused to accept that the bin Laden family could have links to terrorism, saying: ‘They are thoroughly good people. Mr Major has nothing to be concerned about. Bin Laden’s family have castigated him, distanced themselves from him and issued statements condemning the attacks on America. It’s unfair to cast doubt on them. It’s guilt by association.’

She said that Major, who became European chairman of the Carlyle Group on leaving Parliament in May, ‘had never met a member of the bin Laden family, and could not comment on allegations against the family which he knew nothing about’.

Daniella Zuin, the European spokes woman for the Carlyle Group, said: ‘The bin Laden family are investors of ours, but we do not discuss investors. We are sure that the bin Laden family have no dealings with Osama bin Laden.’

Major also sits on the Carlyle Group’s Asia advisory board. The company is the world’s largest global private equity firm and manages more than £10bn in capital.

The former US defence secretary, Frank Carlucci, is the company’s chairman. Carlyle is extremely close to the Saudi Royal family, which in turn has a close friendship with the bin Laden family.

Former President George Bush is the company’s senior adviser to its Asian Partners Fund, while his one-time secretary of state, James Baker, is its senior counsellor.

Bush, Carlucci and Baker have all visited the bin Laden family at their company headquarters in Jeddah.


New ambassador to Saudi Arabia is another Bush/Carlyle Group crony.

by Jonathan Ashley, Eyes On America

October 9, 2001

Dallas attorney Robert Jordan was confirmed Wednesday by the United States Senate to serve as ambassador to Saudi Arabia.

Jordan has no diplomatic experience. However, his connections leave no doubt as to why he was named to the post. He defended George W. Bush in a probe of insider trading allegations in 1990. The allegations involved the sale by Bush of 60% of his Harken Energy Corp. stocks two months before a 25% drop in the stock’s price.

According to a 7 Sep 2000 article by the Associated Press, “At the time of the investigation, Bush’s father was president of the United States and the SEC was run by one of his biggest political supporters, Richard Breeden.

The SEC’s then-general counsel, James R. Doty, was another staunch presidential supporter who as a private attorney was George W. Bush’s lawyer when he purchased his share of the Texas Rangers baseball team.”

This is not Jordan’s only connection to the Bush family. Jordan is a corporate lawyer in the Dallas office of Houston-based Baker Botts. Baker Botts has an office in Riyadh, Saudi Arabia. The client list at Baker Botts includes “more than half of the Fortune 100 companies”.

The client list also includes The Carlyle Group. On the board of directors for Carlyle is former President George Herbert Walker Bush.

James A. Baker III is the current Baker in Baker Botts. Baker was Secretary of State under the first President Bush. He is currently senior counsel to The Carlyle Group.

Baker was a classmate of Donald H. Rumsfeld at Yale University. Rumsfeld, the current Secretary of Defense, was the roommate of Frank C. Carlucci at Yale.

Carlucci, who was head of the National Security Counsel under President Ronald Reagan, is currently chairman of The Carlyle Group.

The current President Bush was a director of Caterair during the years 1990-1994.

Caterair is owned by The Carlyle Group.

The board of directors of The Carlyle Group also includes: former Philippines President, Fidel V. Ramos; former director of the U.S. Office of Management & Budget, Richard Darman; former Assistant to the President (Bush I), Robert Grady; former Prime Minister of South Korea, Park Tae Joon; former SEC chairman, Arthur Levitt; former Prime Minister of Great Britain, John Major; former general director of the World Health Organization, Michael Orloff; retired U.S. Army General, J. H. Binford Peay; former president of Deutsche Bundesbank, Karl Otto Pohl; and former chairman of the Joint Chief’s of Staff, John Shalikashvili.

Two-thirds of Carlyle’s holdings are in defense and telecommunications companies.

At least $2 million of Carlyle funding has come from the bin Laden family of Saudi Arabia.

– Reprinted from Eyes On America :


Posted on the Internet:

An article from Newsday, Jan 31, 1995, by Karen Rothmyer, “Peso Hits Record Low As Bailout Is Debated,” identifies some of the Council on Foreign Relations members involved in the cover-up.

They were “Former Presidents George Bush, Jimmy Carter and Gerald Ford [who] signed a declaration of support for the [bailout] plan. Also endorsing the plan was George Soros, probably the world’s most influential international investor.”

George Soros is also a member of the Carlyle Group. The Carlyle Group is an investor team led by Ronald Reagan’s Defense Secretary Frank C. Carlucci III and funded in part by the Mellon family.

Carlucci is a sawed off runt with a Napoleon complex and a poor self image. The furniture in Carlucci’s office is miniaturized so he feels bigger. When Carlucci is photographed with other men, they sit down, and he stands up, to give the perception he is bigger. As president and CEO of Sears World Trade Center, Carlucci left the company with a $60 million dollar loss, and went work for the government.

The managing director of the Carlyle Group is George Bush’s White House Office of Management and Budget Director Richard Darman.

A partner in the group is George Bush’s Secretary of State James A. Baker III.

Another member of the Carlyle group is Richard Nixon’s White House Office of Management and Budget Deputy Director Frederic Malek.

George Bush Sr.’s son George Bush Jr., former CIA Director Robert Gates and current SEC Chairman Arthur Levitt are advisors to, investors in or board members of Carlyle’s companies. Included in Carlyle’s press kit are Vernon Jordan and Bob Strauss.

Carlucci, Darman, Gates, Jordan, Malek and Strauss are Council on Foreign Relations members.

The Carlyle group has exploited their governmental connections and ties to turn itself into one of the twenty-five largest defense contractors in the world.

All the members of the Carlyle group have been part of dubious investment activities.

Many have been exposed in scandals that involve the Central Intelligence Agency….


October 21, 1999


The Hartford Courant

Connecticut State Treasurer Denise L. Nappier shone the light Wednesday on seldom-seen machinations that have put millions into the pockets of well-connected “finders” in state pension investment deals — and some of the state’s best-known politicians were caught in the glare.

Nappier, responding to the scandal surrounding her now-disgraced predecessor, Paul J. Silvester, released a list of those who have received finder’s fees and other compensation in treasurer’s office deals since 1991….

One firm that has given Nappier an incomplete response is the Carlyle Group — which has figured prominently in the Silvester scandal….

Silvester invested $50 million in pension funds with Carlyle, which has been a client of Wayne Berman, a Washington-based consultant and major fund-raiser for Texas Gov. George W. Bush’s presidential campaign….

Berman gave Silvester a job with his new business consulting firm, Park Strategies, after his term ended….

For more, GO TO > > > A Connecticut Yankee in King Kamehameha’s Court


April 23, 2001

Money Watch
By Vishesh Kumar

CityNet Telecommunications has
a dirty little secret

…but it still manages to walk away with $275 million in funding.
CityNet Telecommunications

CEO: Robert G. Berger
Location: Silver Spring, Md.
Funding: $275 million in equity and debt, following a $100 million investment in April 2000
The Pitch: Stringing optic cables inside sewer lines to bring broadband access to buildings

Don’t laugh when you hear CityNet Telecommunications’ dirty little secret: The company brings fiber-optic networks to office buildings by laying lines in sewers.

CityNet has outfitted robots with digital cameras and sent them into wastewater systems. The robots install stainless steel tubes containing fiber lines along the walls of sewer pipes. Initially developed by a Swiss firm to clean sewers, the robots go through tunnels as narrow as eight inches across.

The stingy private-equity market has opened the floodgates for CityNet. The company raised $175 million in equity and $100 million in debt financing last week, one of the largest private rounds of investment for any company this year.

The Carlyle Group, a buyout and private investment firm, led the charge, which also included Berkshire Partners, CIBC Capital Partners, Crescendo Ventures and Trimaran Capital Partners….

CityNet went to the Carlyle Group to lead the round because of the firm’s global reach and track record in telecommunications. Carlyle has also invested in Global Crossing, Nextel and Nortel.

“In addition to being able to write a big check,” says Rosenblum, “the fact that we have strong industry focus and operations in Europe and elsewhere will be a big help.”


MERGER TALK- Carlyle wants more than political clout

By Dane Hamilton

NEW YORK, May 21, 2001 (Reuters) – After a steady stream of superstar hires from the ranks of government, Carlyle Group finally is getting the recognition its founders think the private equity firm deserves. But for the wrong reasons.

Carlyle, one of the world’s largest leveraged buyout firms, wants to be known as the Goldman Sachs Group (NYSE:GS – news) or Morgan Stanley (NYSE:MWD – news) of private equity. Instead, Carlyle is better known for employing more Washington heavy hitters than any other similar investment firm.

That growing list now includes former President George Bush, former Secretary of State James A. Baker III and Frank Carlucci, President Reagan’s defense secretary. In recent weeks, the firm added John Major, the former British prime minister, and Arthur Levitt, the former Securities and Exchange commissioner, to its advisory panel.

David Rubenstein, a 51-year-old lawyer who helped build the Washington-based buyout firm into a $12.5 billion powerhouse over the last 14 years, bristles at the charge that politicians are too

“addled” to be effective in business. The names, he says, are mainly there bring in new business, especially in aerospace, telecommunications and other regulated industries….

To attract investors at a time when raising money is getting harder and returns smaller, Carlyle is looking to create a strong brand and a broad array of financial products, Rubenstein says.

That way, pension fund investors can undertake “one-stop shopping” for their “alternative investments” that include private equity.

Standard business school prescriptions? Perhaps. But for the veiled world of private equity firms, it’s a big change.

A decade ago buyout firms were dominated by buyout pros who made huge bets on one or two transactions, epitomized by KKR’s now legendary takeover of RJR Nabisco in 1989. Now big firms like Carlyle have scores of dealmakers who buy and manage dozens of private companies for years with thousands of employees.

But making the transition isn’t easy. When Carlyle started in 1987, only a handful of financiers practiced the art of raising huge amounts of debt, or leverage, and buying out companies by using the target firm’s assets as collateral. Later the target firm would be sold, often at a spectacular premium.

Now, with some 700 private equity firms with an estimated $200 billion in committed capital, competition for deals has gotten much tougher.

So Carlyle and others are looking to create lasting institutions that will outlast their founders.

“Investors should not have to worry that a partner might drop dead or leave the business,” Rubenstein says.

Other buy-outs are wrestling with this issue.

“There are very few private equity firms today that aren’t tied to one big guy, like a Tom Lee or Henry Kravis,” says Joseph Malick, general counsel of Crossroads Group, a Dallas private equity firm. “With that, you have a lot of risk of that guy getting hit by a bus. Succession issues are becoming big these days.”

Carlyle, though, isn’t engineering the ego out of private equity, as its advisory board demonstrates. Rubinstein denies Carlyle is playing the age-old Washington game of influence peddling, using former officials to exert pressure on the government contract process.

The issue recently came up when United Defense LP, wholly owned by Carlyle, lobbied the Pentagon to keep funding its Crusader missile. Carlyle certainly has the expertise: Chairman Frank Carlucci is the former defense secretary.

The reason the firm hires big names is that, for better or worse, names open doors, Rubinstein says. It’s much easier to attract the attention of corporate barons with a lunch invite from a John Major or other political luminary than with lesser known Carlyle managers.

And getting the inside track in an asset sale without an public auction is “worth its weight in gold,” says Rubinstein.

Carlyle’s returns — the firm boasts of 50 percent-plus gross overall returns in 2000 — are what attracts investors, not prestigious names, its supporters say.

“The bottom line is that Carlyle has been successful and that is why they have been able to raise capital,” says Rick Rickertsen, principal in the $1.2 billion fund Thayer Capital Inc. and author of the recent book “Buyout.”

Last February, the $170 billion California Public Employees Retirement System, the world’s biggest fund, put down $175 million for a minority stake in Carlyle.

CalPERS also put $250 million in new Carlyle funds with an option to invest $425 million later.

And at a time when other major buyout firms — like Blackstone Group LP; Hicks, Muse, Tate & Furst; and Welch, Carson, Anderson & Stowe — are grappling with financially troubled companies in their portfolios, Rubenstein brags that none of Carlyle’s current companies are write-offs. That’s a powerful lure for big investors who are slashing allocations to “alternative investments” like private equity.

“Big institutions say they have too many partnerships to manage with private equity firms,” says Thayer’s Rickertsen. “They want relationships with fewer, very stable solid firms. I think Carlyle has played that trend brilliantly.”

(Posted on Free Republic, 109, on 07/11/2001 08:09:23 PDT by independentmind)


February, 2000


By Joe Conason, Harper’s Magazine

A Heartwarming Tale of Influence,
Cronyism, and $1.7 Billion!

On December 6, 1994, one month after he defeated Ann Richards to become governor of Texas, George W. received a large but belated campaign contribution from an acquaintance named Thomas O. Hicks

Hicks was easily one of the wealthiest men in Texas, and more specifically, he was the chief executive of Hicks, Muse, Tate & Furst, an investment partnership he founded . . .

Of the scores of appointments made by an otherwise weak governor under the Texas constitution, a seat on the University of Texas Board of Regents is among the most desirable. It carries significant prestige, opportunities for patronage, and preferred access to season tickets (or luxury boxes) at Longhorn football games. For someone like Tom Hicks, however, being a regent provided something far more valuable…

Hicks had conceived an ambitious plan for the state university system’s financial assets — more than $13 billion — that matched his own bold investment style….

Friends and long-time associates of Thomas Hicks, and his firm’s past and future business partners— as well as major Republican contributors and political supporters of the Bush family— received hundreds of millions of dollars from the University of Texas investment funds.

Under the guidance of Tom Hicks, a growing portion of the university’s investment choices had a decidedly Republican tinge. On March 1, 1995, the regents voted to place what would prove to be a comparatively modest $10 million with The Carlyle Group….

That a firm run by his father’s associates would be awarded an investment contract only weeks after George W. to office was unseemly at best.

But the Texas governor had his own long-standing and lucrative ties to Carlyle that dated back almost a decade. Among his more obscure business activities was a corporate directorship at Caterair, one of the nation’s largest airline-catering services, which was acquired by Carlyle in 1989.

The next year, a seat on the company’s board was arranged for George W. by the former Nixon White House aide and longtime Bush associate Fred Malek, who was then an adviser at Carlyle.

Although Bush remained on the catering company’s board until 1994, his earnings as a Caterair director are not specified on his personal financial forms filed with the Texas Ethics Commission….

These days it is the governor’s father who benefits from the Washington investment firm’s largesse.

Since leaving the White House, George Herbert Walker Bush has been paid by Carlyle for speeches at events sponsored by the merchant bank….


May 16, 2001

The Carlyle Group: ex-government
officials cash in

By Shannon Jones

The incestuous ties between the Bush administration and the corporate world are highlighted by its relationship with the Carlyle Group, a leading private equity firm.

Private equity companies buy undervalued businesses and then resell them for a profit. It is a highly profitable field open to only the wealthiest players. It has returned an average profit of 34 percent per year over the past decade.

The Carlyle Group became a major force on the world financial scene by employing prominent ex-officeholders, such as former President George Bush, to provide a foot in the door to government ministries around the world.

Recent activities of the senior Bush include a meeting last fall with King Fahd of Saudi Arabia. Bush also met with the prime minister of South Korea and other government officials, paving the way for Carlyle to acquire KorAm Bank, considered an important prize because of its relatively strong financial position.

Each speech he gives on behalf of Carlyle generally nets the former president $80,000 to $100,000.

Carlyle’s ties to the Bush family date back more than a decade. In 1990 Carlyle placed George W. Bush on the board of directors of one of its subsidiaries, Caterair, an airline catering company.

Charles Lewis, executive director of the Center for Public Integrity, commented, “Carlyle is as deeply wired into the current administration as they can possibly be. George Bush is getting money from private interests that have business before the government, while his son is president. And, in a really peculiar way, George W. Bush could, some day, benefit financially from his own administration’s decisions, through his father’s investments.”

In addition to the elder Bush, Carlyle employs former Secretary of State James Baker and former British Prime Minister John Major. The firm’s advisory board lists such international figures as former President Fidel Ramos of the Philippines and the former prime minister of Thailand. Karl Otto Pohl, former president of Germany’s Bundesbank, is also an advisor.

According to a report in the March 5 edition of the New York Times, “Carlyle has ownership stakes in 164 companies which last year employed more than 70,000 people and generated $16 billion in revenues. About 450 institutions – mainly large pension funds and banks – are Carlyle investors…

“The California state pension fund invested $305 million with Carlyle, and the Texas teachers pension fund – whose board was appointed when George W. Bush was governor – gave Carlyle $100 million to invest in November.”

Carlyle is reportedly the eleventh largest defense contractor in the US because of its ownership of companies making tanks, aircraft wings and other equipment. It is also heavily invested in telecommunications, another field that is strongly affected by government policy.

Frank Carlucci, a former defense secretary under President Ronald Reagan, who is Carlyle’s chairman, met with his former college classmate Donald Rumsfeld, Bush’s secretary of defense, in February.

The two reportedly spoke about “military matters” at a time when Carlyle has billions of dollars worth of defense projects under consideration by the government.

Carlyle is currently pushing for funding of the Crusader heavy-duty tank, which is built by one of the companies it owns.

Carlyle recently lodged a complaint with the government after another one of its companies lost a $4 billion contract to make a lightweight combat vehicle.

Copyright 1998-2001 – World Socialist Web Site, All rights reserved


September 7, 2000

Carlyle Asia Venture Partners II expected
to raise US$800 million

By Bloomberg,

WASHINGTON – Carlyle Group Inc, the private equity firm whose leaders include three former government chiefs, plans to raise as much as US$800 million for a venture capital fund to invest in Asian technology companies.

The fund, Carlyle Asia Venture Partners II, which will probably close in the fourth quarter is one of the Washington-based firm’s three new Asian investment pools.

The fund will be run out of Hong Kong and a new office in Bellevue, Washington, overseen by Stephen Wu, a managing director at the firm. It will invest in closely held technology companies from early to late stages of development. The firm’s first Asian venture capital fund had US$160 million of capital.

“We’re not an Internet fund,” said Wu, who will manage the new Asian fund along with two other Carlyle managing directors, Tony Jansz and Eric Levin, both based in Hong Kong and both formerly of Intel Corp’s investment division.

Carlyle, whose board members include George H W Bush, John Major and Fidel Ramos, joins other US firms stepping up investments in venture capital and international private equity in search of high returns.

