The Iron Triangle: Inside the Secret World of the Carlyle Group

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http://www.fahrenheit911.com/library/book/carlyle/index.php

 

 

BRIODY'S The Iron Triangle: Inside the Secret World of the Carlyle Group

 

Meet the Carlyle Group

 

Timeline

 

Cast of Characters

 

 

 

MEET THE CARLYLE GROUP

 

A vast interlocking global network.

—Carlyle marketing material, circa 2001

 

It is hard to imagine a more concentrated display of wealth than

Manhattan's Upper East Side, where building after building reeks of

money, power, and prestige. Multimillion dollar homes share Madison

Avenue sidewalks with lavish galleries, ritzy boutiques, upscale

nannies, and purebreds. But even against this extravagant setting, the

Carlyle Hotel stands out. Its tower rises unapologetically into the

sky, lording over Central Park and dominating the skyline around it.

The blue-blood interior with lush carpeting and hushed tones perfectly

suits its high-end clientele. It is a place for those accustomed to

success and comfortable with luxury. In a city full of opulent hotels,

it is among royalty.

 

So it is altogether fitting that the Carlyle Group would assimilate

the name of this regal residence when banding together in the summer

of 1987. At the time, co-founders Stephen Norris and David Rubenstein

met often at the hotel on 76th Street and Madison Avenue. They wanted

the name of their company to sound like old money, and the Carlyle

moniker fit the bill. But little did either co-founder know, the

Carlyle Group would go on to become one of the most powerful and

successful private equity firms in the world, with over $13 billion

under management and more political connections than the White House

switchboard. In its 15 years of existence, the Carlyle Group has

become the corporate embodiment of the hotel it was named after: a

towering presence in a world of wealth, power, and politics.

 

Today, the Carlyle Group is a story of dealings inside the " Iron

Triangle, " the place where the world's mightiest military intersects

with high-powered politics and big business. It is a company whose

history includes ties to CIA cover-ups and secret arms deals, and an

astounding trail of corporate cronyism. By making defense buyouts the

cornerstone of its business strategy, Carlyle now finds itself the

beneficiary of the largest increase in defense spending in history.

Indeed the stars seem to have aligned perfectly for Carlyle, in just

15 short years. With the ascension of George W. Bush to the

presidency, the White House is now full of ex-Carlyle employees,

friends, and business partners. And with the newly fattened defense

budget, Carlyle has been able to extract massive profits from its

defense holdings, like United Defense, in the wake of the terrorist

attacks on September 11, 2001. It may be tough times for America, but

as Bette Midler might say, everything's coming up Carlyle.

 

While the company flew well under the radar screen for the first

decade of its life, lately success has not come without scrutiny for

the Carlyle Group. After all, it's hard to remain anonymous when your

employee roster includes names like George Herbert Walker Bush, James

Baker III, John Major, and Arthur Levitt. It's also difficult to avoid

those pesky accusations of corporate impropriety, conflict of

interest, and influence peddling when your chairman emeritus is former

defense secretary Frank Carlucci, a man who has courted controversy

his entire life and spent his years at Princeton University bunking

with his close friend Donald Rumsfeld, the current secretary of

defense. Even George W. Bush and Colin Powell put their time in with

the Carlyle Group. After years of doing business with everyone from

the Bushes to members of the bin Laden family, Carlyle executives have

now found their fortunes being accompanied by the cries of conspiracy.

 

Some critics charge that the company practices nothing more than

" access capitalism, " trotting out big names that bring in big money.

Some call it " The Ex-Presidents Club. " Some worry that it is

influencing domestic and foreign policy. And some, including former

Georgia congresswoman Cynthia McKinney, even implied that President

Bush allowed the events of September 11 to take place to enable him to

dictate policy that would benefit the Carlyle Group. But no matter how

deep your suspicions run, the Carlyle Group warrants close

examination. That a company like the Carlyle Group even exists is

testament to the irresistible temptation for expoliticians to cash in

on their time as public servants, in ways that to some seem less than

scrupulous.

