Know your BFEE: The Carlyle Group

Lunch With The Chairman

by Seymour Hersh
The New Yorker March 17, 2003

EXCERPT...

The Defense Policy Board is a Defense Department advisory group composed primarily of highly respected former government officials, retired military officers, and academics. Its members, who serve without pay, include former national-security advisers, Secretaries of Defense, and heads of the C.I.A. The board meets several times a year at the Pentagon to review and assess the country’s strategic defense policies.

Perle is also a managing partner in a venture-capital company called Trireme Partners L.P., which was registered in November, 2001, in Delaware. Trireme’s main business, according to a two-page letter that one of its representatives sent to Khashoggi last November, is to invest in companies dealing in technology, goods, and services that are of value to homeland security and defense. The letter argued that the fear of terrorism would increase the demand for such products in Europe and in countries like Saudi Arabia and Singapore.

The letter mentioned the firm’s government connections prominently: “Three of Trireme’s Management Group members currently advise the U.S. Secretary of Defense by serving on the U.S. Defense Policy Board, and one of Trireme’s principals, Richard Perle, is chairman of that Board.” The two other policy-board members associated with Trireme are Henry Kissinger, the former Secretary of State (who is, in fact, only a member of Trireme’s advisory group and is not involved in its management), and Gerald Hillman, an investor and a close business associate of Perle’s who handles matters in Trireme’s New York office. The letter said that forty-five million dollars had already been raised, including twenty million dollars from Boeing; the purpose, clearly, was to attract more investors, such as Khashoggi and Zuhair.

Perle served as a foreign-policy adviser in George W. Bush’s Presidential campaign—he had been an Assistant Secretary of Defense under Ronald Reagan—but he chose not to take a senior position in the Administration. In mid-2001, however, he accepted an offer from Secretary of Defense Donald Rumsfeld to chair the Defense Policy Board, a then obscure group that had been created by the Defense Department in 1985. Its members (there are around thirty of them) may be outside the government, but they have access to classified information and to senior policymakers, and give advice not only on strategic policy but also on such matters as weapons procurement. Most of the board’s proceedings are confidential.

As chairman of the board, Perle is considered to be a special government employee and therefore subject to a federal Code of Conduct. Those rules bar a special employee from participating in an official capacity in any matter in which he has a financial interest. “One of the general rules is that you don’t take advantage of your federal position to help yourself financially in any way,” a former government attorney who helped formulate the Code of Conduct told me. The point, the attorney added, is to “protect government processes from actual or apparent conflicts.”

CONTINUED...

http://www.newyorker.com/archive/2003/03/17/030317fa_fact?currentPage=all

Carlyle's Way

Dan Briody, author of The Iron Triangle
Red Herring Business Magazine, Wednesday January 8, 2002

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.

SNIP...

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.

CONTINUED...

http://web.archive.org/web/20030607113821/http:/redherring.com/vc/2002/0111/947.html

Carlyle in talks to sell 9.9% management stake to Chinese

Source: Times Online (UK)

Carlyle Group is in talks to sell up to 9.9 per cent of itself to China’s Social Security Fund in a move that would make it the latest American buyout firm to sell a stake in its management company to the Chinese.

The talks, which began over the summer, emerged five months after Blackstone Group, a key rival, sold a 10 per cent stake in itself to the Chinese Government and floated on the New York Stock Exchange.

<snip>

The Social Security Fund, which has about $62 billion of assets, is thought to be keen to tap the vast profits that private equity firms have made in recent years and is said to have also spoken to other suitors.

A deal with the Chinese fund would mark the third sale of a management stake by Carlyle. Previously it has sold small stakes to the California Public Employees’ Retirement System (Calpers) and the Mubadala arm of the Abu Dhabi Government.

Read more: http://business.timesonline.co.uk/tol/business/industry...

Original DU2 thread: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3047190

The Carlyle Group: Crony Capitalism without Borders

excerpted from the book

How Much Are You Making On The War Daddy?

A Quick and Dirty Guide to War Profiteering in the Bush Administration

by William D. Hartung
Nation Books, 2003, paper

EXCERPT...