Carlyle has traditionally focused on buyouts, investing in undervalued companies it aims to turn around. This week, the firm and JP Morgan Corsair Inc signed an agreement to buy a 40-percent stake in Korea’s KorAm Bank for US$450 million.

Wu said he plans to assemble a “small team” in Bellevue to support the US-based business. “There is a lot of good talent we can draw from the high-tech skill set in the area,” he said.


Carlyle’s new Asian fund plans to invest about 70 percent of its capital in Korea, Taiwan, China, and India, Wu said. The rest will go to Australia, New Zealand, and southeast Asia, including Singapore, Malaysia, the Philippines, Thailand, and Indonesia.

The fund will invest in Asian companies doing business in Asia or seeking to expand into the US, as well as US companies that want to do business in Asia, said Wu.

Since March, Carlyle has made about 12 venture capital investments totaling US$45 million in Asia, said Wu. One of them was in LinkAir, a Chinese company with Silicon Valley operations that’s developing technology for high-speed wireless telecommunications.

While the stated fund-raising target is US$500 million, Carlyle anticipates demand will be higher, said Wu, noting the firm generated average annual returns of about 35 percent since it was founded in 1987. “The fund will end up with between US$500 and US$800 million,” Wu said.

Carlyle expects to raise the new fund from wealthy families, pension funds, and other institutions, said Wu, declining to identify potential investors.

Existing Carlyle investors include the government of Singapore, the Caisse de Depot et Placement du Quebec state pension fund, and the Abu Dhabi Investment Authority.

Earlier this year, Carlyle raised a US$750-million fund, Carlyle Asia Partners, for buyouts in Asia.

The firm plans to raise a separate fund of about US$1 billion for Japanese investments, including venture capital and buyouts, with the first capital commitments expected in 2001, Wu said. “Japan is such an important market, it deserves its own focus,” said Wu.

Wu joined Carlyle in May after 11 years at Microsoft Corp, where he was most recently general manager for Asia in the division that includes the MSN Internet business….


The Buyout Kings of Washington

Carlyle Group’s partners have parlayed their
political connections into a horde of new cash.

How will they spend it?

By Ida Picker

You can see the White House from Carlyle Group’s ornate Washington headquarters, and that’s not a coincidence.

“Our formula is taking advantage of the assets that surround you,” says the buyout firm’s co-founding partner Dan D’Aniello. “Not everyone wants to become a lobbyist or a lawyer. Some people want to make some money.”

D’Aniello, 54, and the two other founding partners, David Rubenstein, 51, and Bill Conway, 51, have made plenty of money by exploiting their political connections since they set up shop in the heart of Washington back in 1987. The private firm makes leveraged investments in undervalued or start-up companies through its six U.S. funds and eight international funds.

Carlyle has averaged annual gross returns of 34 percent since inception, par for the course among similar buyout firms. . . . By the end of 2000 Carlyle had raised a total of $12.5 billion, which made it the fifth-largest private buyout firm in the U.S.

For Carlyle, being close to people on the inside of government has advantages. “The biggest thing is finding out what passes scrutiny so you can decide whether to go ahead with a deal,” says Richard Aboulafia, an analyst at Virginia-based Teal Group, an aerospace and defense forecasting company. “You can learn if there are Federal Trade Commission or Defense Department objections.”

The current White House occupant, George W. Bush, was on the board of a company that Carlyle invested in, and from the beginning the founders have recruited political heavyweights as consultants.

Carlyle won’t disclose how much they earn; industry experts estimate their fees average about $1 million per year.

“Carlyle’s political connections get them access to top business leaders overseas,” says David Snow, editor in chief of PrivateEquity-Central.Net, an Internet buyout newsletter. “If they want a meeting with the leaders of Korean industry, which is going through quite a bit of restructuring, if they show up with [former president] George Bush, they will get a meeting for sure.”

Former defense secretary Frank Carlucci, Carlyle’s chairman, worked his Rolodex to put together Carlyle’s defense company portfolio. George Bush the elder flew off to Saudi Arabia and Asia to ease the way for Carlyle’s fund-raisers. Bush family campaign adviser James Baker III places calls to CEOs on Carlyle’s behalf. Former British prime minister John Major opens European doors. And former Philippine President Fidel Ramos and former Thailand prime minister Anand Panyarachun provide entree in the Far East.

The firm’s partners are adept fund-raisers. In February the California Public Employees’ Retirement System spent $175 million for a 5 percent stake in Carlyle and may invest another $675 million in the firm’s funds as well.

“As we start new funds, we still have to commit our own capital, and we were getting stretched thin,” says Rubenstein. Carlyle’s 18 partners and 180 investment professionals have invested $350 million of their own money in Carlyle’s various funds.

Rubenstein says the investment by Calpers, as the fund is commonly known, will help the firm get more investors while competition for capital grows. “We now have an anchor investor,” he says. “If we do a new U.S. venture fund, we can tell people we have Calpers.” The retirement fund has the option of making an additional 5 percent investment in Carlyle.

Carlyle is trying to pull in more capital via a partnership with Fidelity Investments. Rubenstein says Carlyle’s talks with Fidelity involve setting up a joint venture for Fidelity’s 401(k) clients. They would have a chance to invest in funds offered by Carlyle and other buyout firms.

Last year Carlyle drummed up $6.5 billion in new funds, and that bundle is now a quandary. In this choppy market, the partners worry about what to do with all of that cash. “I’m concerned about not having a place to put the money,” says D’Aniello. “We want to be comfortable that it has a better-than-even chance of making premium returns.” Conway agrees. “Now’s a good time not to be doing deals,” he says. “Now is a good time to be afraid.”

Still, institutional investors did not pour their money into Carlyle’s 14 funds–which run the gamut from real estate to junk bonds–so the partners could sit on it, paralyzed with fear. “Carlyle is a fund-raising machine, but so far their investment acumen, to put it diplomatically, has been moderate,” says Scott Myers, a director at Crossroads Group, a $1.9-billion Dallas fund that has invested with Carlyle.

Carlyle’s intimate connections to the new Bush Administration may help. In addition to his father’s advisory role, President Bush was a director of an ill-fated airline-food-service provider called Caterair International Corp. that lost money because airlines began cutting costs. Carlyle partners are careful to avoid any appearance of impropriety concerning their political connections. Rubenstein, who attended Barbara Bush’s surprise 75th birthday party in Kennebunkport, Maine, last summer, says, “We don’t do lobbying. We don’t give to any politicians. We don’t have a PAC [political action committee]. We try to be cleaner than Caesar’s wife.”

Rubenstein emphasizes the tasteful nature of former President Bush’s excursions to visit the Saudis, Koreans, and Thai for Carlyle as senior adviser to its Asian advisory board. “President Bush is not asking anybody for money,” says Rubenstein. “He speaks at lunches, dinners, and events on non-Carlyle matters and expresses his views on world events.”

The firm’s most profitable niche is buying military and aerospace suppliers at discount prices and selling them for a lot more. With Carlucci’s knowledge of the Pentagon’s inner workings, Carlyle felt confident putting investment dollars into defense companies when they were out of favor in the market.

“Because they have a good sense of the defense and aerospace business, they have an ability to project future earnings so they can calculate the true value,” says Teal Group’s Philip Finnegan, a senior analyst. “They’re not prone to overestimate or underestimate what a property is worth.”

These investments include Vought Aircraft Co., bought from LTV Corp. in bankruptcy, and Magnavox Electronic Systems, which had gross internal rates of return–annual returns on equity invested before a 20 percent charge for fees–of 85.5 percent and 205.6 percent, respectively.

Carlyle’s bargain shopping has been less successful in other areas, like its hazardous-waste-removal plays in IT Group Inc. and Duratek Inc., whose one-year returns are minus 144.6 percent and minus 11.4 percent, respectively. “They’ve gotten into some businesses that a lot of people don’t want to be in,” says Finnegan. “It’s high risk, low reward.”

In 2001 Carlyle’s anxious senior partners say they are sticking to companies in telecommunications, aerospace and defense, and health care. “We aren’t branching out,” says Conway. “We will continue to concentrate in industries we know well.”

Rubenstein, Conway, and D’Aniello may lose sleep this year, trying to find cheap deals that won’t turn sour, but at least they’re not the buyout novices they were when they started out 14 years ago.

Rubenstein, a Baltimore native whose father was a postal worker, graduated from the University of Chicago Law School on a scholarship and landed his dream job working at age 27 as deputy domestic policy adviser to President Jimmy Carter.

When Ronald Reagan defeated Carter for reelection in 1980, Rubenstein joined the Washington law firm Shaw, Pittman, Potts & Trowbridge but soon branched out on his own. “The practice of law was not as noble a profession as I had thought in law school,” he recalls. “It was really a business about how much the law firm was making. I thought, if law is like a business, I want to be in a real business.”

Edward Mathias, a White House colleague and next-door neighbor who had worked at T. Rowe Price Group Inc., steered Rubenstein to his early backers: T. Rowe Price, Alex. Brown, First Interstate Bank of California, and the Mellon family, which together put in about $5 million for 50 percent of the new firm. In December 2000 Carlyle bought out the remaining 10 percent stake of its last original investor: Mellon.

Rubenstein then recruited D’Aniello, a merger maven at Marriott Corp. who had attended Syracuse University on a gymnastics scholarship and graduated magna cum laude, with a major in transportation management.

Rubenstein also brought in Bill Conway, a Nashua, New Hampshire, native who was chief financial officer of MCI Corp. Conway had an MBA from the University of Chicago, acquired in night school while he worked at First National Bank of Chicago specializing in troubled loans, one of which was to MCI.

In May 1987 Rubenstein and company moved into their Washington offices and began selling U.S. companies tax losses in struggling Native American businesses in Alaska.

The business started, says Rubenstein, when he stumbled upon a law that said corporations with tax losses could sell them to other companies–and he then became aware of the large losses the Alaskan businesses had amassed.

“It was a very good business. It paid the rent,” Rubenstein recalls. He says that the U.S. Congress, once it was aware that Alaskan business losses had reached billions of dollars, closed the loophole within two years.

In late 1988 the Carlyle partners bumbled into an investment in Oakite Products Inc., a chemical company, for about $90 million, including $17 million in equity.

“It was a horrible deal, like hand-to-hand combat,” Conway says. Carlyle paid too much, put in too little equity, did not get asset sales, discovered asbestos contamination on the company’s land, and saw Oakite through a bankruptcy. Nine years later, Carlyle crawled out, making a small amount of money.

In 1989 Rubenstein asked a former law partner for an introduction to Frank Carlucci, President Reagan’s former secretary of defense. Rubenstein persuaded Carlucci to become Carlyle’s chairman: “He didn’t want to be a lobbyist. Nobody had heard of us, but we were the only buyout firm in Washington.”

Having a known entity like Carlucci in tow helped Rubenstein raise $100 million from investors for the first fund. The partners jumped into Caterair, then the largest airline catering company, in December 1989, paying $637 million to D’Aniello’s former employer, Marriott. “We paid too much,” Conway says, “and we were hit by the recession.”

George W. Bush joined Caterair’s board in 1990 and left about two years later. Carlyle sold the company in December 1995 for $7.2 million, for a loss of about $87 million.

In October 1990 Carlyle’s partners learned that senior managers at BDM International Inc., a high-profile defense industry think tank, wanted to become independent from their owner, Ford Aerospace Corp. Carlucci convinced the partners that BDM – which had done strategic government contract work on the manned space station and the Strategic Defense Initiative, a proposed antimissile shield – would have a good sense of the Defense Department’s priorities over the next 5-10 years.

Carlyle bought BDM for $125 million from Loral Corp., which had purchased Ford Aerospace, and eventually made about $411 million on its investment. There was a more subtle payoff as well: Carlyle used BDM engineers and military technology experts to analyze other acquisition targets in the defense industry.

BDM helped Carlyle define how they would be different from New York firms,” says Lehman Brothers banker Les Fabuss, who represented Loral. “They would specialize in ownership of businesses with a high degree of government participation.”

The profitable returns on BDM did not come until 1997. From 1987 through 1993, the new buyout firm competed for capital against established players like Kohlberg Kravis Roberts and struggled to stay afloat. “We had no track record, so we had to plead our capabilities without proof,” recalls D’Aniello. “It got to the point where we were very concerned about covering our overhead.”

In 1991 Carlyle did only one deal: It advised Prince Alwaleed bin Talal on his $590-million investment in Citibank preferred stock for a 9.9 percent stake.

Carlyle and the prince shared the same Washington law firm, Hogan & Hartson, which brought the two parties together. When the partners met the prince, they did not mention their fee. “We said we were less interested in compensation than we were in the relationship,” recalls D’Aniello.

In 1993 Carlyle bought Magnavox Electronic Systems for $165 million–including $25 million in equity–from Royal Philips Electronics NV. Magnavox made secret electronic boxes that analyzed radar imagery and other signal intelligence.

Carlyle sold the military supplier for nearly $300 million to Hughes Electronics Corp. in July 1997, a time when the partners were raising their second fund. “Magnavox opened the gates,” says D’Aniello. Investors piled in, and the fund ballooned to $1.3 billion from $400 million.

Two years later, Carlyle and Thiokol Corp., a producer of space shuttle castings, bought Howmet Corp., one of the largest U.S. aircraft and gas-turbine casting manufacturers. Within two years, Carlyle made almost $700 million on this investment.

With Howmet’s success, Rubenstein’s team felt confident enough to diversify outside the U.S. and beyond defense, into telecommunications, health care, and consumer industries.

Rubenstein flew to Europe in 1996 and raised a new buyout fund there of 1 billion Eurodollars.

The firm expanded into venture capital and real estate. Always seeking bargains, the partners dipped into dicier investments in junk bonds, hazardous waste management, and a fund for Russia.

Carlyle’s adventures in hazardous chemical and nuclear waste remediation have been problematic.

The theory, says D’Aniello, was to invest in these cleanup companies, which had been discounted by the market, and then land contracts to meet government environmental standards in a consolidating industry.

In 1995 Carlyle spent $34.3 million on Duratek, then known as GTS Duratek Inc., a nuclear waste removal outfit; in 1996 it bought IT Group, which cleans up contaminated soil and water, for $51 million; and in 1999 the firm picked up EG&G Technical Services, which cleans up hazardous waste on military bases.

IT Group and Duratek’s revenues have grown about 3-fold and 10-fold, respectively, D’Aniello says, but the companies are still out of favor in the market, which makes exiting difficult. “We will not focus on this area in the future,” D’Aniello says.

Added to their problem of where to invest, Carlyle’s founders are grappling with coordinating their far-flung investments. “How do we get this global network with industry specialities and all these products to work together and make a well-oiled deal machine and not just have chaos?” asks Conway.

Good question–one that many global companies have contended with.

As PrivateEquityCentral.Net’s Snow puts it, “Most people in the industry say that the growth of Carlyle is great for Carlyle, but it’s too early to say whether it will be great for Carlyle investors.”

The money keeps flowing in, and the ex-politicians keep signing on. Still, the partners’ ability to cope with their rapid expansion–and to provide healthy returns for investors–will be the standard by which they are measured.

©2001 Bloomberg L.P. All rights reserved


Overcapacity Puts Squeeze
On Network Wholesalers

By Fred Donovan

This article first appeared in PBI Media’s Fiber Optics News

WASHINGTON – Carriers that specialize in selling wholesale capacity are in for a bumpy ride because of overcapacity in deployed fiber optics networks. So concluded a panel of telecom executives participating in the Global Traffic Meeting (GTM) held here last week.

Although the GTM was not open to the public, a group of executives from major carriers shared their views of the international marketplace during a “telecom summit” held in conjunction with the meeting. . . .

James P. Martino, Bermuda-based Global Crossing’s [GX] vice president for global cost of access, said the drop in prices the company is seeing in its wholesale business is pushing it to target the retail multinational corporate market. Global Crossing has deployed a global fiber optic network that links 200 cities in 20 countries, he explained. . . .

Depressing Telecom Story

William Kennard, former chairman of the Federal Communications Commission and, currently, the managing director of the Washington-based Carlyle Group’s telecom and media practice, observed that there is a “depression” in the telecom market. “The irrational exuberance has been replaced by an irrational pessimism,” he said.

Kennard said that there is consensus among political leaders around the world that it’s best to have open, privatized telecom markets in order to give consumers access to the Internet. . . .

~ ~ ~

For more on Global Crossing, which filed for bankruptcy protection on January 28, 2002, GO TO > > > Global Crossing

And to see how a company called Sandwich Isles Communications is spending YOUR tax money, GO TO > > > Predators in Paradise

~ ~ ~






Baker & Taylor – Book-seller which may have cooked the books.

February 4, 1997

Schools called targets of $200 million scam

Seth Rosenfeld, San Francisco Examiner

CALIFORNIA — One of the nation’s leading book discounters allegedly bilked public schools and libraries in California and other states out of as much as $200 million through a scheme that inflated prices for children’s and other books, the U.S. Justice Department claims.

Baker & Taylor Books, owned by former high-level federal officials, deliberately miscategorized certain trade books on its computerized invoices so customers who bought books with public funds were denied the large discounts promised in contracts, according to a whistle-blower lawsuit joined by the federal government. The suit was filed in U.S. District Court in San Francisco and made public Monday.

It is believed to be the nation’s largest-ever fraud in the book wholesaling industry, said a lawyer for the two whistle-blowers.

The case stems from complaints made by a former Baker & Taylor salesman and a Richmond, Va., librarian. A federal investigation found the complaint had merit, and the Justice Department joined the suit.

“The government doesn’t like library fraud,” said Assistant U.S. Attorney Mary Beth Uitti.

“Unconscionable’ scheme”

Eric Havian, the San Francisco lawyer for the whistle-blowers, said, “It’s particularly unconscionable that they (the targets) are largely victims who are least sophisticated and least able to afford the inflated prices. School budgets are tight enough.”

Baker & Taylor, based in Charlotte, N.C., sells more than 40 million books a year, 70 percent of them to public schools, libraries, universities and other publicly funded institutions. Sales of books and videos by the firm totaled $785 million in 1995, according to Dun & Bradstreet.

Also named as a defendant is the Carlyle Group, a Washington, D.C., merchant banking firm that owns more than half of Baker & Taylor’s stock.

Carlyle was founded by former Carter White House official David Rubenstein. Its executives include former Secretary of State James Baker and ex-Defense Secretary Frank Carlucci, both of the Reagan administration, and former Budget Director Richard Darman of the Bush administration.