 

* The Carlyle Group has established a number of firsts in America,

including: • It is the first time a former president has toiled on

behalf of a defense contractor.

* It is the first time that a former president advised his son,

while holding office, on foreign policy decisions that directly

impacted both of their financial fortunes.

* It is the first private-equity firm of its kind to be based in

Washington, DC, rather than the traditional haunts of New York, or

even Chicago.

* It is the first company to assemble a cast of characters that

even X-Fileswriters couldn't have dreamed up. Besides the impressive

domestic roster of political heavyweights, Fidel Ramos, former

president of the Philippines is a senior advisor. Park Tae-joon,

former prime minister of South Korea was also a senior advisor. Former

Thai Premier Anan Panyarachun also worked for the company.

 

If the thought of all of these men working together outside the

fishbowl of international politics makes you uneasy, you are not

alone. Political watchdog groups, like the Center for Public Integrity

and Judicial Watch, have long been howling over the potential for

corruption at Carlyle. The company has been investigated by the FBI,

excoriated by representatives, sued by political activists, and

embarrassed by scandal. Yet the Carlyle machine hums along, doing what

it does best: making gobs of money for investors. Watchdogs might as

well be barking at the moon, because the scandal here is not what's

illegal, but what's legal.

 

In a time when the ties between high-ranking politicians and

billion-dollar businesses has the country on edge, bracing for the

next corporate scandal, and waiting for the political shoe to drop,

the Carlyle Group has come to symbolize the extent to which many of

these relationships continue unchecked. And when accusations of

war-profiteering ring out, Carlyle is usually at the top of most

people's list of guilty parties. Coincidence and circumstance only go

so far in explaining the unbridled success of this company.

Connections, cronyism, and cunning fill in the gaps. Far more

disconcerting to the discriminating investor is the fact that Carlyle

has become the model for a new generation of investment banking in

which former politicians are brought in at high-level positions to

butter up investors, foreign heads of state, and business partners.

Why else would Los Angeles–based Metropolitan West Financial appoint

Al Gore, with zero professional investment experience, its vice

chairman? Investment banks are learning that the Carlyle model pays.

 

But it is Carlyle's particular style of investing that has raised

eyebrows. Concentrating on heavily regulated industries like defense,

telecommunications, energy, and health care, Carlyle is betting that

it can predict future trends in government spending and policy, or

influence them outright. And by hiring former secretaries of defense,

ex-presidents, the former head of the Securities and Exchange

Commission, and the former chairman of the Federal Communication

Commission, they are in a position to do either.

 

Dwight D. Eisenhower, upon leaving the office of president in 1961,

warned future generations against the dangers of a

" military-industrial complex, " and the " grave implications " of the

" conjunction of an immense military establishment and a large arms

industry. " He went on to presciently say, " In the councils of

government, we must guard against the acquisition of unwarranted

influence, whether sought or unsought, by the military industrial

complex. The potential for the disastrous rise of misplaced power

exists and will persist. We must never let the weight of this

combination endanger our liberties or democratic process. "

 

The wisdom of these comments has clearly been lost in the 40 years

since Ike left office. The first step toward turning things around is

understanding how we got here. No single company can illustrate that

progression better than the Carlyle Group, a business founded on a tax

scheme in 1987 that has grown up to be what its own marketing

literature once called " a vast interlocking global network. " The

company does business at the confluence of the war on terrorism and

corporate responsibility. It is a world that few of us can even

imagine, full of clandestine meetings, quid pro quo deals, bitter

ironies, and petty jealousies. And the cast of characters includes

some of the most famous and powerful men in the world. This is today's

America. This is the Carlyle Group.

 

TIME LINE

 

February 1975—Vinnell Corp., a construction contractor and future

Carlyle company, signs a $77 million contract to train the Saudi

Arabian National Guard. The news touches off a controversy that would

dog Vinnell, and then later Carlyle, to the present day, even after

Carlyle sold off Vinnell to TRW in the mid-1990s.

