Corporate influence / THE CORPORATE STATE
On 12 March 2002, Frank Carlucci, the former US Secretary of Defense and chair of the Carlyle Group, presided over a closed-door conference of US and Taiwanese defence officials. At Carlucci's invitation, Taiwan's Defence Minister Tang Yao-Ming flew in from Taipei and met with Deputy US Defense Secretary Paul Wolfowitz, the Bush administration's leading hawk and a man with close ties with conservative leaders in Asia.
The meeting turned out to be the highest-level defence contact between the United States and Taiwan since diplomatic relations were severed in 1979. It provided the Bush administration with an opening to pursue its policies of expanding arms sales to Taiwan outside the glare of the media. Wolfowitz promised to do 'whatever it takes' to strengthen Taiwan's military capabilities against China - a policy of great interest to Carlyle and its largest defence subsidiary, United Defense Industries, which was one of 12 military contractors to sponsor the conference.
This incident illustrates the extraordinary reach of the Carlyle Group and the man at its helm. Carlucci came to Carlyle in 1987 after a long career in the top ranks of the US national security establishment, including stints as deputy director of the Central Intelligence Agency and National Security Advisor to former President Reagan. During the 1980s, he ran Sears World Trade, a company that became deeply involved in shady arms deals and commodity imports before going bankrupt.
Under Carlucci's leadership, Carlyle has become one of the world's largest private equity funds, with over $13 billion worth of investments in defence, manufacturing, telecommunications, healthcare and finance.
As the eleventh largest US defence contractor, Carlyle is involved in nearly every aspect of military production, including making the big guns used on US naval destroyers, the Bradley Fighting Vehicle used by US forces during the Gulf War and parts used in most commercial and military aircraft. United Defense has joint ventures in Saudi Arabia and Turkey, two of the United States' closest military allies in the Middle East.
Through their unbeatable high-level connections, Carlyle has direct lines to government leaders in Asia, the Middle East and Europe. And, not least, to George W Bush who once served as an executive with Caterair, one of hundreds of companies Carlyle has bought and sold over the past 15 years. In an unprecedented twist on the Washington influence game, through Bush Senior's ties to Carlyle and United Defense, President George W Bush's family is making untold sums from the war he is directing against terrorism. This fact is underscored by Carlyle's decision after the opening salvoes of the war to go public with two of its defence companies, including United Defense.
'We've never in the history of the republic had a former US president working for arms manufacturers,' says Charles Lewis, the executive director of the Center for Public Integrity, a Washington-based research group that investigates the influence of money and politics. 'What is most offensive to me is that we have a former president of the United States with a substantial pension from US taxpayers, and we cannot find out what he is doing for the eleventh largest defence contractor.'
Since 1987 Carlyle has invested $6.4 billion in 233 transactions, with a rate of return of 36 per cent on its completed investments. It invests on behalf of 435 pension funds, banks and investment funds, 40 per cent of which are based overseas. During a recent (and rare) public briefing on its investment strategies, one of Carlyle's senior managers disclosed that the Group has $7 billion in cash ready to invest. That's not chump change: $7 billion is the minimum amount the world community should invest every year to fight aids and hiv, UN Secretary-General Kofi Annan said last year.
The extraordinary connections with former high-level statesmen has given Carlyle a great deal of expertise on tap. Bush Senior, who was CIA director and US ambassador to China and the UN before becoming president, is the senior adviser on Asia and makes his money by giving speeches at Carlyle's investment conferences (Carlyle won't disclose where he makes those speeches or how much he earns). Baker, who also served as Treasury Secretary during the Reagan administration and defended George W during the disputed 2000 election with Al Gore, is Carlyle's senior counsellor and a member of the firm's Asia, Europe and Japan advisory boards. Since last spring, John Major has been chair of Carlyle Europe and heads meetings of its European advisory board.
Other recent hires include Arthur Levitt, the former chair of the Securities and Exchange Commission (SEC), which regulates the US stock market; William E Kennard, the former chair of the Federal Communications Commission, which has jurisdiction over the US telecom and wireless industries; and Afsaneh Beschloss, the former chief investment officer of the World Bank, who runs Carlyle's new asset management group. Carlyle's advisory boards are peppered with corporate executives from Boeing, BMW, Toshiba and other big transnationals, and influential characters like former Bundesbank President Karl Otto Pohl, former Thai Prime Minister Anand Panyarachun, former Philippines President Fidel Ramos and former US Ambassador to Japan and former Speaker of the House Thomas Foley.
The Saudi connection
But few took notice until shortly after September 11, when the Wall Street Journal revealed that the bin Laden family, which owns a major construction company in Saudi Arabia, had committed at least $2 million to one of Carlyle's funds and entertained Bush Senior, Baker and Carlucci at their family compound in Jeddah during the 1990s. Carlyle, deeply embarrassed, quickly severed the investment ties. But a few months ago, The Washington Post revealed that the bin Laden money had been solicited by members of the Saudi royal family, who encouraged wealthy Saudi citizens to invest in Carlyle as a sign of respect for Bush Senior and Baker, their heroes from the Gulf War.
Judicial Watch, a conservative US legal group, seized on the bin Laden connection to launch a vitriolic attack, urging Bush Senior to resign from Carlyle. Charles Lewis of the Center for Public Integrity believes the bin Laden connection may be the tip of the iceberg of Carlyle's political relationships. 'I actually think this is a potentially more serious scandal for the Bush administration than Enron, because it's more personal,' he said.
Carlyle only tells the public what it wants. That makes information about Bush Senior's meetings with heads of state and his other activities on Carlyle's behalf almost impossible to obtain.
In April, Cynthia McKinney, an outspoken Democrat Representative from Georgia, became the first public figure to criticize the relationship between the Bush family and the Carlyle Group. In a radio interview, McKinney accused the Bush administration of 'serving the interests' of Carlyle and said that 'persons close to this administration are poised to make huge profits off America's new war'. For that, she was vilified by her fellow lawmakers and the White House, which said through a spokesperson that: 'The American people know the facts, and they dismiss such ludicrous, baseless views. The fact that she questions the President's legitimacy shows a partisan mind-set beyond all reason.'
Apparently it is out of bounds in American politics to question the ethics of a former president who makes money from policies pursued by his son in the White House. But without more voices like McKinney's, the public is likely to remain in the dark about the global reach of the Carlyle Group, which combines the public and private interest in a form rarely seen in Washington.
© Copyright 2002 New Internationalist
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