A third defendant is W.R. Grace & Co., a Fortune 100 firm that owned the book dealer during part of the alleged scheme.

Baker & Taylor on Monday denied what it called the suit’s “outrageous charges based on distorted information.” It said it had been cooperating with the federal investigation and would clear its name.

“Baker & Taylor firmly stands behind its business practices,” the firm said in a statement….

According to the suit, Baker & Taylor typically negotiated master price contracts under which certain categories of books would be sold at a specific discount. Trade books – books of broadest interest, like best sellers – were supposed to be sold at the deepest discount, as much as 40 percent off retail price, it says. Non-trade books, like textbooks, were usually discounted only 10 percent under the contract.

But Baker & Taylor allegedly devised a scheme to fool customers into believing that certain trade books were non-trade books that didn’t deserve the larger discount, the suit says.

The wholesaler concealed the fraud by mispricing books published by lesser-known houses, that sounded like technical books or that were not carried by competitors, the suit says. These included children’s books.

The firm carried out the alleged scheme by directing its staff to assign codes to certain book titles entered into its national pricing computer, so customers were automatically overcharged and given false invoices, the suit says.

The fraud stretched from the late 1970s to at least 1994, it says.

The suit contends that the Carlyle Group and W.R. Grace knew of the fraud but failed to stop it.

The allegations were first made by Robert Costa, head librarian for Richmond, Va., and Ronald Thornburg, a former Baker & Taylor salesman.

The suit was filed under federal and state whistle-blower laws that allow the government to seek three times the cost of the fraud.


Blackstone Group – A New York-based private investment bank.

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….

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


Credit Suisse First Boston – The bank which, according to Dr. John Coleman in “The Conspirator’s Hierarchy,” was a marriage of convenience of two members of the Committee of 300.

From The Laundrymen: . . .

In 1983, Sal Amendolito resurfaced, arrested for fraud in New Orleans. . . .

Agents from the FBI, Customs, the DEA, the IRS and the Bureau of Alcohol, Tobacco and Firearms put a case together that brought grand jury indictments against thirty-nine members of the ring for their participation in drug trafficking and money laundering.

Sal Amendolito became a government witness, testified against the others, and was never charged. . . .

Because some of the culprits were hiding in Italy, including Della Torre, only twenty-two actually stood trail in New York. After 17 months of hearings, 55,000 FBI wire taps — most of them in Italian — and the murder of one suspect, the 21 defendants were found guilty.

The judge sentenced the five Mafia ring leaders to terms of 20 to 45 years. He also ordered four defendants to pay $2.5 million to help fund treatments for heroin addicts….

The group had smuggled 750 kilos of heroin into the States, with an estimated street value of $1.6 billion. Some major financial institutions had also been embarrassed; namely, Merrill Lynch, EF Hutton, and Chemical Bank in New York, Handelsbank in Zurich, and, especially Credit Suisse in Bellinzona.

One of the accounts at Credit Suisse was secretly called “Wall Street 651.” The owner was Oliviero Tognoli, a well-known industrialist to whom the mafia chieftains secretly turned for financial advice. Nearly $20 million passed through his account….

* * *

April 8, 2002

Enron Shareholders’ Suit
to List Banks, Brokerages

Class-Action Filing Seeks to Take Aim at Wall Street
Tactics With Potential Conflicts of Interest

By David S. Hilzenrath and Peter Behr, Washington Post

Several of Wall Street’s most prominent banks and brokerages played a crucial and deliberate role in Enron Corp.’s fraud on investors, lawyers for Enron shareholders allege in an expanded class-action lawsuit they plan to file today. . . .

Enron’s “house of cards” would have collapsed much earlier if it had not been propped up by investment banks and brokerages, the suit alleges. Enron in December sought Chapter 11 protection in the nation’s largest-ever bankruptcy filing.

Financial institutions named as defendants in the lawsuit include J.P. Morgan Chase & Co., Citigroup Inc., Credit Suisse First Boston USA Inc., Bank of America Corp., Merrill Lynch & Co. and Lehman Brothers Holding Inc. . . .

The lawsuit also targets two law firms that worked for Enron or a related partnership: Vinson & Elkins LLP and Kirkland & Ellis. In statements, the law firms said they did their jobs properly.

The suit reflects the Enron shareholders’ quest for deep pockets to cover the billions of dollars they lost when the Houston energy trader collapsed. In November, Enron disclosed that, since 1997, it had overstated profits and understated debts.

Initial lawsuits aimed at Enron executives and directors and the company’s longtime auditor, Arthur Andersen LLP, which put its stamp of approval on the company’s false financial statements….

Banks “structured and/or financed” Enron’s off-the-books partnerships, at times helping them carry out bogus transactions, the suit says.

Banks also “played an indispensable role in helping to inflate and support Enron’s stock price,” the suit says.

As a reward, “banks and/or their top executives” were allowed to invest in one of Enron’s key partnerships, where they stood to profit from self-dealing transactions with Enron, the suit says.

“Secret or disguised transactions by J.P. Morgan, Citigroup and CS First Boston also concealed billions of dollars of loans to Enron,” the suit says….

© 2002 The Washington Post Company


EG&G Defense Materials – A Humpty-Dumpty kind of defense contractor.

May 3, 2002

Chemical Weapons Mishandled,
Worker Says

Incinerator near Salt Lake City is destroying stockpile

by Robert Gehrke, Associated Press

WASHINGTON – Managers at the nation’s only chemical weapons incinerator encouraged workers to cut corners so a deadly nerve agent stockpile could be destroyed before the Winter Olympics in nearby Salt Lake City, a plant employee says.

Brenda Mugleston, who has worked for eight years at the Tooele Chemical Agent Disposal Facility, told The Associated Press workers were promised a $750 bonus for meeting the deadline. She said they felt pressure from managers to increase productivity and they sometimes mishandled weapons.

Mugleston said she feared workers and the public were being endangered and told managers but nothing was done. She also reported problems to the Occupational Safety and Health Administration.

Stuart Young, attorney for EG&G Defense Materials, which runs the incinerator for the Army, said Mugleston’s allegations are being investigated and “at this point we don’t have any reason to believe there are any immediate health, safety or environmental concerns.

Mugleston said she has reported the problems to OSHA and provided a letter saying the agency is investigating. Agency spokesman Bill Wright said whistle-blower laws preclude him from identifying complainants.

Army spokeswoman Nancy Ray said the Pentagon is pleased with the work EG&G has done. “It’s absolutely a professional operation,” she said.

Tooele, located 40 miles west of Salt Lake City, is home to the Pentagon’s incinerator, created to destroy 13,616 tons of the chemical weapons stockpile. Other incinerators are being built in Anniston, Ala.; Umatilla, Ore., and Pine Bluff, Ark.

The incinerator was forced to shut down for several months in the summer of 2000 after a tiny amount of GB nerve agent escaped from its emissions stack.

The Centers for Disease Control and Prevention said the amount was small enough that it did not endanger the public. Plant managers say it is the only time nerve agent was released.

Mugleston’s allegations come as the plant prepares to process VX nerve agent, which the CDC and Environmental Protection Agency say is 36 times more deadly than the sarin gas the facility has been handling and much more difficult to detect.

Mugleston said she is concerned what will happen when VX incineration begins because she has witnessed problems that undermined worker safety, including:

>> Backup generators routinely failed during power outages, compromising systems meant to protect workers from contamination.

>> Workers were sent into contaminated areas breathing through air hoses that already had tested positive for nerve agents.

>> Sarin-contaminated waste was stored for several days in an unprotected area.

>> Last September, dust and ash left over from the incineration process and supposedly free of any contamination billowed out of a waste bin, triggering a chemical alarm 40 feet away.

She provided internal documents to support her claims.

Company officials declined to comment on specific allegations.

~ ~ ~

Thanks, Brenda Mugleston, for your great courage to stand up and speak out!

– The Catbird

~ ~ ~

< < < FLASHBACK < < <

March 26, 1996




SALT LAKE CITY: MARCH 26, 1995–The former Chief Safety Officer at the U.S. Army’s Tooele, Utah, chemical weapons incinerator, Steve Jones, testified today that the Army’s contractor, EG&G Defense Materials, Inc. repeatedly tried to block his efforts to report and address environmental, health and safety hazards at that facility.

In sworn testimony in a whistleblower protection hearing Jones testified that on his first day on the job at Tooele, Henry Silvestri, EG&G’s General Manager, told Jones to never contact government personnel from any other agency about conditions at the plant. Silvestri also demanded that Jones bar Tooele Army Depot staff from entering the incinerator area.

Responding to a comprehensive “internal audit” compiled by Jones documenting thousands of problems at Tooele Silvestri became extremely angry and ordered, “don’t put anything negative about this plant in writing.” EG&G now claims it can not find a copy of Jones’ audit report, but a summary listing 15 program areas which Jones said failed safety inspections was entered into evidence.

EG&G supervisors repeatedly criticized Jones for not being a “team player” and told him his mission was “keeping the customer-the Army’s Program Manager for Chemical Demilitarization-happy.”

Within his first two weeks at Tooele, Jones found the plant had no emergency response plan for its current operations and lacked the required analysis for a maximum credible event, the most plausible catastrophic accident.

Documents entered into evidence over the objections of EG&G lawyers show that government inspections at Tooele, months after Jones was fired, found that many of the problems still existed. Jones claims he was fired for pursuing these problems, an activity that is protected under several federal environmental laws including the Toxics Substance Control Act.

His termination came the day after he refused to certify that the plant was safe, despite a sub-contractor’s report that found 3016 hazards at the plant including more than 150 that could cause “imminent and catastrophic” risks of explosion or agent release.

Also on Tuesday, two expert witnesses testified regarding Jones’ record as a Safety Manager in positions before taking the job with EG&G. Captain John Pickering, who currently commands the Long Beach Naval Shipyard in California, said that Jones was the best Safety Officer he had supervised during 29 years of service, praising him for “a professional, focused, ‘no nonsense,’ managerial style.”

Jones won unprecedented back-to-back Safety Achievement Awards for his work under Captain Pickering at a U.S. Navy repair facility in Japan. George Cook, a career military safety inspector, who had previously worked for Jones, praised him as an “outstanding Safety Manager.” Cook indicated that he was eager to work under Jones again, even visiting Tooele while Jones was employed there to assess employment opportunities.

In Wednesday’s session, which begins at 9:00 A.M. (MST), Jones is expected to finish his direct testimony and then face cross-examination from the lawyers for EG&G. When Jones leaves the witness stand, his lawyers will question representatives from EG&G, including Henry Silvestri, the former General Manager who fired him.

Jones is represented by Richard Condit and Joanne Royce of the Government Accountability Project (GAP), a non-profit whistleblower defense organization, and by John Preston Creer, a prominent Utah attorney.

P.O. Box 467, Berea, Kentucky 40403
Phone: (606) 986-7565 Fax: (606) 986-2695

Copies of Jones’ whistleblower protection complaint and documents about the case available on request.

~ ~ ~

A belated thanks, Steve Jones, for your courageous stand!

– The Catbird

~ ~ ~


For further information: Bob Schaeffer (617) 489-0461; or in Utah (801) 372-8987; Craig Williams (606) 986-7565

March 27, 1996

Secret reports show Tooele chemical incinerator safety dangers still existed more than a year after whistleblower was fired.

SALT LAKE CITY: MARCH 27, 1996 — Formerly confidential documents made public as part of the whistleblower protection trial of Steven Jones, former safety manager at the U.S. Army’s Tooele, Utah chemical weapons incinerator, reveal that as recently as last fall, the Army and its contractor found environmental and safety problems identical to those Jones reported before he was fired in September 1994.

The documents admitted to the public record over the strong objections of EG&G, the company that manages the Tooele facility for the Army, include Operational Readiness Evaluation (OREs) and a plant Pre-Operational Survey.

Ongoing problems at the facility as of late October, 1995, included:

>> absence of an approved Emergency Response Plan, a deficiency that was still not corrected as of October 31, 1995;

>> failure to analyze the impact of a catastrophic accident, called a Maximum Critical Event (MCE). A report notes that MCEs “must” be available to support daily emergency planning since they are “essential to rapid accident assessment” and delivery of information “to potentially threatened communities.”;

>> faulty air circulation systems in the medical unit which could pump agent from a contaminated worker into the rest of the facility;

>> the hazard analyses for the chemical deactivation furnace was still not complete;

>> portions of the hazard analysis “seem to be missing” for the liquid incinerator.

These items had all been rated Category I, the highest possible level of risk. Other serious problems at the facility, which were still not addressed well after Jones’ firing:

>> “Hazard analyses continue not to support actual hazards found & identify hazards that are not found,” Category I issues that EG&G reports were not completed until mid-February, 1995;

>> Forklifts used to move trays of rockets loaded with chemical agent were overloaded and not used safely.

Jones completed his testimony based on these and other documents on Wednesday, and began responding to questions from EG&G’s attorney. Jones claims he was fired after reporting serious environmental, health, and safety problems at the Tooele facility, the first of 8 chemical weapons incinerators the Army plans to construct on the U.S. mainland.

He is represented by lawyers from the non-profit Government Accountability Project, a whistleblower protection organization, and John Preston Creer, a prominent Utah attorney. . . .

Jones is seeking restoration of his job and monetary damages for illegal termination.

* * *

From High Water

July 23, 2002

War is only good for those who make
and sell the guns
~ John Gorka

Or How to Survive in the Current Economy.

URS Corp is going to acquire EG&G, which is 90% owned by The Carlyle Group, which is run by such fine people as George H.W. Bush, James Baker (remember his cheery face during the vote non-recount?), Frank Carlucci, and John Major, among other middle aged white guys.

The Carlyle Group would basically double its $135 million investment, says The Deal, via Ethel the Blog, which is where I found this tidbit.

Also according to The Deal, during a conference call, URS chairman and chief executive Martin Koffel said EG&G’s focus on military services will boost his company’s growth.

“Defense spending has been on the rise since Sept. 11, and … the stage has been well set for even higher defense spending in years ahead,” he said. (More misery and death for others, more money for me, he didn’t say, but might as well have.)

And while I’m on politics, is this the best site on the Web?

– Bonus link: Axis of Corporate Evil!

For more of EG&Gs eerie activities, GO TO > > > Down the Rabbit-Hole


Fidel Ramos – Former president of the Philippines; now a director of The Carlyle Group.

From Asia Week Magazine:

‘Do the Right Things Right’

A lively chat with Budget Secretary Enriquez

AS PRESIDENT FIDEL RAMOS’s budget secretary, Salvador Enriquez Jr., 63, is primarily responsible for cutting fat in government and modernizing the bureaucracy. In 1994, he announced the country’s first budget surplus in 20 years.

A declared leftist and nationalist, he makes no secret of his aversion to World Bank-International Monetary Fund dictates.

Recently, Enriquez was put in charge of a probe into the Ramos administration’s biggest corruption scandal — the sale of 750 hectares of Manila Bay shoreland to Philippine-Thai group Amari Coastal Development Corp.

Critics want the deal nixed, saying the government sold the land at an incredible discount after brokers and friendly officials took $61.5 million in bribes.

Last week Enriquez sat still for an exclusive three-hour interview with Asiaweek Senior Correspondent Antonio Lopez.

Excerpts …

On official corruption

Maybe 20% to 30% of the government budget is wasted through stupidity, graft and corruption. Corruption in the Ramos administration is less now than in previous administrations. [But] it will take more than a Ramos to do something about corruption. It requires a revolution of the hearts and minds of the people.

This is like a boil. You must hasten its ripening for it to burst. We pray we may be able to make another revolution, hopefully not a bloody one.

But history tells us, it has to be a bloody one.

On World Bank-IMF influence

I hate it. I wonder about the necessity of cabinet ministers having to sit across from IMF representatives explaining why this and that happened as if we are accountable to them. They seem to me still the imperial masters of the country.

What I don’t like is the IMF being credited for the economic turnaround. They make it appear to the world that the Philippines is their baby and that we are succeeding because of the IMF — which is not true.

Even without the IMF, we would have the same economic recovery which we have achieved because of the tremendous sacrifices of the Filipino people and our prudence in spending.

IMF mission head John Hicklin insisted the government pay the two-billion-peso deficit in the Oil Price Stabilization Fund to the oil companies.

I asked him, “Are you the collector of the oil companies?”

He explained it was to show the world that the Philippines pays its debts. I asked him, “Has there been an instance when the Philippines did not pay a single centavo of its debt?”

* * *

18-20 MARCH 1998



ON FRIDAY, April 28, 1995, George Triviño, a convicted gold smuggler with a long history of wheeling-dealing, received 31 checks totaling P300 million from the Amari Coastal Bay Resources Corp., a Thai-Filipino company that had just entered into a P1.8-billion contract with the government to buy reclaimed property off the Manila-Cavite coastal road.

All the checks were deposited into an account at the U.N. Avenue branch of the Traders Royal Bank. As soon as they cleared, on Tuesday, May 2, just nine days before the local elections, P273 million was withdrawn from that account. The following day, the balance of P27 million was drawn from the same bank.

Triviño was the Philippine representative of the Ital-Thai Development Corporation Ltd., the Thai construction conglomerate that set up Amari. According to a Senate investigation of the Amari transaction, the checks were “encashed by the sister-in-law of a high ranking leader of Congress after said checks were endorsed by George Triviño.” . . .

Close to a year after two Senate committees wound up their investigation of what Senator Ernesto Maceda has called the “grandmother of all scams,” many questions about Amari remain unanswered.

De Venecia’s role in the deal is one.

President Fidel V. Ramos’s possible involvement is another.

The payoffs that were made to several officials in an effort to hush up the investigation of the transaction also remain carefully cloaked in secrecy.

Our own investigation shows that from 1995 to 1997, as much as P3 billion in bribes and commissions was paid by Amari to a cast of brokers, government bureaucrats and politicians, making this the single biggest scam in memory, dwarfing the amounts made in single transactions by the most avaricious of Marcos’s cronies.

In the course of several months, we have interviewed some two dozen people, including several who were privy to the transaction. These sources as well as a trail of documents, many of them subpoenaed by the Senate, indicate that the following payoffs were made:

P300 million – to George Triviño, who later turned over the amount to the politician who was his principal

P100 million – to a Hong Kong bank account held by Triviño’s principal

P 225 million – blank checks paid to Benito Cuevo, the broker who made the connection between Amari and officials of the Public Estates Authority (PEA), the government agency in charge of the reclaimed property

P344.7 million – paid to two ethnic Chinese brokers, Frank Chua and Benito Co, who were negotiating with an array of officials.