 

December 1986—Frank Carlucci is named national security advisor to

President Ronald Reagan, succeeding John Poindexter, who resigned in

disgrace following the Iran-Contra scandal. While waiting to assume

his responsibilities as national security advisor, Carlucci is briefly

embroiled in an arms scandal of his own, when the Washington

Postreports that Sears World Trade was involved in clandestine

international arms deals while Carlucci was chairman.

 

September 1987—After making millions brokering deals that exploited an

obscure tax loophole, Stephen Norris and David Rubenstein form the

Carlyle Group, named after the posh Carlyle Hotel on New York's Upper

East Side.

 

November 1987—Frank Carlucci is named secretary of defense by

President Ronald Reagan. During his short tenure, Carlucci worked

extensively on restructuring the Pentagon's procurement system, a

system he would later exploit as chairman of the Carlyle Group.

 

July 1988—BDM, soon to be a Carlyle company, is accused by rivals of

currying favor with the Navy officer in charge of procurement, Melvyn

Paisley, by hiring his wife. Paisley would go on to become the highest

profile conviction of Operation Ill Wind, the years-long investigation

into corruption at the Pentagon.

 

September 1988—Fred Malek resigns as chairman of the Republican

National Committee after reports that while a Nixon aide, he compiled

figures on the number of Jews working in the Bureau of Labor and

Statistics. He immediately signs on with Carlyle.

 

January 1989—Six days after his term as secretary of defense ended,

Frank Carlucci joins the Carlyle Group.

 

July 1989—Marriott Corp. sells its In-Flite Services catering business

to Marriott's upper management. Carlyle invests in the deal, renames

the company Caterair, and loses millions when the airline catering

business evaporates in the early 1990s.

 

February 1990—George W. Bush joins Caterair board at the behest of

Fred Malek, a good friend of his father's. Bush would later drop his

disastrous experience with Caterair from his resume when he runs for

governor of Texas in 1994.

 

September 1990—Carlyle Group buys BDM Consulting, one of the largest

and most successful defense consultancies in the world. Carlyle would

use the $130 million purchase to evaluate future buyouts in the

defense industry.

 

January 1991—After months of contentious negotiations, Carlyle snags a

board seat at Harsco, a maker of military vehicles. The seat would

eventually help Carlyle to obtain Harsco's defense business, later

known as United Defense.

 

February 1991—Prince Alwaleed of Saudi Arabia buys $590 million of

stock in Citicorp, America's largest bank. Carlyle brokers the deal

and gains a reputation as the merchant bank of choice for wealthy Saudis.

 

March 1992—BDM, a Carlyle company, buys Vinnell, a privatized military

training company that does extensive work with the Saudi Arabian

National Guard.

 

August 1992—Carlyle wins a year-long struggle over control of LTV

Corp.'s defense and aerospace division, paying $475 million in

conjunction with Loral Corp. and Northrop Corp. The deal instantly

legitimizes Carlyle as a serious player in defense buyouts.

 

September 1992—George Soros, a future Carlyle investor, brings the

British economy to its knees by speculating on the demise of the

British pound. When the value of the pound cratered on Black

Wednesday, September 16, 1992, Soros pocketed a cool billion.

 

February 1993—A month after the Bush administration cleans out its

desks at the White House, Richard Darman, the outgoing director of the

Office of Management and Budget, joins the Carlyle Group in a package

deal with James Baker III.

 

March 1993—After spending 12 straight years in the White House in

various capacities under Reagan and Bush, James Baker IIItakes his

considerable talents to the Carlyle Group, lending the firm instant

international recognition and credibility.

 

September 1993—Carlyle snags its highest profile investor to date when

George Soros invests $100 million in Carlyle Partners II, a fund that

would go on to become the biggest and most successful of all Carlyle's

funds.

 

December 1994—A Washington Postarticle exposes a secret arms deal

conducted by BDM, a Carlyle company. In the deal, BDM used the same

arms broker from the Iran-Contra scandal to arrange the transfer of

Russian military equipment to the United States.