Dick Cheney and the Self-Licking Ice Cream Cone

p27
The revolving door between the government and weapons contractors isn't new, but it has reached new heights (monetarily) and depths (ethically), in recent years.[Richard] Cheney's relationship with Halliburton is a perfect case study of all that is wrong with the relationship between our democratic form of government and the corporations that finance our elections and feed at the government trough on a daily basis.

p29
Halliburton's biggest "cash cow" during his [Cheney's] tenure was definitely in the area of military support services, and the company's ability to earn so much in this area was directly tied to a decision Cheney had made back when he was secretary of defense in the first Bush administration. It was under Cheney's watch that the decision was made to privatize not only specific services in support of U.S. troops overseas-such as food services, or doing the laundry, or repairing vehicles-but to privatize the actual planning process that went into providing logistics for U.S. troops when they had to be sent into an inhospitable foreign hot spot on short notice.

In 1992, near the end of Cheney's tenure as defense secretary, Halliburton won a contract from the U.S. Army's Logistics Civil Augmentation Program (LOGCAP), which P.W. Singer has described as a deal to "work with the military in planning the logistical side of contingency operations." Singer notes that "it was the first time the U.S. military had ever contracted such global planning to a private organization." In a pattern that would mark both Halliburton's and Cheney's business paths, the firm got the LOGCAP contract after conducting a top secret $3.9 million report for the Pentagon on how private companies could essentially provide the bulk of the logistics involved in major U.S. contingency deployments, from transportation and base-building to cooking the food and doing the laundry. The initial study contract called for a plan for how a private company could bear the bulk of the logistical burden for deploying 20,000 troops to 5 separate bases overseas within a 1 80-day period. Later in the year, Halliburton got a $5 million follow-on study contract to outline how a private firm might supply logistics for a series of more specific contingencies. By the end of the year, Halliburton had been selected to receive a five-year contract to be the U.S. Army's "on call" private logistics arm.

The work started almost immediately. Halliburton was called upon to provide support services for U.S. forces deployed to Somalia as part of "Operation Restore Hope," an operation that began at the end of the Bush administration and carried over into the first Clinton term. As Singer notes, "Brown and Root employees arrived in Mogadishu just 24 hours after the first U.S. troops arrived and stayed until the final withdrawal in March 1995, when its employees left with the last U.S. marines." The company did everything from hiring local women to hand wash Army laundry to importing "a mortician to clean up the bodies of killed UN peacekeepers before shipping them out of the country." Singer notes that for a good portion of its time in country, Halliburton was "the largest employer in Somalia, with some 2,500 local employees."

The Somalia operation led to additional, more limited work on behalf of smaller U.S. deployments to Rwanda and Haiti. But the big payoff came in the Balkans, where Halliburton's Brown and Root Services unit started out supplying logistical support for Operation Deny Flight, the United Nations-mandated no-fly zone in Bosnia, and ended up building and operating bases and refugee camps in Croatia, Bosnia, and, most lucratively of all, in KOSOVO. The firm's Balkan adventures started during the same year that Cheney took over as CEO of the company, and accounted for a good deal of the company's growth on the military side of its operations during his five-year tenure at the head of the firm.

The Army contract to provide logistical support for 20,000 U.S. troops deployed as part of the NATO IFOR forces in Bosnia came in at a cool $546 million, and it resulted in Halliburton doing work on behalf of U.S. and allied forces in Hungary, Bosnia, and Croatia. Just as it seemed that Halliburton had struck pure gold, there was a setback in 1997 when the company lost in its bid to renew its overall LOGCAP contract with the Army to a competitor, DynCorp, who had underbid them for the next round of work. But the sting was taken out of the loss when the Army decided to remove the BaIkans work from the larger LOGCAP contract, allowing Halliburton to go full speed ahead on its lucrative support operations there.

The Bosnia work set the stage for an even bigger role for Halliburton in Kosovo, where the company was involved in everything from building make-shift refugee quarters to building two major Army bases from scratch. The company's contract for its first year in Kosovo alone ballooned from the base level fee of $180 million to $1 billion. During its first three months in Kosovo alone, Singer reports that the company did the following: "built 192 barracks . . . thirteen helipads, two aviation-maintenance facilities, twelve mess-kitchen dining facilities, two large base dining facilities, and 37 temporary bathing facilities," even as it was delivering over I million meals, providing more than 55 million gallons of water, supplying over 383,000 gallons of diesel fuel, collecting over 89,000 cubic meters of trash, and loading and off-loading over 4,200 containers with needed supplies.