P300 million – paid to various individuals and officials in order to persuade a Korean company to give up its bid for the property.

These payoffs total P1.269 billion. A large part of that amount was passed on by the brokers to their contacts in various government agencies. In addition, our sources say, close to P2 billion more was paid to various individuals and officials last year, after the scandal broke and the parties involved made frantic attempts to cover up the deal.

This story began in 1994, at the height of the property and stock market boom, years before the Southeast Asian currency crisis that sent fortunes crashing. Land prices were soaring then, the Manila skyline was crowded with cranes, and the highrollers in the stock market were making so much money it was obscene.

At that time, every wheeler-dealer in town was looking for an opportunity to cash in on the boom. They seldom cared about the rules and believed that everyone, even the top officials of government, has a price. In their world, connections and access to the rich and powerful are the most valuable assets.

More than anything else, what counts is whom you know and whom you can influence.

The key characters who would figure in the Amari scam belong to this netherworld of wheeler-dealers. They include Benito Cuevo, the quintessential deal maker who hangs around at the Patisserie, the coffee shop of the Holiday Inn hotel (and casino) in downtown Manila. Triviño, the smuggler who told the Senate that the House Speaker was his “long-time friend.” Frank Chua and Benito Co, loggers and high-stakes gamblers who can smell a business deal a mile away.

What brought them together was one of the biggest deals in the era of the fast buck.

Initially, they and their accomplices and principals were to be paid P1.75 billion in brokers’ commissions from the purchase by Amari of three reclaimed islands not far from the coastal road leading to Cavite.

The islands were an accident. In the 1970s, the area was reclaimed from Manila Bay by the Construction Development Corp. of the Philippines (CDCP), the Marcos crony company that was building the coastal road. But the road was realigned, leaving three mounds of reclaimed land stranded in the bay, in the foreshore area of the towns of Parañaque and Las Piñas.

In 1981, Ferdinand Marcos tried to rescue the bankrupt CDCP by ordering the sale of several portions of the Manila Bay reclamation area, including the three islands and the site of the ill-fated Film Palace, to the PEA, a government agency he created in 1977. PEA was asked to pay CDCP P1.5 billion for the land and to assume another P1.5 billion of CDCP’s debts.

Fifteen years later, in the 1990s, PEA found itself the fortunate owner of what had become prime real estate in Manila’s hot property market. Although the three islands had by then become a teeming slum marooned in the polluted waters of Manila Bay, developers were quick to see the potential of seafront property just off scenic Roxas Boulevard, only a spit away from the international airport, and with a view of a world-famous sunset.

On April 28,1995 the PEA board approved the contract selling the three islands to Amari, which was awarded the Philippines’ biggest real estate project ever.

On July 23, 1996, Centennial City, a publicly listed company, assumed complete control and ownership of Amari through a stock swap. Centennial then made a killing in the stock market by selling the idea of a new city complete with skyscrapers, parks, a marina, a golf course and casinos that would rise out of Manila Bay.

Not long afterward, two Senate committees investigated the transaction, concluding, after four months of hearings, the government was defrauded of billions of pesos in that deal….

When Ramos fell ill and needed surgery, Akoy Montano arranged with the U.S. defense department to get free treatment for his ward.

After all, Akoy’s brother, Julian, was married to Ramos’s first cousin, and the Montanos were a large clan with a strong sense of family ties and filial obligation.

In the 1960s, when Ramos’s promotion to the rank of colonel was being questioned by the commission on appointments in Congress, he approached then senator Justiniano Montano Sr., who interceded on the officer’s behalf with his Liberal Party colleague, Senator Benigno Aquino Jr. . . .

For this is what political families are all about: a shared myth about favors traded and owed through generations of deals and compromises.

It was therefore not surprising that when Ramos was seeking the presidency in 1992, the Montanos helped him, particularly in Cavite, where they retained some residual influence. . . .

SINCE THE nineteenth century, discreet brokers, many of them ethnic Chinese, have played a key but often invisible role in Philippine politics. Filipino officials have relied on such middlemen to make under-the-table arrangements away from the glare of public scrutiny.

For sure, men like these take a cut for themselves, but that is the price of the connections and the maneuvers they bring into the transaction. They also provide politicians the plausible deniability the latter need if, for some reason, the deal is exposed. They are the fall guys. They take the flak. . . .

Unfortunately, the Senate investigation did not pursue Ramos’s possible role.

But it is clear from the Senate hearings that whether or not the President was dealing with Montano, Malacañang’s blessings went a long way in ensuring the deal’s approval.

Lagdameo, in his disjointed Senate testimony, admitted that “in the normal course of business, the marginal notes of the President receive immediate attention.”

Indeed, on January 26, 1995, barely two weeks after Lagdameo received the letter with Ramos’s instructions, he informed to Amari that PEA had accepted the company’s offer. . . .

It is clear from the way events unfolded that Premchai was willing to pay a total of P2,250 per square meter, or P3.3 billion altogether, for the property. The brokers could split the change from whatever price they could negotiate from the government.

When PEA insisted on P1,200 per square meter, the total brokers’ commissions, as indicated in a receipt signed by Chua and Co, was reduced to P1.75 billion from the original P1.89 billion.

It is an eye-popping amount. If the deal were done legitimately, this money (and more, because the property was undervalued) should have gone into PEA’s coffers, for doing what the agency was mandated by its charter to do: build low-cost housing for the poor.

Instead, the money went into various well-lined pockets….

Among the many lessons from Amari is that the check-and-balance mechanisms against corruption are flexible: they can be bent by those with the right connections and sufficient cash….

Our sources say that at about this time three years ago, de Venecia met in his home with Frank Chua and Benito Co, the two brokers hired by Ital-Thai to arrange the purchase of the property from the government. In that meeting, the Speaker asked the two men to work out an arrangement that would make “everybody happy.”

What happened next is amply supported by documentary evidence subpoenaed by the Senate investigation.

Amari, the Philippine company formed by Ital-Thai and its Filipino partners, issued to Triviño 31 manager’s checks totaling P300 million from its Citibank account in Makati….

Our sources say that it was made clear to the Chinese brokers who had been negotiating with the PEA that Triviño was fronting for a powerful politician.

Thus, in effect, the two brokers, Frank Chua and Benito Co, fronted for a string of public officials and private individuals who played a role in ensuring that Amari would acquire the reclaimed islands at a bargain-basement price.

It will be recalled that the total amount Ital-Thai’s Premchai Karnasuta was willing to pay for the property was P2,250 per square meter.

Originally, in the November 1994 agreement, this amount was to be divided this way: P1,000 per square meter as the purchase price, and P1,250 for the brokers.

When PEA insisted on the price of P1,200 per square meter, the balance of the P2,250 – P1,050 a square meter, or a total of P1.657 billion went to the commissions.

Later, the total commissions were adjusted to P1.596 billion, our sources say. To save on cash, Amari also told the two Chinese that it would pay P300 million of this amount in the form of reclaimed land in the project area. The company computed the price of the property at P5,500 per square meter…

In addition, to make up for the intrusion of the politician who took P400 million of their commission, Chua and Co were promised a cash bonus of P157.84 million once the property had been developed and was to be sold.

The cash bonus, together with the P1.596 billion the two Chinese had earlier been promised, brought the total commissions to P1.75 billion, nearly equal to the price at which Amari bought the property from PEA….


Frank C. Carlucci – 16th Secretary of Defense, Reagan Administration, Nov 23, 1987 – Jan 20, 1989.


By Francis Schor

In the past few months there has been a rash of media reports on the Carlyle Group, a private equity investment group with billions of dollars of assets in the defense industry and a roster of directors and consultants which includes not only well-known Reagan and Bush appointees but also international figures like John Major, the former Prime Minister of Great Britain, and Fidel Ramos, the former President of the Philippines.

The Chairman of the Carlyle Group, Frank Carlucci, was not only a former Secretary of Defense in the Reagan Administration, but a Deputy Director of the CIA during the Carter Administration.

In fact, Carlucci’s career in Washington provides some insight into the intersection between foreign and domestic policy in the Cold War years. Moreover, Carlucci’s particular trajectory through the government and into private industry reveals much about the meaning and influence of the military-industrial complex in the past and continuing policies of the United States at home and abroad.

A critical part of Carlucci’s career was spent as a foreign service officer during the 1950’s and 1960’s in such hot spots as the Congo and Brazil. He capped that foreign service career with a stint as Ambassador to Portugal from 1974-77, a key time in the history and development of the Portuguese revolution. Carlucci’s navigation through these conflictual moments helps to situate the nuances of US cold war policies not only in these specific countries, but throughout the world.

As the Second Secretary in the US Embassy in the Congo during the time of the reign and consequent assassination of Patrice Lumumba, Carlucci was intimately involved in the US efforts to overthrow Lumumba’s government.

In the recent cinematic reconstruction of the life and times of the Congo’s first elected prime minister, Lumumba by Haitian director, Raoul Peck, Carlucci is depicted as being part of a meeting of US, Belgian, and Congo officials plotting the murder of Lumumba.

Claiming that this particular meeting was fabricated by the filmmaker, Carlucci did admit at a Washington premier of the film that US policy towards the Lumumba government was a bit “too strident.”

The fact that CIA station chief Lawrence Devlin was under direct instructions from Secretary of State Dulles to seek the immediate removal of Lumumba is part of the historical record. There is even evidence to suggest that the actual hit on Lumumba came from the White House at Eisenhower’s suggestion.

In fact, there was an assassin hired by the US government, equipped with chemical weapons from Ft. Detrick, to use against Lumumba.

When Lumumba was captured in December 1960 after fleeing from house arrest by a former supporter and later vicious dictator of the Congo, Colonel Joseph Mobutu, the CIA probably helped to arrange for Lumumba’s transfer to Katanga province where Katangan and Belgian henchman murdered Lumumba and disposed of his body.

Meanwhile, Carlucci was attempting to placate Lumumba supporters and draw them into a new coalition government. In the confusions that ensued, Carlucci found himself under house arrest and at odds with Clare Timberlake, the US Ambassador to the Congo who did not favor any involvement with Lumumba supporters.

Fortunately for Carlucci, Timberlake was relieved of his ambassadorial post and replaced by Kennedy appointees whose liberal politics allowed for certain compromises with indigenous forces in Africa who might still serve the anti-communist alliance while facilitating US economic interests in the region.

Although Carlucci wasn’t around for the mess that followed in the wake of UN intervention and the continuing zigs and zags of US policy in the Congo, he did wind up in Brazil in time for the overthrow of the Goulart government.

The CIA and State Department were actively engaged in funneling money to opponents of Goulart and setting the stage for the eventual military coup in March and April of 1964.

Beyond his populist policies that threatened nationalization of US subsidies, Goulart was seen by Washington as “soft on communism” and “pro-Castro,” indictments enough to spell his doom and put in place right-wing military dictators who would outlaw any political or union dissent for years. As a consequence of the military coup and its entrenchment, Carlucci gained a reputation as a “tough-guy” with the American Defense Attach=E9 in Brazil, Colonel Vernon Walters.

By the end of the 1960s Carlucci had returned to Washington to become part of the Nixon Administration, going from the Office of Economic Opportunity in 1969-71 to the Office of Management and Budget in 1971-72. He then was appointed Under Secretary of Health, Education, and Welfare from 1972-74.

Among the other key members of these departments of domestic pacification were Caspar Weinberger, who was a Carlucci mentor, and Donald Rumsfeld, a former college buddy and wrestling mate from Princeton. Both Weinberger and Rumsfeld would later become, as would Carlucci, Secretaries of Defense.

The bureaucratic imperatives honed in these cabinet positions would further underscore the primacy of military Keynesianism in governmental policy. After so many positions as an underling and gray bureaucrat, Carlucci burst onto the explosive stage of post-revolutionary Portugal as Ambassador.

With the approval of CIA Deputy Director Vernon Walters and Henry Kissinger, Carlucci began immediately to ferret out potential communist sympathizers among the left-leaning young military officers who helped foment the revolutionary coup in Portugal in 1974.

However, unlike Kissinger, Carlucci was willing to work with Socialist Mario Soares not out of any sympathy for Soares’ politics, but because from Carlucci’s perspective Soares was the “only game in town” to prevent the most militant leftists from assuming power in Portugal. Carlucci managed to convince President Ford of his approach by working directly through Rumsfeld who was, at the time, the White House chief of staff.

Carlucci’s pay-off came when Soares won the Presidency in 1976, cementing ties with NATO and instituting IMF approved austerity measures. Such successful machinations in Portugal earned Carlucci a position as Deputy Director of the CIA in the Carter Administration from 1978-1981.

When insurgent forces in Iran and Nicaragua in 1979 toppled the Shah and Somoza dictatorships, Carlucci and the CIA had little ability to control the upheavals even though there were various clandestine efforts to thwart the revolutionary forces in these countries. On the other hand, the CIA certainly played a significant role in sponsoring anti-Soviet Mujaheddin, perhaps even suckering the Soviets into their disastrous campaign in Afghanistan.

Carlucci then made the transition to a procurer of new weapons as Deputy Secretary of Defense in the Reagan Administration under Caspar Weinberger from 1981-83. During this time, in response to wide-spread criticism of Pentagon waste and mismanagement, Carlucci developed proposals (known as the “Carlucci Reforms”) to rationalize the process of weapons procurement. However, Carlucci’s policies did not lower costs. They did, apparently, offer new start-up companies the opportunity to get involved in DoD pork, something that the Carlyle Group would take advantage of later on.

After a brief departure into the world of private business at Sears World Trade from 1983-86, Carlucci returned to become first an Assistant to the President for National Security Affairs in 1987. He then went on to become Secretary of Defense later than year until his resignation in 1989 when he went to work for the Carlyle Group.

As Secretary of Defense he worked closely with the Joint Chiefs of Staff and particularly the Chairman, Admiral William Crowe, Jr. (Crowe is now a chief stock-holder of the parent company of BioPort, the recently FDA approved monopoly holder of an anthrax vaccine. The Carlyle Group also apparently has stock holdings in Crowe’s company.)

While overseeing some cutbacks in the DoD, particularly military bases in the US, Carlucci was committed to expanding certain military appropriations in the area of new technology as a way of strengthening the US national security state and expanding NATO. Although willing to compromise with Congress on the Strategic Defense Initiative (encountering in the process a rebuke from Reagan), Carlucci maintained a determined stance of US supremacy in nuclear arms and nuclear-war-fighting capability.

While outside of government in the 1990’s, Carlucci managed to circulate on the boards of various think-tanks, e.g. the RAND Corporation, and help promulgate reports on national security and defense that urged increases in defense spending and the use of US military might. Nonetheless, he, along with other former Secretaries of Defense, opposed sending ground troops to Bosnia, perhaps because there were no long-term prospects for security or economic advancements.

Certainly, Carlucci’s tenure at the Carlyle Group has resulted in an expanded portfolio of defense industries. Among the defense industries that Carlyle holds is United Defense, a maker of missile launch systems for the US Navy. However, Carlyle’s reach under Carlucci has expanded into a variety of new technologies in defense and non-defense industries, such as global communications.

For example, Carlyle is keen on cleaning up hazardous materials at military bases and nuclear waste. Buying firms not yet publicly traded that deal with such services, such as Duratek and EG&G, allows Carlyle to position these firms for government contracts and then cash in when they are publicly traded.

Such influence-peddling is certainly not new to former government officials who use their ties to past and present administrations for private benefit. Carlucci, of course, insists that he does not importune or lobby his old buddy Don Rumsfeld. Nonetheless, the money trail from Carlyle’s portfolio to Rumsfeld’s office at the Pentagon is pretty evident.

In one major decision by Rumsfeld, revealed by New York Times columnist Paul Krugman, United Defense’s 70-ton Crusader artillery system was saved from a potential budget cut.

Surely, the proposed massive increase in spending for the Pentagon by the Bush Administration will benefit the Carlyle Group. What has seemed most egregious to inquiring journalists and public interest groups has been Carlyle’s consultants, like former President Bush, whose ties to ruling elites in Saudi Arabia (including the Bin Laden family) and South Korea have resulted in lucrative holdings and investments in these countries for Carlyle.

As noted by the executive director of the Center for Public Integrity: “(Former President) George Bush is getting money from private interests that have business before the government…And, in a really peculiar way, George W. Bush could, some day, benefit financially from his own administration’s decisions, through his father’s investments.”

In fact, George W. benefited in the past from Carlyle by being put on the board of a Carlyle investment, Caterair, an airline-catering company during his Texas business career days.

Similar to the Enron situation, the Bush family and others have enriched their careers and political fortunes with their ties to the Carlyle Group. However, this is a scandal that still hasn’t gained the attention and measures necessary to prevent its scandalous continuance. Carlyle’s cozy relationship with DoD insiders and other power-brokers is part of Carlucci’s effective management of Carlyle. The global reach of Carlyle, while often hidden behind the veil of private investments, moreover is indicative of Carlucci’s own experience with US imperial and military policies.

Like the subject of C. Vann Woodward’s seminal study of racial oppression and exploitation in the South, The Strange Career of Jim Crow, Carlucci’s “strange” career is representative of significant other pathological imperatives in US political culture. The residual effects and on-going commitments to imperialism and militarism in US society feed such opportunistic careerists as Frank Carlucci.

Until there is a massive movement to dismantle all of the institutions and ideas that sustain US imperialism and militarism, Frank Carlucci and his ilk will continue to profit and prosper at the expense of the well-being and very lives of people here and abroad.

– Francis Schor teaches at Wayne State University in Detroit, Michigan. He can be reached at: Copyright 2002. All rights reserved. CounterPunch is a project of the Institute for the Advancement of Journalistic Clarity.

* * *

From Carlucci’s web biography:

Frank C. Carlucci, who had served as Caspar Weinberger’s deputy secretary between 1981 and 1983, succeeded him as secretary of defense. After graduation from Princeton University in 1952, he served two years as a lieutenant in the U.S. Navy. In 1956 after study at the Harvard Graduate School of Business Administration and a short stint in private business, Carlucci joined the Department of State as a foreign service officer.