 

January 1995—Co-founder Stephen Norris is forced out of the company,

accused by his colleagues of erratic behavior and fiscal

irresponsibility. Norris faults his former colleagues for waging a

smear campaign against him, spreading rumors and undermining his

credibility to the financial community.

 

March 1995—University of Texas Investment Management Company, UTIMCO,

weeks after George W. Bush became governor of Texas, places a $10

million investment into the Carlyle Group, which up until 1994,

employed the young Bush.

 

September 1995—Onex Food Services buys Caterair from Carlyle for $500

million, nearly $150 million less than Carlyle had originally paid for

the company.

 

November 1995—A car bomb attack on Americans living in Saudi Arabia

puts a spotlight on Vinnell, BDM, and the presence of the Carlyle

Group in Saudi Arabia. Three spouses of BDM workers are injured in the

attack.

 

September 1996—Carlyle closes Carlyle Partners II at a total of $1.33

billion, more than twice its original target for the fund, and 13

times as much as the company had ever raised for a single fund. The

defense-oriented fund would go on to produce returns of better than 35

percent.

 

September 1997—Carlyle buys United Defense for $850 million, one of

the company's largest buyouts ever. United Defense has plans to build

the Army a 60-ton mobile howitzer called Crusader.

 

March 1998—John Major, former prime minister of the United Kingdom,

joins Carlyle as European advisor. He would later become chairman of

Carlyle Europe in May 2001.

 

April 1998—Carlyle closes another $1.1 billion fund, called Carlyle

European Capital Partners, at double its initial target. The company

was able to raise the money in just under a year.

 

May 1999—Former President George Herbert Walker Bush visits South

Korea on behalf of Carlyle, cultivating business and political ties

that result in Carlyle's investing more than $1 billion in South

Korea's struggling economy.

 

July 1999—Former Connecticut State Treasurer Paul Silvester is forced

to resign his new position at Park Strategies after the FBI begins an

investigation into a series of investments he made with Connecticut

State Pension funds before he left office. Among the investments is a

$50 million placement with Carlyle Asia.

 

September 1999—Silvester pleads guilty to corruption. Court documents

are sealed, and the identities of the private equity firms involved

are kept secret by the state, awaiting Silvester's sentencing, which

is ongoing.

 

January 2001—SBC Communications, a Carlyle client, wins FCC approval

to offer long-distance phone service in Texas, Oklahoma, and Kansas,

after the Justice Department had rejected the company's request. The

approval is given on the last day of FCC Chairman William Kennard's

tenure. Three months later, Kennard is given a job at Carlyle.

 

February 2001—George W. Bush, a month into his presidency, reverses

America's policy of diplomacy toward North Korea, angering North and

South Koreans alike, and threatening Carlyle's extensive investments

in the region.

 

June 2001—Former President George H. W. Bush urges his son to

reconsider his stance on North Korea, reminding him, among other

things, of the U.S. business interests in the Korean peninsula. George

W. Bush subsequently reverses his policy toward North Korea.

 

July 2001—Former President George H. W. Bush personally calls Crown

Prince Abdullah of Saudi Arabia, reassuring the heir to Saudi Arabia

that his son is " going to do the right thing " and " his heart is in the

right place. " The call is in response to George W. Bush upsetting the

Saudi prince with his policy toward the Israeli-Palestinian conflict.

It also helps protect Carlyle's extensive business in the region.

 

September 11, 2001—America sustains a highly organized attack by

terrorists, leveling the World Trade Center towers, and ripping a gash

in the Pentagon building. The attacks would lead to a massive increase

in defense spending. A week after the attacks, Anthraxlaced letters

are found throughout the East Coast, leading to heightened fears, and

unexpected new contracts for Carlyle companies.

 

October 2001—Carlyle is forced to liquidate its holdings from the bin

Laden family as news reports of the company's association with

terrorist Osama bin Laden's estranged family overwhelm the press.

 

December 2001—Carlyle takes United Defense public after newly approved

defense spending temporarily secures the Crusader's future. The

company earns $237 million in one day on the sale of shares, and on

paper made more than $800 million.