Halliburton's growth under Cheney's leadership is nothing compared to what it has done since he became vice president. In 2001, it won back the Army's LOGCAP contract, just in time to cash in on the logistical bonanza involved in providing facilities and provisions for U.S. troops in Afghanistan, Uzbekistan, Qatar, Kuwait, Iraq, and all the other far-flung outposts of the Bush administration's war on terrorism. The company is also in charge of making the cages used to house Taliban members and terror suspects at Guantanamo Bay, Cuba. A late August 2003 analysis in the Washington Post estimated that Halliburton had raked in $1.7 billion in military contracts in Iraq, Afghanistan, and beyond since the start of the Bush administration.

The company's biggest prize-which it was awarded on a no-bid basis by the Army Corps of Engineers after Halliburton officials had helped the Defense Department write the specs for the contract-was an open-ended, two year contract worth up to $7 billion for putting out oil fires and repairing oil infrastructure in Iraq.

CONTINUED...

http://www.thirdworldtraveler.com/Corporate_Welfare/CarlyleGroup_HMOWD%3F.html

Cheney's Multi-Million Dollar Revolving Door

News: As Bush Sr.'s secretary of defense, Dick Cheney steered millions of dollars in government business to a private military contractor -- whose parent company just happened to give him a high-paying job after he left the government.

By Robert Bryce
Mother Jones
August 2, 2000

EXCERPT...

In 1992, the Pentagon, then under Cheney's direction, paid Texas-based Brown & Root Services $3.9 million to produce a classified report detailing how private companies -- like itself -- could help provide logistics for American troops in potential war zones around the world. BRS specializes in such work; from 1962 to 1972, for instance, the company worked in the former South Vietnam building roads, landing strips, harbors, and military bases. Later in 1992, the Pentagon gave the company an additional $5 million to update its report. That same year, BRS won a massive, five-year logistics contract from the US Army Corps of Engineers to work alongside American GIs in places like Zaire, Haiti, Somalia, Kosovo, the Balkans, and Saudi Arabia.

After Bill Clinton's election cost Cheney his government job, he wound up in 1995 as CEO of Halliburton Company, the Dallas-based oil services giant -- which just happens to own Brown & Root Services. Since then, Cheney has collected more than $10 million in salary and stock payments from the company. In addition, he is currently the company's largest individual shareholder, holding stock and options worth another $40 million. Those holdings have undoubtedly been made more valuable by the ever-more lucrative contracts BRS continues to score with the Pentagon.

Between 1992 and 1999, the Pentagon paid BRS more than $1.2 billion for its work in trouble spots around the globe. In May of 1999, the US Army Corps of Engineers re-enlisted the company's help in the Balkans, giving it a new five-year contract worth $731 million.

CONTINUED...

http://www.motherjones.com/news/feature/2000/08/cheney.html

George Bush Takes Charge: The Uses of "Counter-Terrorism"

By Christopher Simpson
Covert Action Quarterly 58

A paper trail of declassified documents from the Reagan‑Bush era yields valuable information on how counter‑terrorism provided a powerful mechanism for solidifying Bush's power base and launching a broad range of national security initiatives.

During the Reagan years, George Bush used "crisis management" and "counter‑terrorism" as vehicles for running key parts of the clandestine side of the US government.

Bush proved especially adept at plausible denial. Some measure of his skill in avoiding responsibility can be taken from the fact that even after the Iran‑Contra affair blew the Reagan administration apart, Bush went on to become the "foreign policy president," while CIA Director William Casey, by then conveniently dead, took most of the blame for a number of covert foreign policy debacles that Bush had set in motion.

The trail of National Security Decision Directives (NSDDS) left by the Reagan administration begins to tell the story. True, much remains classified, and still more was never committed to paper in the first place. Even so, the main picture is clear: As vice president, George Bush was at the center of secret wars, political murders, and America's convoluted oil politics in the Middle East.

SNIP...

Reagan and the NSC also used NSDDs to settle conflicts among security agencies over bureaucratic turf and lines of command. It is through that prism that we see the first glimmers of Vice President Bush's role in clandestine operations during the 1980s.