His State Department assignments took him to South Africa, the Congo, Zanzibar, and Brazil between 1957 and 1969. He left the State Department in 1969 to join the Office of Economic Opportunity as assistant director, and moved up to director late in 1970. He then became associate director and deputy director of the Office of Management and Budget (1971-72) and under secretary of the Department of Health, Education, and Welfare (1972-74).

At both places he worked under Caspar Weinberger.

In 1975 Carlucci returned to the State Department to serve as ambassador to Portugal until 1978, when he went to the Central Intelligence Agency as deputy director, staying until January 1981. The next month he joined Weinberger at the Department of Defense as deputy secretary.

As deputy secretary he worked closely with Weinberger, assuming responsibility for the day-to-day management of the Pentagon and overseeing the defense budget and procurement. He created the Defense Resources Board and proposed the “Carlucci initiatives” to bring more stability and order into the defense procurement process.

Carlucci left the Pentagon in January 1983 to become president and later chairman and chief executive officer of Sears World Trade, Inc., in Washington. He stayed with Sears until 1986, when he moved to the White House as assistant to the president for national security affairs. In 1985-86, while still with Sears, he served on the President’s Blue Ribbon Commission on Defense Management, chaired by David Packard.

Carlucci succeeded Weinberger as Secretary of Defense on 23 November 1987. During his 14 months as secretary of defense, he made 13 trips overseas, devoting about 25 percent of his time to visiting Europe, the Middle East, Africa, and Asia.

In visits to China and Japan, Carlucci pursued much the same agenda that had occupied Weinberger. He urged Japan to continue to move forward with its defense programs and to increase support for U.S. forces stationed there. In China he asked the government not to sell missiles to Middle Eastern countries; previously China had sold Silkworm missiles to Iran and intermediate-range missiles capable of reaching Israel to Saudi Arabia.

Talks followed on U.S. transfers of technology to the Chinese armed forces.

As soon as he took office in November 1987, he had to deal with the DoD budget request for fiscal year 1989, beginning on 1 October 1988. Shortly after the stock market crash in October 1987, the administration and Congress agreed on limiting the FY 1989 DoD budget to about $299 billion, some $33 billion less than President Reagan had requested earlier.

Working closely with Deputy Secretary Taft, Carlucci provided guidelines to the military departments on cutting the proposed FY 1989 budget and expected them to follow through, but he encountered trouble. The Army, for example, proposed to slow production of some systems even after Carlucci made it clear that he would not accept that approach; he wanted the elimination rather than the stretching out of certain weapon programs. The Navy objected to Carlucci’s order that it retire 16 frigates, since it meant the abandonment of the 600-ship Navy goal. Secretary of the Navy James H. Webb, Jr., resigned over this issue, accusing Carlucci of failing to lead.

When DoD presented its revised $299.5 billion budget proposal to Congress in February 1988, it projected a reduction of 36,000 from the current personnel strength of 2,174,000. The services would have to cut certain planned weapon systems and retire existing systems. The Navy would retire 16 frigates and one Poseidon-class submarine; the Army would lose 620 Vietnam-vintage helicopters; and the Air Force would phase out its fleet of SR-71 reconnaissance aircraft and deactivate a tactical fighter wing.

After Congress completed work on the Defense budget in the summer of 1988, President Reagan vetoed the bill, even though Carlucci and the national security adviser, Lt. Gen. Colin L. Powell, recommended approval. Reagan found unacceptable the reduced levels of SDI spending imposed by Congress and restrictions on the amount of money the Pentagon could spend on development of space-based antimissile interceptors, part of the SDI program.

Carlucci also had to deal with the damaging “ILL WIND” procurement fraud, involving billions of dollars in contracts, disclosed in the summer of 1988 – payment of bribes for inside information on competitive bids, use of contract specifications to favor one contractor over others, and collusive bidding by contractors. One of the principal figures involved was a former assistant secretary of the Navy, who had resigned in March 1987 to become a private defense consultant.

Eventually the courts prosecuted and convicted some of the major figures involved in the Ill Wind fraud. The whole episode, however, raised questions anew about the procurement process and damaged the Pentagon’s reputation.

The long war between Iran and Iraq in the 1980s threatened the interests of the United States and its friends in the Persian Gulf region and confronted Carlucci with a major crisis. The United States began to convoy Kuwaiti tankers, carrying the U.S. flag, in the summer of 1987, shortly before Carlucci arrived at the Pentagon. He had played a central role in the development and implementation of the reflagging and convoy policy as Reagan’s national security adviser before he became Secretary of Defense.

On one of his first trips abroad as secretary in January 1988 he visited Kuwait, Bahrain, Saudi Arabia, and U.S. ships in the Gulf.

Three months later U.S. relations with Iran reached another flash point when U.S. Navy ships destroyed two Iranian oil platforms in retaliation for damage done by an Iranian mine to the USS Samuel B. Roberts in the Gulf. In the southern half of the Gulf, U.S. ships clashed with Iranian forces, crippling or sinking six of their ships. Subsequently President Reagan ordered the U.S. Navy to expand its duties in the Gulf to include the protection of neutral, non-Communist merchant ships that requested help when attacked.

Another serious incident in the Persian Gulf occurred on 3 July 1988, when the USS Vincennes mistakenly shot down a civilian Iranian airliner over Gulf waters, killing 290 persons. Carlucci set up a commission of inquiry to look into the matter, and the United States apologized to Iran and paid compensation to the victims’ families.

In August 1988, Iran and Iraq agreed to an armistice, ending their eight-year conflict, but Carlucci kept U.S. forces at full strength in the Persian Gulf, pending a formal settlement between the two countries.

Carlucci left office on January 20, 1989 with the advent of the Bush administration.

After he left the Pentagon, Carlucci joined the Carlyle Group, a Washington investment partnership, as vice president and managing director; he later became chairman. In the ensuing years, he wrote, spoke, and testified frequently on defense issues.

He lobbied against what he considered to be congressional micromanagement of Dept of Defense, and continued to advocate rail deployment of the MX, and promoted the new B-2 bomber as a necessary nuclear deterrent….

* * *

January 16, 2002

The unquiet death of Patrice Lumumba

By Bill Vann,

January 17 marks the forty-first anniversary of the brutal assassination of Patrice Lumumba.

The murder of the leader of the Congolese independence struggle and one of the most impassioned critics of the colonial oppression of Africa continues to haunt governments in both Europe and America.

In November, an all-party commission of inquiry formed by the Belgian government released a report acknowledging that Belgium played a role in the murder of the Congolese leader.

The admission was far too little and came far too late. The Belgian government decided to launch the commission as a show of repentance for past crimes. Its aim was to smooth the way for increased involvement in its former African colony following the fall of the Mobutu dictatorship and to improve its bargaining position vis-à-vis the United States, its principal economic rival in the region. . . .

At the same time, the limited admissions served as a means of whitewashing the growing revelations about the assassination in the last few years, in both the book by Flemish historian Ludo de Witte published two years ago, De Moord Op Lumumba, and by journalists who interviewed Belgian officers and soldiers who participated in the killing.

Focus has been further brought to the assassination by the recent film Lumumba, directed by Raoul Peck, which recreated the horrific murder.

The film begins with the nightmarish scene of Belgian soldiers unearthing the remains of the Congolese leader and one of his comrades who were shot to death by a firing squad just days before. Determined to deny supporters of Congolese liberation even a corpse around which they could rally, the order was given to obliterate every physical trace of Lumumba.

Thus, with axes, saws, acid and fire——along with ample quantities of whisky to dull their senses——the soldiers set about their grisly task.

The commission’s report concluded that authorities in Brussels and Belgium’s King Baudouin knew of plans to kill Lumumba and did nothing to save him. It insisted, however, that there is no documentary evidence that Belgium ordered the Congolese leader’s death.

It did acknowledge that the government covertly channeled funds and arms to regional secessionist groups within the Congo that were violently opposed to Lumumba.

The report put much of the blame on Baudouin, who died, in 1993, alleging that the King pursued his own post-colonial policy behind the backs of elected officials. Some parties within the Belgian government have responded by calling for a debate on the future of the royal family.

In fact, earlier investigations have uncovered ample proof that the assassination of Lumumba was the direct result of orders given by the Belgian government and the Eisenhower administration, acting through the Central Intelligence Agency (CIA) and local clients financed and “advised” by Brussels and Washington.

De Witte’s book cited a telegram sent three months before Lumumba’s death from Count Harold d’Aspremont Lynden, then minister for African affairs, to Belgian officials in the Congo:

“The main aim to pursue in the interests of the Congo, Katanga and Belgium is clearly Lumumba’s definitive elimination,” said the memorandum. Given that the Congolese leader had already been deposed from power and placed under house arrest at the time, there was no mistaking the meaning of these words.

Similar revelations have surfaced from the US side. Last year, the government released archive material related to the Kennedy assassination that included an interview with the White House minute-taker under the Eisenhower administration, Robert Johnson.

In a meeting held with security advisers in August 1960, two months after Congo achieved its formal independence from Belgium, Eisenhower ordered the CIA to “eliminate” Lumumba, according to Johnson’s account.

“There was a stunned silence for about 15 seconds and the meeting continued,” Johnson recalled.

The CIA’s director, Allen Dulles, referred to the Congolese leader as a “mad dog.”

Among the American agents on the ground in the Congo was a young CIA man working under diplomatic cover, Frank Carlucci, who tried to work his way into Lumumba’s confidence in the months before the murder.

Carlucci went on to become national security advisor and defense secretary in the Reagan administration and is today the chairman of the Carlyle Group, the influential merchant bank that includes George Bush Sr. among its directors.

According to Larry Devlin, then the CIA station chief in Leopoldville (Kinshasa), the agency’s chief technical officer arrived in the African nation shortly after the “elimination” order from Eisenhower. With him he brought a tube of poisoned toothpaste that was to be placed in the Congolese leader’s bathroom. The improbable plot was dropped, however, in favor of a more direct method. Lumumba was delivered into the hands of his bitterest political enemy, Moises Tshombe, the secessionist leader of Katanga.

The assassination took place less than seven months after the Congo had declared its independence, with Lumumba as its first prime minister.

Lumumba was among the most courageous and principled figures in a generation of young nationalist leaders who came forward in the second half of the twentieth century to claim freedom from European colonialism.

These forces were ill prepared for the challenge of leading the immense eruption of social struggle that swept the continent. Moreover, both those who were murdered, like Lumumba, and those who survived were handed a poison chalice by the old colonial powers in the form of the arbitrary borders that they had drawn in the nineteenth century scramble to divide and conquer Africa.

In the Congo, in particular, Belgian colonialism had deliberately kept the African population untrained and uneducated, reduced to the status of beasts of burden for the extractive industries that looted the country’s vast mineral and other natural wealth.

On the eve of independence, the Congo, a territory larger than Western Europe, was seriously underdeveloped. There were no African army officers, only three African managers in the entire civil service, and only 30 university graduates.

Yet Western investments in Congo’s mineral resources (uranium, copper, gold, tin, cobalt, diamonds, manganese, zinc) were colossal. These investments meant that the West was determined to keep control over the country beyond independence. The Belgians organized the transfer of power in deliberate manner to ensure that “independence” would at best be a formal fiction….

The murder of Lumumba was part of a political process that unfolded throughout sub-Saharan Africa in which the dreams of masses of workers, peasants and poor for revolutionary social change were cruelly betrayed….

In the course of three years of civil war, more than 2.5 million Congolese have died, most of them women and children who have fallen victim to hunger and disease.

The armies of neighboring African regimes——Rwanda, Uganda on one side and Zimbabwe on the other——have intervened in the country’s civil war, ostensibly for reasons of political sympathy and regional security. In fact, they have merely emulated the historical role of Western colonialism, illegally appropriating and exploiting mining facilities to enrich military officers and their political and business cronies in the three countries….


George Soros – From Free Republic, 2/12/98, posted by Stefan Lemieszewski:

The Secret Financial Network Behind
‘Wizard’ George Soros

This is another post in the series along the theme that: “Corrupt elites prosper at the people’s expense of the IMF, World Bank and ‘shock therapy’ policies of Western advisors under the guise of free-trade or democratic or market-reforms.”

In his article, “Communique of American-Ukrainian Advisory Committee,” … Eugene M. Iwanciw wrote: “The American-Ukrainian Advisory Committee met in New York on Nov 17-18, 1995 and reiterated its strong conviction that a resilient Ukraine is in the interest of European stability and thus also American security.” . . .

The American participants of the AUAC sponsored by the Center for Strategic and International Studies (CSIS) included:

Zbigniew Brzezinski (CSIS counselor); Richard Burt (chairman, International Equity Partners); Frank Carlucci (chairman, Carlyle Group); Gen. John Galvin (dean, Fletcher School of International Law and Diplomacy); Michael Jordan (chairman and CEO, Westinghouse Electric Corp); Henry Kissinger (chairman, Kissinger Associates) and George Soros (chairman, Soros Foundation).

Previous American advisers of AUAC included Malcolm Steve Forbes, Jr. (editor-in-chief, Forbes magazine) … and Dwayne Orville Andreas (chairman and CEO, Archer Daniels Midland Co.), whose company pleaded guilty last month for anti-trust and price-fixing violations and agreed to pay a $100 million fine– the largest fine on its kind ever.

Also in a previous post it was indicated that at least six of the current seven American members of AUAC are also members of the Council of Foreign Relations (CFR), including George Soros. . . .

It has also been reported that Soros has contributed $15 million to groups advocating an array of alternatives to the Clinton administration’s “War on Drugs,” including a personal donation of $350,000 to fund a “medical marijuana” ballot initiative in California and a personal donation of $100,000 for a similar ballot initiative in Arizona.

The following Nov 1, 1996 article by the Executive Intelligence Review provides additional background information on George Soros . . .

The Secret Financial Network Behind “Wizard” George Soros

by William Engdahl

Time magazine has characterized financier George Soros as a “modern-day Robin Hood,” who robs from the rich to give to the poor countries of eastern Europe and Russia. It claimed that Soros makes huge financial gains by speculating against western central banks, in order to use his profits to help the emerging post-communist economies of eastern Europe and former Soviet Union, to assist them to create what he calls and “Open Society.”

The Times statement is entirely accurate in the first part, and entirely inaccurate in the second. He robs from rich western countries, and uses his profits to rob even more savagely from the East, under the cloak of “philanthropy.” His goal is to loot wherever and however he can. Soros has been called the master manipulator of “hit-and-run capitalism.”

As we shall see, what Soros means by “open,” is a society that allows him and his financial predator friends to loot the resources and precious assets of former Warsaw Pact economies. By bringing people like Jeffrey Sachs or Sweden’s Anders Aslund and their economic shock therapy into these economies, Soros lays the groundwork for buying up the assets of whole regions of the world at dirt-cheap prices.

The Man who Broke the Bank of England?

An examination of Soros’s secretive financial network is vital to understand the true dimension of the “Soros problem” in eastern Europe and other nations.

Following the crisis of the European Exchange Rate Mechanism of Sept, 1992, when the Bank of England was forced to abandon efforts to stabilize the pound sterling, a little-known financial figure emerged from the shadows, to boast that he had personally made over $1 billion in speculation against the British pound. The speculator was the Hungarian-born George Soros, who spent the war in Hungary under false papers working for the Nazi government, identifying and expropriating the property of wealthy fellow Jews.

Soros left Hungary after the war, and established American citizenship after some years in London. Today, Soros is based in New York, but that tells little, if anything, of who and what he is.

Following his impressive claims to possession of a “Midas touch,” Soros has let his name be publicly used in a blatant attempt to influence world financial markets– an out-of-character act for most financial investors … Soros the financier is as much a political animal, as a financial speculator.

Soros proclaimed in March 1993, with great publicity, that the price of gold was about to rise sharply; he said that he had just gotten “inside information” that China was about to buy huge sums of gold for its booming economy. Soros was able to trigger a rush into buying gold, which caused prices to rise more than 20% over four months …

Typically for Soros, once the fools rushed in to push prices higher, Soros and his friend Sir James Goldsmith secretly began selling their gold at a huge profit. . . .

The Secret of the Quantum Fund NV.

Soros is the visible side of a vast and nasty secret network of private financial interests, controlled by the leading aristocratic and royal families of Europe, centered in the British House of Windsor. This network, called by its members the Club of Isles, was built upon the wreckage of the British Empire after World War II.

Rather than use the powers of the state to achieve their geopolitical goals, a secret, cross-linked holding of private financial interests, tied to the old aristocratic oligarchy of western Europe, was developed. . . . Soros is one of what in medieval days were called Hofjuden, the “Court Jews,” who were deployed by the aristocratic families.

The most important of such “Jews who are not Jews,” are the Rothchilds, who launched Soros’s career. They are members of the Club of the Isles and retainers of the British royal family. This has been true since Amschel Rothschild sold the British Hessian troops to fight against George Washington during the American Revolution.

Soros is American only in his passport. He is a global financial operator, who happens to be in New York, simply because “that’s where the money is,” as the bank robber Willy Sutton once quipped, when asked why he always robbed banks.

Soros speculates in world financial markets through his offshore company, Quantum Fund NV, a private investment fund, or “hedge fund.” His hedge fund reportedly manages some $11-14 billion of funds on behalf of its clients, or investors– one of the most prominent of whom is, according to Soros, Britain’s Queen Elizabeth, the wealthiest person in Europe.

The Quantum fund is registered in the tax haven of Netherlands Antilles, in the Caribbean. This is to avoid paying taxes, as well as to hide the true nature of his investors and what he does with their money.

In order to avoid U.S. government supervision of his financial activities … Soros moved his legal headquarters to the Caribbean tax haven of Curacao. The Netherlands Antilles has repeatedly been cited by the Task Force on Money Laundering of the Organization for Economic Cooperation and Development (OECD) as one of the world’s most important centers for laundering illegal proceeds of the Latin American cocaine and other drug traffic. . . .

Soros has taken care that none of the 99 individual investors who participate in his various funds is an American national. By U.S. securities law, a hedge fund is limited to no more than 99 highly wealth individuals, so-called “sophisticated investors.” By structuring his investment company as an offshore hedge fund, Soros avoids public scrutiny.