 

April 2002—Cynthia McKinney, a Democratic congresswoman from Georgia

calls for an investigation into the September 11 attacks, pointing out

the President's extensive ties with the Carlyle Group, a company that

stands to make millions from the aftermath of September 11.

 

May 2002—The Army is forced to investigate whether its own officials

illegally lobbied Congress in support of the Crusader in the face of

the program's cancellation.

 

August 2002—United Defense issues an official press release announcing

the cancellation of the Crusader program. The same press release

announces the awarding of a new contract for United Defense to build

another gun for the Army, effectively replacing Crusader.

 

November 2002—Lou Gerstner, the man who engineered IBM's stunning

turnaround during the 1990s, is hired as Carlyle's chairman. The move

is characterized by many in the media to change Carlyle's image from a

defense oriented buyout firm to a more traditional private equity

company. Frank Carlucci stays on as Chairman Emeritus.

 

CAST OF CHARACTERS (in Order of Appearance)

 

Stephen Norris—co-founder Carlyle Group.

Norris was the driving force behind the creation of the company. A

mercurial executive, bent on hunting down big deals, Norris ultimately

would be forced out of the firm by his fellow co-founders in an

acrimonious conflict.

 

David Rubentstein—co-founder Carlyle Group.

Still the brains of the operation, Rubenstein is widely considered one

of the most intelligent men in Washington, DC. His IQ is surpassed

only by his tireless work ethic and extensive Rolodex. He is what

holds Carlyle together.

 

Dan D'Aniello—co-founder Carlyle Group.

A former colleague of Norris at Marriott, D'Aniello was brought on

board only after Norris personally guaranteed his salary. He is among

the more enigmatic, behind-the-scenes members of Carlyle, often

serving as a buffer between the more explosive executives.

 

William Conway—co-founder Carlyle Group.

The son of a quality control guru and former chief financial officer

at MCI, Conway is reputed to be one of the finest financiers in the

world. His conservative style and waste-not approach would eventually

clash with Norris's larger-than-life personality, resulting in Norris

being sent packing.

 

Frederic Malek—former Carlyle consultant.

This former Nixon aide and close friend of George Bush Sr. ran to

Carlyle after a furor erupted in Washington over his involvement in

the documented anti-Semitic actions of former President Nixon. He

would go on to introduce Carlyle to some big names in Washington, but

would later be excommunicated from the firm.

 

William Barr—former Attorney General.

A one-time law partner of David Rubenstein's, Barr would help Carlyle,

along with Rubenstein, funnel millions of dollars through a temporary

tax loophole known as the Great Eskimo Tax Scam, taking Carlyle into

the Big Leagues.

 

Arthur Miltenberger—then chief investment officer of the Mellon

Foundation.

As an original investor in Carlyle Group, Miltenberger was among the

first to see the potential of an investment bank based in Washington,

DC. His early contributions would get Carlyle on its feet.

 

J. W. Marriott—chairman of Marriott Corp.

The hotel magnate was once the boss of Steve Norris, Fred Malek, and

Dan D'Aniello. The influence of Marriott on Carlyle was a pervasive

force, and his former employees still utter his name with the highest

respect.

 

Dan Altobello—former chairman of Caterair.

Yet another former Marriott employee, Altobello had the dubious honor

of presiding over one of Carlyle's worst investments ever in Caterair.

Like many others, he would clash badly with Norris, and later sell off

Caterair at a loss.

 

George W. Bush—president of the United States of America.

An early hire of Carlyle, Bush was placed on the board of Caterair in

1990 and served for four years, before leaving to run for governor of

Texas. His early stint with Carlyle would become a source of

controversy later during his presidency.

 

Frank Carlucci—chairman 1989–2002, currently chairman emeritus of

Carlyle Group.

A lifelong public servant, former secretary of defense, former deputy

director of the CIA, and more, Frank Carlucci would lead Carlyle into

the murky world of defense buyouts in the late 1980s and early 1990s.

It is Carlucci's close friendship with Secretary of Defense Donald

Rumsfeld that the press most often seizes on when criticizing Carlyle.