CONTINUED...

http://books.google.com/books?id=YZqRyj_QXf8C&pg=PA75&lpg=PA75&dq=christopher+simpson+The+Uses+of+%E2%80%98Counter-Terrorism%E2%80%99&source=bl&ots=8klB0PzATX&sig=hi9DpE3qF43Oefh7iGn79W4jXQs&hl=en&ei=zAFQTeriBsr2gAfu1Mgc&sa=X&oi=book_result&ct=result&resnum=1&ved=0CBYQ6AEwAA#v=onepage&q=christopher%20simpson%20The%20Uses%20of%20%E2%80%98Counter-Terrorism%E2%80%99&f=false

Former CIA head David Petraeus joins buyout firm

By Andre Damon
wsws.org, 5 June 2013

KKR, the giant private equity firm, announced Thursday that it had hired David Petraeus, the former director of the Central Intelligence Agency and head of US combat operations in Iraq and Afghanistan.

The move points to the integration of the upper echelons of the military/intelligence apparatus and the most predatory sections of finance capital, which are natural allies in the war against the working class domestically and throughout the world.

SNIP...

Private equity firms, which are not publicly traded and therefore far less regulated than publicly traded corporations, provide among the highest payouts to their executives and consultants. This has made them the main choice for ex-politicians seeking to monetize their connections made in office. The list of former top government officials serving as advisors and executives of private equity companies includes:

* George H.W. Bush, former US president and CIA director, who has longstanding connections to the Carlyle Group, including having sat on the board of directors of one of its subsidiaries, Caterair, an airline catering company
* Former US President Bill Clinton, who served as an advisor to Yucaipa Companies for six years, making $12.5 million
* Former Vice President Dan Quayle, who serves as global investment chairman at Cerberus Capital Management, along with former US Treasury Secretary John Snow, who serves as the company's chairman.
* Colin Powell, former secretary of state and four-star army general, who chairs the advisory board of Leeds Equity Partners
* Henry Kissinger, the former secretary of state, who serves on the board of private equity firm Forstmann, Little & Company.

While private equity firms are the most common employers for high-profile public officials, most former generals who are not as well-known as Petraeus and Powell go on to work for defense contractors, sometimes employed as consultants for both the military and defense contractors at the same time.

CONTINUED...

http://www.wsws.org/en/articles/2013/06/05/petr-m04.html

Obama's Campaign to Glorify the War on Vietnam

By davidswanson - Posted on 13 August 2013

Wars exist because lies are told about past wars.

When President Obama escalated the war on Afghanistan, he revived virtually every known lie about the war on Iraq, from the initial WMD BS to the "surge." While Americans remain unfathomably ignorant about the destruction of Iraq, a majority says the war shouldn't have been fought. A majority says the same about the war on Afghanistan. This is, pretty wonderfully, impeding efforts toward a U.S. war on Syria or Iran.

The new wars were supposed to cure the Vietnam Syndrome -- that public reluctance to support mass murder for no good reason. The Pentagon is now turning to the source of the disease. The war in most need of beautification for Americans, the military has decided, is the war the Vietnamese call the American War.

Most people in the United States have no idea that this was, like all other recent U.S. wars, a one-sided slaughter -- in this case, of 3.8 million Vietnamese men, women, and children. But most Americans know the war was awful, even on the side of the aggressor. The Vietnam Syndrome (popular opposition to wars) still frightens war makers.

Obama is usually opposed to any "looking backwards," as doing so might involve prosecuting criminals for their crimes. But, making a big exception, he is dumping 65 million of our dollars into prettying up the war on Vietnam.

Please read the following statement, put together by some U.S. veterans of that war, and sign onto it here.

An Open letter to the American People about a Project to Accurately Commemorate the American War in Viet Nam

We are coming up on the 50th anniversary of key moments in the American war in Viet Nam. As peace and justice activists, we believe it is crucial that the realities of the war be faced squarely. President Obama has announced his plan for a 13-year-long commemoration funded by Congress at $65 million, featuring a full panoply of Orwellian forgetfulness and faux-patriotism. On May 25, 2012, President Obama proclaimed: “As we observe the 50th anniversary of the Vietnam War, we reflect with solemn reverence upon the valor of a generation that served with honor. We pay tribute to the more than 3 million servicemen and women who left their families to serve bravely, a world away from everything they knew and everyone they loved ... fighting heroically to protect the ideals we hold dear as Americans. Through more than a decade of combat, over air, land, and sea, these proud Americans upheld the highest traditions of our Armed Forces.”. The purpose of the official proclamation -- rather than honestly looking backward so as to glean and educate about important lessons -- will be to promote an ex post facto justification of the war, lay lingering doubts to rest, and provide a stamp of approval without attending to or contending with the horrors of the war that many of us opposed.