Soros himself is not even on the board of Quantum Fund. Instead, for legal reasons, he serves the Quantum Fund as official “investment adviser,” through another company, Soros Fund Management, of New York City. If any demand were to be made of Soros to reveal the details of Quantum Fund’s operations, he is able to claim he is “merely its investment adviser.” Any competent police investigator looking at the complex legal structure of Soros’s businesses would conclude that there is prima facie evidence of either vast money laundering of illicit funds, or massive illegal tax evasion. Both may be true. . . .

George Soros is part of a tightly knit financial mafia– “mafia,” in the sense of a closed masonic-like fraternity of families pursuing common aims. Anyone who dares to criticize Soros or any of his associates, is immediately hit with the charge of being “anti-Semitic”– a criticism which often silences or intimidates genuine critics of Soros’s unscrupulous operations. . . .

According to knowledgeable U.S. and European investigators, Soros’s circle includes indicted metals and commodity speculator and fugitive Marc Rich of Zug, Switzerland and Tel Aviv; secretive Israeli arms and commodity dealer Shaul Eisenberg, and “Dirty Rafi” Eytan, both linked to the financial side of the Israeli Mossad; and the family of Jacob Lord Rothschild. . . .

~ ~ ~

Comment on above article from navigator, 2/12/98: Soros is directly linked to Bill and Hillary. Along with Larry Lawrence (not really a wealthy man, rather a money launderer for organized crime) George Soros is one of the “legitimate” sources of Clinton campaign money and a financial director of the Elect Clinton campaign. The illegitimate sources being the PRC and money robbed from failed banks, etcetera.

* * *

From The Spotlight, by Godfrey Fortune, 3/2/98:

Speculators, D.C. in Cahoots

Fat Cat Internationalists Are Making a Fortune at Your Expense –
with a Little Help from the U.S. Government.

It is now quite clear what happened in ‘Southeast Asia vis-a-vis currencies.

George Soros and his pals saw that the local economies were shaky and took advantage of the situation to make billions by selling their currencies short (with money borrowed from the banks).

Soros did the same in 1992, with the British pound and Italian lira. So did the big American brokerage firms, led by Salomon Brothers, with the Mexican peso.

Mahathir Mohamad, prime minister of Malaysia, did something unforgivable when he actually dared to identify his enemies. But now he will have to go, cap in hand, and borrow from the international bankers, just like all the others. When you realize that Soros himself is deeply involved with the International Monetary Fund (IMF), you will realize that the shortselling and lending forces are working in unison.

The meeting of Asian and Southeast Asian government officials at which Mahathir denounced Soros and his pals for selling Southeast Asian currencies short was covered by British correspondent Derek Stoneham. He reported that when Mahathir made his denunciation, only U.S. Secretary of State Madeleine Albright and Assistant Secretary of State Stuart Eizenstat failed to applaud.

Within hours, they were denouncing Mahathir and calling reporters to defend Soros. As Albright told the London Financial Times, Soros is “a valued citizen [of the U.S.] who has done much good in the world. He is not involved in any financial dealings anywhere in Southeast Asia.” Eizenstat said it was “naive and mistaken” to blame the sudden shakeout on currency speculation: “Other forces – lagging trade, rising deficits – are behind this devaluation.”


But such influences do not have sudden effects by themselves. Even persistent selling causes only gredual depression of the market. Crashes always involve short selling. They certainly did on this occasion.

As The Spotlight (9/22/97) reported, it wasn’t long before the computerized currency trading logs from Hong Kong and Singapore were made available to the unjustly maligned newspaper. These show that Soros quietly began betting against the Thai baht and Malaysian ringgit as early as Feb 1997.

In the first three months of 1997, his $10 billion Magnum Fund profits were a mere 2.3%. By August they were 22.3%. . . .

A Soros raid involves gearing short positions up to $20-30 billion with the help of bank loans. Few countries have sufficient reserves to stand against such pressure, and his profits are commensurate.

Southeast Asian diplomats whom I meet at functions in Vienna confirm The Spotlight allegations but … the Southeast Asian governments which resent the money power are by no means guiltless themselves.

And the Indonesians are the most corrupt of all….

For more, GO TO > > > The Indonesian Connection

* * *

From The Spotlight, by Martin Mann, May 11, 1998:

Elite Gobble Your Tax Dollars !

The House and the Clinton administration are eye-ball to eye-ball on billions for the IMF. The key question is, who benefits?…

The Clinton administration is pressing Congress to vote a hefty new handout — some $18 billion — to the International Monetary Fund (IMF) this year…

These stories have been well covered in the mainstream media. But what has been missing from the White House press releases — and mainstream media reports — is where the money really goes. . . .

To make up for such lack of candor, this populist newspaper has launched its own inquiry to find out just who gets the dough rolled out for this conspiratorial one-world financial bureaucracy The answers turned out to be revealing. . . .

First rakeoff rights off the top go to Goldman Sachs, the giant Wall Street investment bank where Treasury Secretary Robert Rubin made his first billion in the anything goes 1980’s…

Goldman Sachs has been retained as a lavishly-paid financial adviser, underwriter and syndicator both by the governments of South Korea and Indonesia, as well as some of the largest banks and corporations in these sorely squeezed countries. . . .

BILLIONS INVOLVED . . . Under current arrangements, stage-managed by Rubin and his faithful sidekick, Undersecretary of the Treasury Laurence Summers, Indonesia and South Korea are slated to share an eye-popping $100 billion in IMF bailout funds during the next 16 months or so. . . .

“You’d think most of the loot would go to help ease some of the crushing dollar-denominated debt of these hard-hammered Asian economies — at least, that’s what Rubin and Larry Summers claim,” commented Fred Ackerman, a veteran Wall Street trader in international debentures…

Nothing like it, warned this veteran money manager. “In reality, the IMF’s bailout is being used mainly as loan insurance to enable Indonesia’s and Korea’s tapped-out state agencies and corporations to borrow even more in the global markets.” . . .

Goldman Sachs, chosen as the lead underwriter and syndicator of new bond issues for some of the largest Southeast Asian borrowers, is already collecting millions — and is expected to collect tens of millions — of dollars in fees and royalties for helping to pile more debt on the stumbling Indonesian and Korean economies. . . .

“It’s like one of Mike Milken’s daisy chains, isn’t it?” asked Ackerman sarcastically, referring to the fraudulent syndicates set up in the ‘80’s by convicted swindler Michael “Junk King” Milken to rig the bond markets. . . .

In much the same fashion, there is just a thinly veiled linkup between the official acts of Treasury Chief Rubin known to insiders as the most powerful man in Washington as well as the main back-channel promoter of the IMF — and the huge profits skimmed by his once-and-future firm, Goldman Sachs, from such international bailouts, Wall Street sources say…

The second kickback from the IMF bailout goes to what even the Wall Street Journal calls “vulture capitalists” — that is, international financiers who pounce on distressed corporations, buy them out at knockdown prices, and then use “special connections” to make a killing on the deal. This is what happened in Mexico in 1994-95, and it’s happening now in Southeast Asia, Wall Street sources say. . . .

For an example, they cite the case of Daewoo, a major Korean car manufacturer, crushed by a back-breaking $3 billion debt it could no longer service after international speculators, led by George Soros, raided Korea’s currency and devalued it by more that a third last year. . .

An international syndicate headed by General Motors and advised by Goldman Sachs is now negotiating to buy a controlling interest in Daewoo at a time when they can acquire the huge bankrupt manufacturing complex at a steep discount, something like “15 cents on the dollar,” these sources averred. . .

“That’s a real sweet deal for the vulture investors grabbing Daewoo, but will they also get stuck with its $3 billion in outstanding debt,” asked Dr. Gottfried Sieberth, the dean of European financial writers based in the U.S. . . .

Not if the IMF cash is divided up the way it was in Mexico, where it was used to buy up the defaulted loans of the biggest banks and corporations, explained this knowledgeable observer.

* * *

“Daddy Warbucks” of Drugs and Death –
CFR member George Soros

In April 1998 Reader’s Digest printed an article by Senior Editor Daniel Levine, titled “HIGH ON A LIE.” The article is about the “medical marijuana” movement and explains how the movement is a hoax and a fraud. Levine fails to point out the Council on Foreign Relations links to sponsorship of the movement.

In November of 1996 the California voters passed Proposition 215 – the Compassionate Use Act. It allows the marijuana to be grown and used for “any illness for which marijuana provides relief.” The Campaign for the “Compassionate Use Act” to legalize medical marijuana would not have been successful without the funding of billionaires George Soros, Peter Lewis and John Sperling. . . .

Council on Foreign Relations member George Soros is one of the world’s richest men (estimated worth: $10 billion) and probably the biggest international investor of all time. This guy lost $600 million in one day speculating on which way the yen would jump and never flinched.

Soros doesn’t flinch because he and his fellow Council on Foreign Relations members can always steal more money. In 1995, Senator Alfonse D’Amato, as head of the Senate Banking Committee, issued a report about the Clinton Administration’s $20 billion loan to Mexico. The reason given for the loan was to prop up a staggering Mexico because any default on loans would end foreign investment in all developing countries.

The real reason was to rescue American and Mexican investors who had thrown their money into the craps game of high-interest Mexican Government bonds. For a year before the loan was ordered, on January 31, 1995, top Treasury officials and President Clinton were telling us how great things were going economically in Mexico. It was a cover-up to prevent Congressional defeat of the North American Free Trade Agreement, to bolster the Mexican and US administrations in upcoming elections in both countries, and to protect the major speculators.

An article from Newsday, “Peso Hits Record Low As Bailout Is Debated” ( Karen Rothmyer – 1/31/,95) identifies some of the Council on Foreign Relations members involved in the cover-up. They were “Former Presidents George Bush, Jimmy Carter and Gerald Ford [who] signed a declaration of support for the [bailout] plan. Also endorsing the plan was George Soros, probably the world’s most influential international investor.”

George Soros is also a member of the Carlyle Group. The Carlyle Group is an investor team led by Ronald Reagan’s Defense Secretary Frank C. Carlucci III and funded in part by the Mellon family. . . .

Soros uses some of the money he steals to fund a group of international foundations. Foundations are used by The Council on Foreign Relations to funnel corporate and personal wealth into the policy-making process. Foundations are tax-free. Contributions to foundations are deductible from federal corporate and individual income taxes.

The Foundations themselves are not subject to federal income taxation. Foundations control hundreds of Billions of dollars of money that would normally go to pay federal and individual income taxes.

In 1970 there were 7000 foundations that controlled $20 Billion in assets. Nearly 40% of these foundation assets were controlled by the top 12 foundations [Ford Foundation, Lilly Foundation, Rockefeller Foundation, Duke Endowment, Kresge Foundation, Kellogg Foundation, Mott Foundation, Pew Mutual Trust, Hartford Foundation, Alfred P. Sloan Foundation, Carnegie Foundation]. The top twelve foundations were controlled by the Council on Foreign Relations.

Foundations can he created by corporations or individuals. These corporations or individuals can name themselves and their friends as directors or trustees of the foundations they create. Large blocks of corporate stock or large amounts of personal wealth can be donated as tax-exempt contributions to the foundations. The foundations can receive interest, dividends, profit shares, and capital gains from these assets without paying any taxes on them. The directors or trustees, of course, are not allowed to use foundation income or assets for their personal expenses, as they would their own taxable income, but otherwise they have great latitude in directing the use of foundation monies-to underwrite research, investigate social problems, create or assist universities, write research, investigate social problems, establish “think tanks,” endow museums, etc.

At the Soros foundation Web Site ( we learn that the:

“National foundations are autonomous institutions established by Mr. Soros in particular countries to initiate and support projects. National foundations are located primarily in the previously communist countries of Central and Eastern Europe and the former Soviet Union, but also in Guatemala, Haiti, Mongolia, and South Africa. Each national foundation has a board of directors and staff who set the priorities for the foundation’s work. The national foundations are, in most cases, autonomous nongovernmental organizations registered in their own countries and staffed by local professionals. . . .”

One of the Foundations, the Open Society Institute, is issuing grants to promote abortion. Among the programs those that use abortion as a method for family planning.

Is the Soros foundation a way for the Council on Foreign Relations to use tax payer money to promote abortion and population control?

Are the Soros foundations part of the Council on Foreign Relations “Secret Team” ?

Do Soros Foundation employees double as covert operators who carry out well planned psycho-political operations in the Eastern Europe and the Soviet Union?

Are any Soros’ Foundation employees also CIA agents?…

The Council on Foreign Relations controls the US Banking industry, and has controlled the Federal Reserve since it’s inception.

Council on Foreign Relations member Robert Edward Rubin was sworn in as the 70th Secretary of the Treasury on January 10, 1995. On May 18, 1998 Reuter’s reported “Treasury Secretary Robert Rubin and Attorney General Janet Reno, at a joint news conference, said a three-year undercover operation had resulted in the indictment of officials from 12 of Mexico’s 19 largest banks. They said it was the first time that Mexican banks were “directly linked to laundering the Cali and Juarez cartels’ U.S drug profits.”

Are any drug profits laundered by Council on
Foreign Relations controlled US banks?

CFR member Congressman Richard Gephardt (D-MO), recently informed the TV audience America will soon have to relinquish control to a “International Regime.” Are we approaching the day when students and workers marching in the United States will be crushed by UN Peacekeeping Forces under the control of this International Regime? Who will control the Regime? The Council on Foreign Relations?

Should a major political party consider someone willing to turn our country over to a “International Regime” a possible presidential candidate? . . .

* * *

From When Corporations Rule the World, by David C. Korten:



For global corporations engaged in producing and trading real goods and services, the sometimes considerable swings in the exchange relationships among different currencies can be a serious problem … Speculators, by contrast, thrive of volatility, as it is their source of extractive gain . . .

There would be little opportunity for speculative profit in a stable financial market. In most instances, the extractive investor is taking advantage of price fluctuations to claim a portion of the value created by productive investors and by people doing real work – a private tax on the productive output of others. . . .

The riskier and more destabilizing forms of extractive investments have received a major boost from the formation of a new breed of mutual funds – called hedge funds – that specialize in high-risk, short-term speculations and require a minimum initial investment of $1 million.

The biggest of these, Quantum Fund headed by George Soros, controls more than $11 billion of investor money. Since aggressive hedge funds may leverage investor money to borrow $25 or more for every investor dollar, this would give a fund with $10 billion in equity potential control over as much as $250 billion.

Many of the largest hedge funds produced a return of more than 50 percent for their shareholders in 1993. The downside risks are also substantial, however. One small hedge fund lost $600 million in two months in the mortgage markets and went out of business….

The fact that hedge funds are generally highly leveraged greatly increases both the potential gains and the risks. It also ties up banking system funds in activities that are of questionable benefit to society when the credit needs of home buyers, farmers, and productive businesses go unmet.

The claim that speculators increase price stability by moving markets more quickly toward their equilibrium was recently debunked by George Soros himself in testimony before the Banking Committee of the U.S. House of Representatives. Soros told the committee that when a speculator bets that a price will rise and it falls instead, he is forced to protect himself by selling, which accelerates the price drop and increases market volatility. . . .

Soros speaks from experience when he claims that speculators can shape the directions of market prices and create instability. He has developed such a legendary reputation as a shaper of financial markets that a New York Times article, “When Soros Speaks, World Markets Listen” credited him with being able to increase the price of his investments simply by revealing that he has made them.

After placing bets against the German mark, he published a letter in the Times (London) saying, “I expect the mark to fall against all major currencies.” According to the New York Times, it immediately did just that “as traders in the United States and Europe agreed that it was a Soros market.”

On November 5, 1993, the New York Times business pages included the story, “Rumors of Buying by Soros Send Gold Prices Surging.”

In September 1992, Soros sold $10 billion worth of British pounds in a bet against the success of British Prime Minister John Major’s effort to maintain the pound’s value. In doing so, he was credited with a major role in forcing a devaluation of the pound that contributed to breaking up the system of fixed exchange rates that governments were trying to put into place in the European union.

Fixed exchange rates are anathema for speculators because they eliminate the volatility on which speculators depend. For his role in protecting the opportunity for speculative profits, Soros extracted an estimated $1 billion from the financial system for his investment funds. The resulting gyrations in the money markets caused the British pound to fall 41 percent against the Japanese yen over eleven months.

These are the kinds of volatility that speculators considered a source of opportunity. . . .


Investcorp – Investcorp is a leading global investment group with offices in London, New York and Bahrain. Since 1982, it has completed transactions in North America and Western Europe, with a total acquisition value of approximately $19 billion.

Investcorp and its clients have investments in U.S. companies including Stratus Technologies, The William Carter Company, Jostens, Inc., Werner Holdings, TelePacific Communications and Independent Wireless One.

U.S. investments that have been taken public by Investcorp include Prime Service, Tiffany & Co., Circle K Corporation, Saks Fifth Avenue and CSK Auto Corporation.

In Europe, Investcorp and its clients currently have investments in Avecia (formerly Zeneca Specialties), Gerresheimer Glas, Polestar, Welcome Break, CityReach, and Helly Hansen.


For much more, GO TO > > > Investigating Investcorp; The Nests of Osama bin Laden


Ko Olina – Large, politically-entwined resort development on Oahu, Hawaii.

September 20, 2001

New Ko Olina development begins soon

Christy L. Cain, Pacific Business News

Work is scheduled to start by the end of this year on a new residential development on the Leeward Side of Oahu.

Kai Lani will be consist of 29 four-plexes housing 116 one- and two-bedroom units. They’ll go up just past the entrance to Ko Olina.

The project is a $45 million joint venture of A&B Properties and Armstrong Builders Ltd.

“This is another sign of the confidence people have in Ko Olina Resort and the resort market,” says Jeff Stone, president of the Ko Olina Resort Association.

Builder Bob Armstrong says the units will be designed to look like the big homes built in the Manoa and Nuuanu areas in the 1940s.

The target clientele will be empty-nesters, telecommuters and the retired and semi-retired. Prices will range from $350,000 to $450,000….

The Challenge

Finance the purchase of a substantial block of uniquely valuable but undercapitalized real estate assets by a sophisticated real estate development group.

The Winning Strategy

The Ko Olina Resort Properties financing is representative of the innovative real estate finance services Brown, Gibbons, Lang & Company now affords its clients.

When completed, Ko Olina Resort & Marina, situated just west of Honolulu, will be one of the most unique luxury resorts, marinas and residential communities in all of Hawaii. Construction of Phase I commences in the first half of 1999 and will revolve around a world class marina, sports club and Town Center.