 

Patrice Lumumba—former president of Zaire.

Assassinated after only two months in power, Lumumba would later

become the subject of the film Lumumba, directed by Raoul Peck. In the

film, there was originally a scene showing Frank Carlucci plotting the

murder of the erstwhile leader. The scene was edited at Carlucci's

request before the film's release.

 

Mobuto Sese Seko—former president of Zaire.

Chosen by Americans to succeed Lumumba, Sese Seko led Zaire into

decades of famine and war. He remains part of Carlucci's legacy from

his time as second secretary to the U.S. Embassy in Zaire.

 

Raoul Peck—filmmaker.

It was Peck's accounting of the murder of Patrice Lumumba that caused

an uproar from Frank Carlucci. At Carlucci's request, Peck edited the

scene that showed Carlucci plotting the assassination, but Peck stands

by the film's veracity.

 

Donald Rumsfeld—secretary of defense.

A former college roommate and wrestling teammate of Frank Carlucci,

Rumsfeld and Carlucci are never far apart. The two followed each other

through the executive ranks of government, worked for Sears Roebuck

together, and remain very close friends to this day.

 

Caspar Weinberger—former secretary of defense.

As one of Carlucci's many mentors, Cap Weinberger helped legitimize

Carlucci, grooming him to one day become secretary of defense.

 

Roderick Hills—former CEO of Sears World Trade.

As the CEO of Sears World Trade, Hills fought off allegations of the

company being a front for CIA activity and eventually resigned amidst

huge financial losses, leaving Carlucci to succeed him.

 

Earle Williams—former CEO of BDM.

In leading BDM, a highly successful defense consultancy, Earle

Williams curried favor with countless Washington, DC insiders, among

them Frank Carlucci. Carlyle would go on to buy BDM and make a killing.

 

Melvyn Paisley—former Naval officer.

When in the Navy, Paisley was in charge of awarding Navy contracts, a

task he did while accepting kickbacks from defense contractors. He

would go on to work for BDM, then get convicted after pleading guilty

in the Ill Wind investigation into corruption in the Pentagon.

 

Vicki Paisley—Melvyn's wife.

Also an employee at BDM, Vicki was thought to be the reason that Earle

Williams received a highly coveted appointment to the Naval Advisory

Board.

 

Phil Odeen—chairman of TRW.

Williams' successor as BDM CEO, Odeen would grow the company into a

highly successful and diversified consultancy. He was also CEO when

BDM employees were targeted in a vicious car bombing in Saudi Arabia.

 

M. W. Gambill—former CEO of defense contractor Harsco.

The CEO of one of Carlyle's early takeover targets, Gambill would

fight the fledgling buyout firm for control of Harsco, eventually

conceding only a seat on the company's board.

 

Norman Augustine—former CEO of defense contractor Martin Marietta.

Augustine would go toe-to-toe with Carlyle over the heavily disputed

takeover of LTV, an aerospace company spun out of Ford. After a

protracted battle, Augustine and Martin Marietta would eventually lose

out to Carlyle.

 

Prince Alwaleed bin Talal—Saudi Arabian prince.

A billionaire international investor, the Prince played a central role

in raising Carlyle's name recognition, both at home and in Saudi

Arabia. The Prince would go on to become close friends with Steve

Norris, and make enormous investments in American companies.

 

King Fahd—king of Saudi Arabia.

As the leader of Saudi Arabia, King Fahd hired Carlyle companies to

protect him and his family, as well as to manage the Saudi Economic

Offset Program, a government-run program that brings foreign

investment into Saudi Arabia.

 

Faissel Fahad—San Francisco lawyer.

This friend of Prince Alwaleed was responsible for making the key

connection between Carlyle and the Prince, which led to the $590

million investment in Citicorp.

 

Prince Sultan bin Abdulaziz—Saudi Arabian defense minister.

According to a financial advisor to Prince Alwaleed, Prince Sultan bin

Abdulaziz used Prince Alwaleed bin Talal as a front to invest money on

his behalf, among others, in U.S. companies, like Citicorp. Prince

Alwaleed denies the allegation.