The whole idea is a bit staggering, that this project was put into the hands of the Department of Defense (DoD) so that they can attempt – a half century later – to rewrite a tragic history which already has been distorted and manipulated by those in power in the US. The DoD is recruiting "partner" organizations from across the country to help them distort and silence much of the real history. Numerous events are scheduled over the next 12 years to “honor” our soldiers and extol the selfless sacrifices of Americans during an ugly period of our history. There will likely be little mention of the Vietnamese, and what the nation and the society of Viet Nam suffered as a result of U.S. intervention, nor of the resistance to the war by courageous and committed Americans. Almost certainly, the DoD project will not pay tribute to the voices and postwar reconciliation activities of many antiwar veterans.

Those years many of us remember, with painful acuity, as other than glorious. We feel compelled to make sure that the history of US involvement in Viet Nam is told truthfully.

Rather than let this Madison Avenue PR campaign just roll over us, we are viewing this as an opportunity to truly examine what happened during those tragic and tumultuous Viet Nam years, and use those lessons to turn American policy and shape a better future for ourselves and other nations. The US seems as committed as ever to military interventions heedless of the consequences for the invaded and occupied people or even for those called upon to invade and occupy.

We believe that an honest remembrance of what actually went on in Viet Nam is essential – to face the realities for the millions of Vietnamese civilians killed, maimed, poisoned, and traumatized; our soldiers propagandized, thrown into a ‘war of choice’; and subsequently largely abandoned to cope with postwar stress, our citizenry lied to and manipulated who came to recognize the war’s futility, if not its immorality.

It is incumbent on us not to cede the war’s memory to those who have little interest in an honest accounting and who want to justify further acts of military adventurism. The experience of the war ought to be cautionary against the fantasy of world dominance that besots many of our political and military leaders. What are the consequences of trying to control the fate of a people from afar with little understanding or interest -- except for the purposes of counterinsurgency -- in their history and culture, or their human desires? What are the consequences of dehumanized ideologies used to justify wars of aggression? To honor the Viet Nam generation and to inform current and future generations, we should make every effort to pass on a critical and honest history of the war.

As part of our counter-commemoration, we also will also pay tribute to the broad-based resistance to the war. Taking inspiration from the civil rights movement, an unprecedented opposition movement arose not just on campuses, but in the streets, in the military, and around family dinner tables. Millions of Americans resisted the war spontaneously, as well as in organizations ranging from the Student Nonviolent Coordinating Committee to the Chicano Moratorium, Women’s Strike for Peace, the War Resistors League, the Fellowship of Reconciliation, American Friend Service Committee, Students for a Democratic Society, Labor for Peace, Business Executives Move for Viet Nam Peace, and Vietnam Veterans Against the War, not to mention countless community groups. The movement made the morality of the war an issue for Americans, moving beyond the cost-benefit analysis favored by the punditocracy. The war was wrong, not just too costly; as Martin Luther King warned in his “Beyond Vietnam” speech: “the US was on the wrong side of the world revolution.”

In tandem with the civil rights, Black liberation, and women’s movements, the anti-war movement fostered a cultural and intellectual revolution which undermined Euro-centrism and traditional hierarchies while honoring the previously marginalized. Our grasp of history, culture, and human capacity was qualitatively expanded. We learned and demonstrated that history could be made by ordinary people; by people of color, by women, by the ignored and excluded.

The work around the quincentennial of Columbus’s voyages is a useful precedent. Originally designed as a celebration of Eurocentrism and empire, widespread grassroots action instead turned the quincentennial into a critique of the conquest and destruction of native peoples.

We therefore are inviting you to join us in developing a strategy for an antiwar commemoration with direct relevance for today. Here are some beginning, suggestive ideas to expose the truths of war and pose alternatives to its normalization by developing:

A central storehouse of information, a web site, and digitized archives;
Curriculum for schools and colleges;
A speaker’s bureau;
A program on the model of the Viet Nam era’s teach-ins and Winter Soldier investigations;
Our own commemorations of significant war and antiwar events.

Sign here.

SOURCE: http://warisacrime.org/content/obamas-campaign-glorify-war-vietnam

I spent 33 years being a high-class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer for capitalism. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912. I helped make Mexico and especially Tampico safe for American oil interests in 1916. I brought light to the Dominican Republic for American sugar interests in 1916. I helped make Haiti and Cuba a decent place for the National City (Bank) boys to collect revenue in. I helped in the rape of half a dozen Central American republics for the benefit of Wall Street.