The manager of the new owners will be Ko Olina Partners L.L.C., with Jeff Stone and Kevin Showe serving as managing directors. Both have been actively involved Hawaii real estate for nearly two decades.

Brown, Gibbons, Lang & Company formed its Real Estate and Structured Finance Group in 1998. This special services team of eight professionals is headed by Gary A. Zdolshek, a partner of the firm.

* * *

February 5, 2002

Ko Olina: tax break proposed

Two members of the Hawaii Senate have introduced a bill to provide a tax break to a developer if he builds certain kinds of projects in West Oahu.

The 100 percent tax credit would apply to any development at Ko Olina that qualifies as educational.

Developer Jeff Stone says he plans an aquarium there and also wants to build sports facilities for the University of Hawaii.

Sen. Colleen Hanabusa (D-Barbers Point-Makaha) and Sen. Sam Slom (R-Waialae Iki-Hawaii Kai) cosponsored the bill.

Ko Olina is in Hanabusa’s district. Slom usually opposes special interest legislation but says in this case he thinks the result could be economic diversification.

Copyright 2002 American City Business Journals Inc.

For more, GO TO > > > Dirty Money, Dirty Politics and Bishop Estate; The Grand & Dirty Ko-Olina; Predators in Paradise


Louis V. Gerstner Jr. – New Carlyle chairman, replacing Frank Carlucci; former chairman of IBM.

November 22, 2002

Gerstner to Be
Carlyle Group Chairman

Former IBM Chief Brings Long List
of Contacts to Private Equity Firm

By Greg Schneider, Washington Post Staff Writer

Carlyle Group, the Washington-based private equity firm with a reputation for hiring political heavyweights, snagged an industrial celebrity yesterday when it announced that former IBM chief executive Louis V. Gerstner Jr. will become its chairman.

Gerstner will succeed Reagan administration defense secretary Frank C. Carlucci on Jan. 7, and Carlucci will become chairman emeritus.

Credited with restoring International Business Machines Corp. to its position as an icon of American business, Gerstner, 60, retired as chief executive of IBM in March.

He was “a once-in-a-lifetime figure” to bring to Carlyle, said Carlyle co-founder David M. Rubenstein.

He is also a change for a 15-year-old firm that gained fame through its association with major political figures: Former president George H.W. Bush is a senior adviser to Carlyle, and former British prime minister John Major heads its European arm.

Other luminaries in various roles include former secretary of state James A. Baker III, former Securities and Exchange Commission chairman Arthur Levitt Jr., former White House budget chief Richard Darman and former FCC chairman William E. Kennard.

Putting Gerstner at the head of the table “certainly distances them a little more from their image as some sort of quasi-political institution,” said David Snow, editor in chief of, an online newsletter that tracks buyout firms.

Carlyle, founded in Washington in 1987, has charted an eccentric course to become one of the nation’s largest merchant banks, buying and selling companies around the world.

It stayed apart from the New York financial scene and used the access and knowledge of its political heavyweights to sniff out good business deals — usually in regulated industries such as defense and telecommunications.

By running its companies for only a few years and then selling them at a profit, the firm has a 36 percent rate of return.

Today Carlyle manages about $13.9 billion for private investors.

Carlyle officials resent being viewed as a stud farm for statesmen, siring fortunes merely through political connections.

“We would like to get away from the distractions of people sort of using that as an old chestnut that keeps on coming up,” one Carlyle source said, acknowledging that Gerstner’s presence ought to help reshape public perception.

But it’s more than image that Gerstner brings to the firm. As he details in the recently published book “Who Says Elephants Can’t Dance?,” Gerstner spent nine years leading IBM and rescued it from the brink of collapse.

He retired in March as chief executive and will step down at the end of this year as chairman of IBM’s board.

Gerstner has said in interviews that he retired early because he wanted to do other things in life, including studying Chinese history at Cambridge University.

Gerstner has agreed to commit about 20 percent of his time to Carlyle, the company said in a news release. . . .

His personal connections will give the firm access to “a tremendous amount of people in the business world, especially in the big Fortune 100 companies, which are currently in the process of shedding divisions” that Carlyle might want to buy, Snow said.

He added that Gerstner, who before going to IBM spent four years running RJR Nabisco Inc., will also supply valuable expertise in streamlining the companies that Carlyle purchases.

Carlucci, 72, who joined Carlyle in 1989 and became chairman in 1993, led the firm through a lucrative run buying defense companies and expects to remain in an active role, sources said.

© 2002 The Washington Post Company

$ $ $

December 1, 2002

Evaluating executive compensation


The year 2001 shaped up as a landmark test for whether top executives shared in the pain of a recession, a brutal bear market and a post-Sept. 11 swoon that shrank retirement savings and cost millions of jobs.

Yet multiple problems weren’t enough to halt rich paydays for chief executives such as William B. Harrison Jr. at J.P. Morgan Chase & Co. His salary and bonuses jumped 75 percent last year to $11 million, even as the banking Goliath struggled with troubled loans to bankrupt companies, investor lawsuits over its ties to Enron and the sharp falloff in Wall Street deals in the slumping economy. Harrison’s total compensation, including options he exercised, rose 105 percent to $22.2 million.

J.P. Morgan stock fell 20 percent last year, profits plunged 70 percent and layoffs mounted….

Harrison’s salary and bonus made him the top paid executive and, with exercised options, the fourth best compensated executive last year based on an analysis of 69 companies with local headquarters or a major presence in Westchester, Rockland or Putnam counties.

To answer the question, “Were they worth it?” The Journal News crunched the data on those companies to see which executives delivered the worst and best returns for stockholders in a year in which the S&P 500 fell 12 percent. The analysis compared changes in an executive’s salary and bonus last year —— compensation most under a board’s control —— to the stock return….

But answering the question of whether pay is deserved can be complicated. You often get opposite views depending on whom you ask.

Consider the $127.7 million package for Armonk-based IBM Corp‘s Louis V. Gerstner Jr. that rose 73 percent last year largely because of exercised options. To his fans, Gerstner is worth every penny because he rescued a company on the verge of breakup nine years ago, oversaw a 938 percent gain in the stock price and transformed an insular culture into a tech powerhouse.

“Mr. Gerstner prepared IBM to be the best it has ever been,” said Sam Albert, a management consultant in Scarsdale. “His pay doesn’t bother me.”

But James Leas, a former IBM engineer in Burlington, Vt., thinks otherwise.

He says Gerstner’s pay and perks send the wrong message when average employees are losing their jobs or facing cuts in pension benefits.

He also alleges that Gerstner’s record is built more on accounting gimmicks rather than improvements in the company’s competitive position.

IBM spokeswoman Carol J. Makovich said, “Mr. Leas has a history of making unsupported allegations against our company and our executives. This is more of the same.”

She said IBM’s board determines Gerstner’s pay based in part on an analysis of other companies, the complexity of IBM and the results for a given year.

Since the options are based on stock performance, his pay “is aligned with our shareholders’ interests,” she said….


United Defense Industries – Another Carlyle nest of the rich and powerful and politically-connected.

December 13, 2001

United Defense raises $400.9 million
in rare defense IPO

NEW YORK, Dec 13 (Reuters) – Military contractor United Defense Industries Inc. on Thursday raised $400.9 million, breaking a long drought for initial public offerings in the defense industry.

L-3 Communications Corp., a maker of communications products that derives more than half of its revenues from sales to the Pentagon, went public in May 1998. Research firms like Dealogic and Thomson Financial, however, consider United Defense the first pure defense IPO since Firearms Training Systems went public in November 1996.

Lead-underwriters Lehman Brothers and Goldman Sachs set the final price for the 21.1 million shares of United Defense at $19, in line with the anticipated range of $18-$20. The Arlington, Virginia-based company, however, pocketed only $175.8 million in proceeds, as more than half the IPO shares were sold by the company’s main stockholder, private equity firm Carlyle Group.

United Defense, which produces combat vehicles, artillery and missile launchers, benefited from a favorable climate for defense companies, that are seen poised to cash on increases in defense spending stemmed from the war against terrorism.

United Defense is expected to start trading on the New York Stock Exchange under the symbol UDI.

© 2001 Reuters

Continued at: United Defense Industries

* * *

May 2, 2002

Pentagon, Army fight over weapon


WASHINGTON —— An internal battle over the Pentagon’s plan to cancel an $11 billion Army program broke into the open Thursday when Defense Secretary Donald Rumsfeld said his office was looking into reports that Army officials had gone behind his back to Congress.

“I HAVE a minimum of high regard for that kind of behavior,” Rumsfeld told reporters.

Rumsfeld disclosed that he intended to cancel the program, possibly by the end of this month. The Army considers development of the new artillery system, called Crusader, a top priority.

Rumsfeld’s comments suggested that he felt that his authority as the Pentagon’s top civilian official was being challenged.

It also raised questions about the future of Army Secretary Thomas White, who is under political pressure as a result of his contacts with Enron Corp. officials during the company’’s collapse last year.

White had headed Enron Energy Services, a subsidiary, before he became Army secretary.


Loren Thompson, a defense expert at the Lexington Institute, a conservative think tank, said Thursday that he thought it likely that the flap over Crusader would be the final straw for White.

“Mr. White has finally found a matter of principle on which to depart,” Thompson said in an interview.

Col. Tom Begines, an Army spokesman, would not comment.

Top Pentagon aides gave White 30 days to report how he would use the $475.2 million earmarked for the Crusader in President Bush’s 2003 budget for alternative emerging technologies.

The Army considers the Crusader vital to its strategy for modernizing U.S. land forces and transforming them to a lighter, more mobile force. The Crusader has undergone initial tests of its firing capabilities and is scheduled to enter service in 2008.

But opponents say the weapon, a self-propelled 155mm howitzer, has become a symbol of an outdated Cold War-era weapons system that has survived at the Pentagon for political reasons and because of vested interests, rather than military relevance.

The conflict over Crusader is part of a wider battle Rumsfeld has waged with the Army and other services since he took office last year and pledged to transform the military to meet 21st-century challenges.

Rumsfeld has called into question the future of several major weapons programs, although canceling the Crusader would be the biggest and boldest move in his campaign to force change.

“Crusader now becomes a symbol of whether Rumsfeld’s priorities will prevail or not,” Thompson said.


Rumsfeld seemed disturbed by reports that the Army’s office of legislative affairs had sought to fight the planned cancellation by preparing “talking points” for members of Congress to lobby for the Crusader.

Asked by a reporter whether he believed that Army leaders were fighting a rear-guard action against him, Rumsfeld said Deputy Defense Secretary Paul Wolfowitz was looking into that.

Rumsfeld made it clear, however, that he expected Army leaders to fall in line once he made decisions….

The Crusader is being developed by United Defense Industries Inc., a defense contractor controlled by the Carlyle Group, an investment firm led by Frank Carlucci, a former secretary of defense.

Members of Congress from Oklahoma, where the Crusader would be assembled, have vociferously defended the program.

Sen. James Inhofe, R-Okla., a member of the Armed Services Committee, issued a statement Wednesday saying the fight to save what he called the “crown jewel of our Army modernization program” would continue in Congress.

White also appeared ready to fight Rumsfeld to retain the project. A spokesman for Inhofe told The Washington Post that Inhofe spoke to White on Tuesday and was told that “he was in a fight to save the Crusader within the building.”…

The Associated Press and Reuters contributed to this report.

* * *

May 24, 2002

Former Soviets Get
Lesson in Privatization

By Bill Wolfe, The Courier-Journal

Old naval station in Louisville is their classroom

Delegates from the former Soviet Republic of Moldova, a nation struggling to bring prosperity to its once-Communist economy, came to Louisville yesterday for a lesson in privatization. Their classroom? The old Naval Ordnance Station.

The industrial complex, now called Technology Park, was one of four former defense-facility sites across the country selected to be part of the State Department’s Freedom Support Grant project for Moldova.

The United States is trying to help the eastern European nation convert closed Soviet defense plants to commercial use to sput the country’s economy. The Louisville tour highlighted a facility that was privatized in 1996 and is home to 11 tenants employing nearly 1,000 people, including defense contractors United Defense and Raytheon Systems….

Ted Sauer, executive director of the Louisville/Jefferson County Redevelopment Authority, which operates Technology Park, presented the 172-acre industrial park … as an example of public and private cooperation.

It’s “very important for government to be involved” in privatization, he said. “The key is for government to know when to remove itself.”…

Technology Park also is working to diversify its tenants, Sauer said, so that it can withstand possible defense-contract downturns that would affect United Defense and Raytheon….

* * *

Frontline: The Future of War

Directors of United Defense: Crusader’s Manufacturer

Gen. (USA-Ret) John M. Shalikashvili

General John Shalikashvili was appointed by President Clinton as the thirteenth Chairman of the Joint Chiefs of Staff in 1993, and served in that capacity until his retirement from active duty in 1997.

As the senior officer in the United States military, he served as the principal advisor to the President, the Secretary of Defense, the National Security Council, and chairing the senior body tasked with providing strategic direction to the United States Armed Forces. Prior to being appointed Chairman of the Joint Chiefs, he served as the Commander-In-Chief of all United States forces in Europe and as NATOs tenth Supreme Allied Commander.

Born in Warsaw, Poland, in 1936, he immigrated to the United States in 1952. He holds a Bachelors Degree in Mechanical Engineering from Bradley University and a Masters of Science in International Affairs from George Washington University.

After his graduation from Bradley University in 1958, he was drafted as a private into the Army. Upon graduation from Officer Candidate School the following year, he was commissioned a second Lieutenant in the Artillery. For the next 38 years, he served in a variety of command and staff positions in the United States, Belgium, Germany, Italy, Korea, Turkey and Vietnam.

In 1991, following the Persian Gulf War, he was appointed commander of Operation Provide Comfort, which returned hundreds of thousands of Kurdish refugees from Eastern Turkey to Northern Iraq. Following that, he was assigned to Washington, D.C., as assistant to then-Chairman of the Joint Chiefs, General Colin Powell.

He currently serves as a visiting professor at Stanford University and on the board of several organizations, including United Defense; L-3 Communications Corporation; Bradley University; and, the National Bureau of Asian Research.

Casper W. Weinberger

Weinberger was Secretary of Defense during the course of the Iran-Contra affair.

In June, 1992, he was indicted by a federal grand jury on charges of concealing from congressional investigators and prosecutors thousands of pages of his handwritten notes.

The personal memoirs, taken during high level meetings, detailed events in 1985 and 1986 involving the Iran-Contra affair. Weinberger claimed he was being unfairly prosecuted because he would not provide information incriminating former President Ronald Reagan.

Weinberger was scheduled to go on trial January 5, where the contents of his notes would have come to light and may have implicated other, UN-indicted, conspirators.

While never directly linked to the covert operations of the Iran-Contra affair, he is believed to have been involved in the cover-up of the ensuing scandal. According to Special Prosecutor Lawrence Walsh, Weinberger’s notes contain evidence of a conspiracy among the highest-ranking Reagan administration officials to lie to Congress and the American public….

Born in San Francisco, CA, August 18, 1917; son of Herman and Cerise Carpenter (Hampson) Weinberger. A.B., magna cum laude, Harvard University, 1938; LL.B., Harvard University, 1941. Married Jane Dalton, August 12, 1942; father of Arlin Cerise (Mrs. Richard Paterak) and Caspar Willard. Law clerk to U.S. Judge William E. Orr, 1945-47; with firm Heller, Ehrman, White and McAuliffe, 1947-69, partner 1959-69; member, California Legislature from 21st District, 1952-58; vice chairman, California Republican Central Committee, 1960-62; chairman, California Republican Central Committee, 1962-64; chairman, Committee on California Government Organization and Economics, 1967-68; California director of finance, 1968-69; chairman, Federal Trade Commission, 1970; deputy director, Office of Management and Budget, 1970-72; director, Office of Management and Budget, 1972-73; counsellor to the president, 1973; secretary, U.S. Department of Health, Education and Welfare, 1973-75; special counsel, vice president, director, Bechtel Corp., 1975–. . . .

General J.H. Binford Peay III

Peay was born in 1940. . . .

Beginning in July 1988, he served a one year assignment as Deputy Commandant, Command and General Staff College, Fort Leavenworth, Kansas. On 3 August 1989, General Peay returned to Fort Campbell to assume command of the 101st Airborne Division and led the division through Operations DESERT SHIELD and DESERT STORM in the Persian Gulf. . . .

Frank C. Carlucci

Carlucci is Chairman and a Partner in The Carlyle Group, a Washington, D.C. based merchant bank. Prior to joining The Carlyle Group in 1989, Carlucci served as Secretary of Defense from 1987 – 1988. He served as President Reagan’s National Security Advisor in 1987. Before returning to Government service, Carlucci was Chairman and CEO of Sears World Trade, a business he joined in 1983. His Government service included positions as Deputy Secretary of Defense (1980 – 82), Deputy Director of Central Intelligence (1978 – 80), Ambassador to Portugal (1975 – 78), Under Secretary of Health Educationn and Welfare (1973 – 75), Deputy Director of OMB (1970 – 72), and Director of the Office of Economic Opportunity (1969). Carlucci was a Foreign Service Officer from 1956 to 1980.

Carlucci serves on the following corporate boards: Ashland, Inc.; BDM International, Inc.; East New York Savings Bank; General Dynamics Corporation; Kaman Corporation; Neurogen Corporation; Northern Telecom Limited; The Quaker Oats Company; Sun Resorts, Ltd., N.V.; Texas Biotechnology Corporation; Pharmacia & Upjohn, Inc.; Westinghouse Electric Corporation; and the Board of Trustees for the RAND Corporation….

William E. Conway, Jr.

Mr. Conway is a Founder and Managing Director of Carlyle. Mr. Conway was Senior Vice President and Chief Financial Officer of MCI Communications Corporation from 1984 until he joined Carlyle in August 1987. Mr. Conway was a Vice President and Treasurer of MCI from 1981 to 1984.

While at MCI, Mr. Conway arranged several billion dollars of debt and equity financing, both in the public and private financial markets, and negotiated MCI’s most significant acquisitions and divestitures. Prior to joining MCI, Mr. Conway served in a variety of positions for almost ten years with The First National Bank of Chicago in the areas of corporate finance, commercial lending, workout loans and general management….