 

Henry Jackson—former U.S. senator.

Jackson saw early on the perils of letting private companies contract

with foreign governments on military missions. His investigation into

Vinnell's deal with Saudi Arabia revealed a contract fraught with

controversy.

 

Richard Secord—retired Air Force general.

An ex-employee of Vinnell, but better known as one of the IranContra

fall guys, Secord drew unwanted attention to Vinnell when he was

implicated in trading arms for hostages.

 

James Baker III—Carlyle managing director, senior counselor.

The former secretary of state under President George Bush Sr. led five

different Republican presidential campaigns, and spent 12 straight

years in the White House during the Reagan and Bush administrations.

He took a position with Carlyle in 1993, and would later lead George

W. Bush's successful battle for the presidency during the Florida

recounts.

 

Richard Darman—Carlyle executive.

The former director of the Office of Management and Budget under Bush

Sr., Darman wrangled his way into a position at Carlyle by including

himself in a package deal with Baker.

 

Colin Powell—secretary of state.

A former Carlyle advisor, Powell's role in Carlyle's history is a bit

of a mystery. Most believe that he merely advised the company while he

was not in public office. One of his early mentors was Frank Carlucci,

and the two remain close.

 

Michael Eisner—chairman of Walt Disney.

Eisner was involved with a deal between Prince Alwaleed and Euro

Disney, in which Norris negotiated a huge investment from the Prince.

Eisner was among the many that found Norris undisciplined.

 

Antonio Guizzetti—Italian business man.

After meeting Steve Norris in a sauna at a Washington area gym,

Guizzetti led Norris and Baker on a wild tour of Italy in search of

the perfect investment. Ultimately, the investment they had targeted

fell apart when Norris resigned in the middle of negotiations.

 

Basil Al Rahim—former Carlyle employee.

In charge of raising capital in Middle East during the early 1990s, Al

Rahim was the man who introduced Carlyle to members of the bin Laden

family, a relationship that would later cause both parties discomfort.

 

George Soros—Carlyle investor.

This internationally respected investor and speculator helped

legitimize Carlyle when he committed $100 million to the Carlyle

Partners II fund. The sizeable investment was accompanied by Soros'

public endorsement of Carlyle.

 

John Major—chairman Carlyle Europe.

The former prime minister of the United Kingdom, Major came on board

with Carlyle during a fevered spate of highly political hirings by the

company. Since then he has spent time stumping for Carlyle throughout

the world.

 

Paul Silvester—former Connecticut state treasurer.

Silvester is awaiting sentencing after pleading guilty to corruption

charges while working as the state treasurer of Connecticut. In his

final two months in office, after losing reelection, Silvester

invested $800 million of the state's pension fund in several private

equity firms for which he received kickbacks. One of the firms he

invested in was Carlyle, which was investigated, but no charges were

brought.

 

Wayne Berman—president of Park Strategies.

A consummate Washington insider, Berman is a major financial backer of

George W. Bush, as well as the president of Park Strategies, the

company that hired Silvester after he invested Connecticut's pension

funds through his firm.

 

Denise Nappier—Connecticut state treasurer.

Stepping into the mess that Silvester left behind, Nappier required

that all firms doing business with the Connecticut state pension fund

disclose their finder's fee arrangements. After initially holding out,

Carlyle disclosed a $1 million fee to Wayne Berman.

 

Thomas Hicks—founder of Hicks, Muse, Tate & Furst.

This Texas billionaire and George W. Bush backer was responsible for

taking the University of Texas' asset management private and investing

the school's money with various Republican-friendly firms, including

Carlyle.

 

William Kennard—Carlyle managing director.

The former chairman of the Federal Communications Commission (FCC),

Kennard approved a highly questionable bid by SBC Communications, a

Carlyle client, to enter into long-distance markets days before he

left office. Two months later, he landed a job with Carlyle.

 

Frank Yeary—Carlyle managing director.

A former investment banker at Salomon Smith Barney, Yeary used his

extensive connections at SBC to get Carlyle business there.