Mr. Conway presently serves on the Board of Directors of the following publicly traded companies: Global Crossing Ltd. and Nextel Communications Co., Inc. He also serves on the Board of the following private companies in which Carlyle has significant investments: The Aerostructures Corporation, Lear Siegler Services, Inc., USMR Holdings, Inc., Federal Data Corporation, United Defense Industries, Inc., Prime Communications, LLC, US Investigations Services, Inc., EG&G Technical Services, Inc. and Dr Pepper/Seven Up Bottling Group, Inc. (formerly The American Bottling Company).

Peter J. Clare

Mr. Clare is a Managing Director of Carlyle. Mr. Clare joined Carlyle in 1992 and has focused primarily on the defense, aerospace and information technology industries. Prior to joining Carlyle, Mr. Clare was with First City Capital Corporation, a private equity group which invests in LBOs, public equities, distressed bonds and restructurings. Prior to joining First City Capital, Mr. Clare was with the Interfunding/Merchant Banking Group and Leveraged Buyout Department of Prudential-Bache Capital Funding where he analyzed various transactions with an aggregate value totaling $3.2 billion.

Mr. Clare is based in Carlyle’s Hong Kong office. Mr. Clare is a magna cum laude graduate of Georgetown University and received his MBA from the University of Pennsylvania’s Wharton School. While in business school, Mr. Clare also worked for the Palmer Group, a merchant bank formed by Russell E. Palmer (former dean of The Wharton School and former managing partner of Touche Ross) to acquire businesses in the Philadelphia area. Mr. Clare presently serves on the Boards of Directors of Federal Data Corporation and United Defense Industries, Inc.

Allan M. Holt

Mr. Holt joined Carlyle in 1991, initially with primary responsibilities as Senior Vice President and Chief Financial Officer of one of Carlyle’s portfolio companies, where he was involved in the negotiation and sale of the business. Prior to joining Carlyle, Mr. Holt spent three and a half years with Avenir Group, Inc. . . . Mr. Holt was also previously with MCI Communications Corp., where as Director of Planning and Budgets he managed a group responsible for the development, review and analysis of MCI’s multi-billion dollar financial operating and capital plans.

Before joining MCI, Mr. Holt was with Coopers & Lybrand. Mr. Holt is a graduate of Rutgers University and received his MBA from the University of California, Berkeley. Mr. Holt presently serves on the Boards of Directors of Composite Structures, L.L.C., Entertainment Publications, Inc., Federal Data Corporation, USMR Holdings, Inc., United Defense Industries, Inc., Lear Siegler Services, Inc., EG&G Technical Services, Inc., Gemini Air Cargo, Inc., US Investigations Services, Inc., Vought Aircraft Industries, Inc., and Kuhlman Electric Company. Mr. Holt’s primary investment focus is in the defense and aerospace and information technology industries.

Tom Rabaut

President and CEO of United Defense, L.P.

Francis “Buzz” Raborn

Vice President, Finance and Chief Financial Officer, United Defense, L.P.

Robert M. Kimmit

Vice Chairman of the Board of Directors and President, Commerce One, Inc. and former U.S. ambassador to Germany.

~ ~ ~

To peek at the MONEY behind UNITED DEFENSE INDUSTRIES, GO TO > > > The United Defense Matrix


United States Enrichment Corp. – A privatized U.S. Government agency formed to enrich fuel for nuclear power plants, but ending up enriching insiders at the expense of taxpayers and national security.

In April 1996, Congress enacted the USEC Privatization Act, Pub. L. 104-134, tit. III §§ 3101, 110 Stat. 1321-335 (codified at 42 U.S.C. §§ 2297h-1 et seq.), which directed the USEC Board to transfer the federal government’s interest in USEC to the private sector.

By June 1998, the Board was left with three options for accomplishing that objective: (1) the sale of USEC, through a merger and acquisition, to a consortium led by the Carlyle Group; (2) the sale of USEC, through a merger and acquisition, to a consortium consisting of Texas Pacific Group and General Atomic; and (3) the sale of USEC stock to the public in an initial public offering (“IPO”).

In early June 1998, the USEC Board met on three separate occasions to consider these privatization options. The meetings were closed to the public.

At the end of the final meeting, on June 11, the Board voted unanimously for the IPO option. On June 29, the Board announced a proposed IPO to the public. . . .

For much more, GO TO > > > Birds on the Power Lines


United States Marine Repair – Now a “publically-held” corporation so you can watch both your tax money and pension money go down with the ship!

February 14, 2002

Marisco sued over Kalaeloa drydock

The dock was intended for native Alaskan use,
competitor Pacific Shipyards contends

By Russ Lynch, Honolulu Star-Bulletin

A Hawaii shipyard business has sued a local competitor and a native-Alaskan tribal business for what it says is a racketeering scheme to take over a surplus Navy floating drydock intended for use in Alaska.

The dock was intended to be used for the economic benefit of natives at St. Paul Island, Alaska, and instead has been put to work in competition with private enterprise in Hawaii, according to complainant Pacific Shipyards International.

The consortium of two Hawaii-owned local shipyards filed a federal racketeering and corrupt practices complaint yesterday against Alaskan Aleut business Tanadgusix Corp. and rival Oahu ship-repair business Marisco Ltd.

The lawsuit says Marisco is using the surplus drydock, donated by the Navy to Tanadgusix, for ship repair work at Kalaeloa, formerly the Barbers Point Harbor, when the conditions of the Navy’s gift exclude its use outside Alaska.

Meanwhile, Pacific Shipyards invested about $4.5 million to bring a new floating drydock to Hawaii and is getting unfair and illegal competition from Marisco’s use of the donated equipment, the lawsuit says.

Marisco did not return calls and the Alaska business could not be reached yesterday, but the lawsuit says they tried repeatedly to get permission to keep their equipment in Hawaii and were denied by the U.S. General Services Administration.

The lawsuit cites GSA letters saying the drydock was for use in Alaska only, for the benefit of the natives at St. Paul Island, Alaska, near Anchorage.

In their initial pitch to the state of Alaska and the federal government, the Alaskans said the drydock, called Ex Competent but officially AFDM-6, would be repaired at Marisco and towed to St. Paul Island. The drydock, which is sunk under vessels and then floated until the ship to be repaired is dry, was worth more than $5 million according to federal documents filed with the lawsuit.

Then Tanadgusix, normally known as TDX, wrote to the government saying moving the equipment to Alaska wasn’t financially feasible, it couldn’t economically be used “anywhere but where it presently resides in Hawaii” and that allowing it to be used in Hawaii would immediately begin to benefit the Alaskan natives.

The GSA replied use outside Alaska would be illegal. . . .

Pacific Shipyards said in the lawsuit that in mid-January, Marisco began using the Alaskan drydock at Kalaeloa to service the Coast Guard cutter Jarvis.

That was in direct violation of the terms of the Alaskans’ acquisition of the drydock, the lawsuit says.

Pacific Shipyards, which brought its new floating drydock to Honolulu’s Pier 41 a year ago, is a combination of Honolulu Shipyard Inc. and Honolulu Marine Inc., which joined forces in a new limited liability corporation in May 2000. They are descendants of Dillingham Shipyard, Pacific Marine and other businesses that have been in Hawaii ship repairing for more than 50 years.

William Clifford, managing partner of Pacific Shipyards, said that “what Marisco and TDX have done is wrong” and the donation of the surplus Navy equipment from Pearl Harbor was intended to promote economic development, employment and job training in Alaska.

“However, almost as soon as TDX got the drydock, TDX started taking steps to put the drydock into operation here in the state of Hawaii. The General Services Administration of the United States Government has told TDX in writing they cannot use the drydock in Hawaii. TDX is using it anyway,” Clifford said.

* * * * *

May 29, 2002

United Defense deal may
save Carlyle investment

By Mark Weinraub

NEW YORK (Reuters) – A plan by United Defense Industries Inc. to buy Carlyle Group shipyard unit United States Marine Repair may save the huge investment Carlyle has in the army contractor, which has been reeling from a Pentagon decision to scrap an $11 billion artillery contract.

The deal, which expands United Defense’s (UDI) product base, provides the company with cover should its traditional operations show weakness, said Jon Kutler, president of Quarterdeck Investment Partners Inc.

“Because shipyards and armored vehicles are among the least sexy businesses in the defense industry, it is not unusual for them to be grouped together,” he said.

To make the deal, announced on Tuesday, investment firm Carlyle, which owns 49 percent of United Defense, had to call off an initial public offering of United States Marine, a provider of ship repair services for the U.S. Navy.

Defense offerings have been some of the bright spots in the moribund IPO market, which has struggled under the weight of a two-year-old stock slump.

“I think that they would’ve gotten more potentially for United States Marine Repair on a separate basis, but they wouldn’t have been able to necessarily boost the value of United Defense,” said Rick Phillips, who runs the aerospace and defense practice at investment bank Houlihan Lokey Howard & Zukin.

United States Marine’s planned IPO would have raised about $170 million — giving the whole company a price tag of about $325 million, $9 million more than United Defense agreed to pay for it, Phillips said.

“The diversification that (the deal) brings to United Defense clearly is enhancing the value in terms of the way people are looking at the company,” he added.

Arlington, Virginia-based United Defense has been scrambling since the Pentagon announced plans to scrap the U.S. Army’s Crusader artillery system.

United Defense shares fell about 12.5 percent between the cancellation and the time the United States Marine acquisition was announced. Investors cheered the news and the stock has gained nearly 7 percent on the New York Stock Exchange over the course of two trading days.

Credit Suisse First Boston analyst Pierre Chao raised his investment rating on United Defense shares to “buy” from “hold.”

He had downgraded the stock when news broke that the Pentagon was considering canceling the Crusader system.

Carlyle Group, run by well-connected Washington insiders, raised $400.9 million in United Defense’s initial public offering in December.

The company’s ties to the Pentagon are strong — former Defense Secretary Frank Carlucci runs Carlyle Group and James Baker, the elder President George Bush’s secretary of state, and Richard Darman, the elder Bush’s budget director, also work for Carlyle.

United Defense said it took steps to ensure the United States Marine acquisition was fair.

Carlyle executives who serve on United Defense’s board of directors were excluded from the process and Merrill Lynch provided a fairness opinion to United Defense’s board before the deal was made, United Defense said in a statement.

Before the United States Marine deal, many investors were drawn to United Defense’s stock because of the Crusader system, which was expected to become more important to the company in the coming years, Houlihan’s Phillips said.

United Defense, which is set to receive a termination fee of $520 million if the military does pull the plug on Crusader, has said it is lobbying to save the howitzer.

© 2002 Reuters

See also: Credit Suisse First Boston; United Defense Industries; United States Marine Repair

For more on international incestuous relationships, GO TO > > > The United Defense Matrix

* * * * *

March 13, 2002

Ship repairer United States Marine Repair files IPO

WASHINGTON, March 13 (Reuters) – United States Marine Repair Inc., which fixes and maintains U.S. Navy ships, cruise ships and tankers, has filed for a $160 million initial public offering.

The Norfolk, Virginia-based private sector company plans to use the net proceeds to reduce the principal amount outstanding under a credit facility, it said on Tuesday in a filing with the Securities and Exchange Commission.

It may also use some of the money for general corporate purposes.

The preliminary SEC filing did not disclose how many common shares are being offered in the IPO or the price range, but shares are being sold by the company and unidentified stockholders.

United States Marine has applied for a New York Stock Exchange listing under the symbol “URM” and hired Lehman Brothers, Credit Suisse First Boston, Bear Stearns and Credit Lyonnais Securities to manage the IPO.

Revenues for 2001 were $390.7 million, a decline of $5.4 million, from $396.1 million the year before. Revenues for the first three quarters of 2001 were affected by the U.S. Navy’s postponement of repair work, said the company, which got 75 percent of 2001 revenues from the U.S. Navy.

United States Marine also posted gross profit of $63.5 million in 2001, a decrease of $2.9 million the previous year, and net income of $10.1 million compared to $9.2 million in 2000, the filing said.

Entities affiliated with the Carlyle Group, the private equity firm based in the nation’s capital, owned 85.6 percent of the company, the filing said.

Copyright 2002, Reuters News Service

* * * *

May 29, 2002

United Defense buys
United States Marine Repair Inc.

United Defense Industries Inc. agreed to buy United States Marine Repair Inc. for $316 million to add revenue from ship repair as it faces the loss of the U.S. Army’s Crusader artillery-system contract.

Closely held U.S. Marine, like United Defense, is controlled by buyout firm Carlyle Group Inc. The company modernizes and repairs non-nuclear ships. Its plan for a public stock offering has been canceled, United Defense said in a statement.

United Defense gets about a quarter of its sales from Crusader, which is being developed in Fridley and has been targeted for termination by President George W. Bush and Defense Secretary Donald Rumsfeld. U.S. Marine will add to earnings starting in the second half and increase profit by 5 percent to 10 percent annually, United Defense said.

* * * * *



Marisco is one of the largest marine and industrial services companies in Hawaii. The facility is located at the Barbers Point Deep Draft Harbor near Campbell Industrial Park, Kapolei, Hawaii….

Marisco operates the largest commercial drydock and biggest industrial machine shop in the state. Marisco serves the governmental, commercial marine and industrial sectors of Hawaii. The governmental sector includes U.S. Navy, U.S. Coast Guard, and Military Sealift Command work.

The local ship repair industry hit a low point after Navy jobs began to dry up. In the past, Navy work amounted to 60 to 70 percent of the business of the island’s two largest private yards — Honolulu Shipyard and Marisco Ltd. Budget cuts in recent years meant Navy contracts went from $37 million in 1995 to $13 million in 1999.

Company founder Alfred Anawati established Marsico in 1972. In April 2001 United States Marine Repair (USMR), America’s largest non-nuclear ship repair, modernization, overhaul and conversion company, signed a letter of intent to buy Marisco, Ltd., one of only two full-service shipyards in Hawaii….

The Carlyle Group, a Washington, D.C.-based investment firm, owns USMR.

Frank C. Carlucci, former secretary of defense and assistant to the president for national security affairs under President Reagan is the chairman of Carlyle. James A. Baker, III, who has served as the 61st secretary of state in the Bush Administration and in other senior levels of the US government under three different presidents, is also a principal in The Carlyle Group.

The acquisition closed in mid-June 2001.

* * *

November 9, 2001

Abercrombie announces Pearl Harbor ship maintenance and repair contract

U.S. House of Representatives Press Release

Congressman Neil Abercrombie announced today that the Navy has contracted with Honolulu Shipyard, Inc (a member company of Pacific Shipyards International), of Honolulu, to provide repair and maintenance services to Navy surface ships at Pearl Harbor….

Honolulu Shipyard was selected to provide the services for one year, with options to extend the contract for an additional four years, one year at a time.

The firm is expected to employ 150-200 civilians, given a normal workload.

The contract was signed November 6, 2001.

“This is good news for our economy,” said Abercrombie, a senior member of the House Armed Services Committee. “It means jobs and paychecks for island families, and the ripple effect will be felt by dozens of small businesses. . . .

* * *


April 27, 2001

From The Honolulu Advertiser:

 O`ahu Shipyard To Be Sold

United States Marine Repair, a Virginia firm owned by investors including several national political figures, yesterday announced plans to buy O`ahu shipyard Marisco Ltd.

United States Marine Repair is owned by the Carlyle Group, a Washington, D.C.-based investment firm whose chairman is Frank C. Carlucci, former secretary of defense for President Reagan.

Another principal in the firm is James A. Baker III, who served as secretary of state under former President Bush.

United States Marine Repair has shipyards in San Diego, San Francisco and San Pedro, Calif.; Norfolk, Va.; and Ingleside, Texas. The company specializes in maintaining U.S. Navy surface combat ships.

Retired Rear Adm. Dick Camacho, former commander of the Pearl Harbor Naval Shipyard, will lead United States Marine Repair in Honolulu, the company said.

“Because of Marisco’s excellent reputation and 29-year history of accomplishing quality work on difficult jobs, we are looking forward to having the yard and its employees join our family of shipyards,” B. Edward Ewing, chief executive of United States Marine and Carlyle Management Group, said in a statement.

The company said its annual revenues would grow to more than $500 million with the acquisition.

Marisco is one of two full-service private shipyards in Hawai`i….

* * *

September 25, 2001

House approves $365 million
for Hawaii military

by Ben DiPietro

Hawaii will receive $365 million for military construction projects in a fiscal 2002 defense spending bill approved Tuesday by the U.S. House.

Most of the money is for housing construction and renovation of housing on isle military bases, says Rep. Neil Abercrombie, D-Hawaii….

The largest of the projects is $50 million for a barracks complex at Wheeler Army Airfield, $47 million to replace 172 units of family housing at Marine Corps Base Hawaii (Catbird: That’s about $273,256 per unit, according to my fuzzy math – a bit expensive, I suspect, even for Hawaii) and nearly $38 million for the next phase of renovations of Pacific Command headquarters at Camp Smith.

Other spending includes $29 million to replace a hydrant fuel system at Hickam Air Force Base, nearly $12 million for a shipping operations building and $8 million for a drydock support facility at Pearl Harbor and $5 million for a command and control center for the Army’s Pohakuloa Training Area on the Big Island.

The spending bill still must win approval from the Senate, then be signed by President Bush….

See also: Ko Olina

For the movie, Exposed: The Carlyle Group






For more da kine stuff that floats in
the cesspools at the Carlyle Group…



Apollo Advisors

A Connecticut Yankee in King Kamehameha’s Court

The Blackstone Group

Claims By Harmon

Confessions of a Whistleblower

Conrad Black: The Dark Side

Crouching Dragons ~ Hidden Rats

Dirty Money, Dirty Politics & Bishop Estate

Down the Rabbit-Hole

Drowning in Think Tanks

Global Crossing

Investigating Investcorp

The Mating of Chevron-Texaco

The Nests of CB Richard Ellis

Nests in the Pentagon

Rand Corporation

The Great Nest Egg Robberies

The Department of Homeland Security

The Eagle Awakes

The Eagle Hooded

The Mercenaries

The Myth & The Methane

The Pimps to Power

The Snow Birds

The Torch of Eric Shine

The Turkey Nests

The Nests of Osama bin Laden

The Nuclear Nests

The Sinking of the Ehime Maru

The Story of Enron

The Strange Saga of BCCI

The United Defense Industries Matrix

Thorns in the Rose Garden

Uncle Sam’s Guinea Pigs

The Washington Baseball Club

Year of the Dragon



Last Update December 15, 2006, by The Catbird