 

Arthur Levitt—Carlyle senior advisor.

The former chairman of the Securities and Exchange Commission (SEC)

was known for his policy that protected the individual investor and

railed against corporate malfeasance. The irony of his current

position with Carlyle is less than subtle.

 

George Herbert Walker Bush—Carlyle advisor.

The former president of the United States of America has been the

source of the majority of Carlyle's controversy. His visits with world

business leaders everywhere from Saudi Arabia to South Korea and his

repeated influence on American foreign policy make him an easy target

for public advocacy groups, who accuse him of influence peddling and

damaging conflicts of interest.

 

Park Tae-joon—Carlyle advisor.

This former prime minister of South Korea was instrumental in securing

Carlyle's extensive business interests in the Korean Peninsula.

 

Michael Kim—Carlyle managing director.

The son-in-law of Park Tae-joon, Kim runs Carlyle's Korean operations,

and spearheaded the successful buyout of one of Korea's few healthy

banks, KorAm.

 

Crown Prince Abdullah—heir to the Saudi Arabian throne.

Upset with George W. Bush's pro-Israel policy, Prince Abdullah

received a phone call from the president's father, George H. W. Bush,

reassuring him that his son was okay, and that George W.'s " heart is

in the right place. "

 

Tom Fitton—president of Judicial Watch.

A died-in-the-wool Clinton hater, Fitton caused a stir in Washington

when he came out publicly against George H. W. Bush's involvement with

the Carlyle Group. His efforts to obtain documents from the federal

government have produced some of the most tangible evidence of

Carlyle's influence yet.

 

General Shinseki—U.S. Army chief of staff.

In favor of a more mobile and agile army, General Shinseki originally

presented the argument that would ultimately kill United Defense's

Crusader, a 42-ton howitzer on wheels.

 

Andrew Krepinevich—executive director of the Center for Strategic and

Budgetary Assessments.

As a member of the Congressionally appointed 1997 National Defense

Panel which analyzed military spending, Krepinevich came out against

the further development of Crusader, citing the gun's weight and

obsolescence as his reasons.

 

Milo Djukanovic—president of Montenegro.

In searching for support to pursue independence for his country,

Djukanovic lobbied the American government to no avail. But he found

an ally in Frank Carlucci, who met with Djukanovic and then lobbied

his former understudy, Colin Powell, to consider Djkanovic's requests.

 

Frank Finelli—Carlyle employee.

A retired Army colonel, Finelli is perhaps the most mysterious of all

Carlyle's employees. He was instrumental in working with lawmakers to

push through incremental approvals of the Crusader program. He has

been characterized as a " behind the scenes " type that " works in the dark. "

 

Shafiq bin Laden—estranged half-brother of Osama bin Laden.

Shafiq is the representative to Carlyle for his family's investments

with the company, and as such, was at the Carlyle annual investor

conference in Washington, DC, on September 11, 2001.

 

Cynthia McKinney—former democratic representative from Georgia.

McKinney was an outspoken critic of Carlyle and was openly ridiculed

for voicing her concerns that people close to the George W. Bush

administration stood to gain financially from the ongoing war on

terrorism.

 

Chris Ullman—Carlyle spokesperson.

Hired only after the ironies of Carlyle's bin Laden ties were

discovered afterSeptember 11. Ullman has been a busy man, trying to

hold back a barrage of negative criticism.

 

Paul Wolfowitz—deputy secretary of defense.

Recently profiled by the media as the man behind Bush's war fetish,

Wolfowitz is also reported to be the man that killed the Crusader, not

Rumsfeld. Regardless, United Defense felt no pain from the

cancellation of the program when the company was awarded another

contract to build a different gun the very same day.

 

Louis V. Gerstner Jr.—chairman of Carlyle, former IBM chief executive.

At IBM, Gerstner earned a reputation as a driven executive, directing

Big Blue through an unforgettable turnaround, restoring the company's

reputation as a global behemoth. It is anticipated that he will only

spend 20 percent of his time on Carlyle, advising on two funds and

mentoring senior managers.