The Carlyle Group

"We are greatly assisted by [James] Baker and [George H.W.] Bush. It shows that we are associated with people of the highest ethical standards."
- Daniel A. D'Aniello, Carlyle Group managing director

The Carlyle Group, run by Ronald Reagan's defense secretary Frank Carlucci, is one of the world's largest private equity firms. It specializes in buying and selling companies in the defense, energy and communications industries, which are heavily affected by government regulation. It raises money from large pension funds, banks and other financial institutions, as well as wealthy individuals and families, including the Mellon Trust, George Soros and the royal House of Saud. In 2000 it had ownership stakes in 164 companies generating $16 billion in revenue. Its holdings rank it as at least the 11th largest US defense contractor.

The Carlyle Group hires or works with many former government officials who were once responsible for regulating industries it has a stake in. Some of these include:

• George Bush, former US president
• James Baker, Bush's secretary of state
• John Major, former British prime minister
• Fidel Ramos, former Philippines president
• Park Tae Joon, former South Korean prime minister
• Richard Darman, Bush's OMB director
• Afsaneh Masheyekhi Beschloss, former treasurer and chief investment officer of the World Bank
• Arthur Levitt, former SEC chairman
• Hareb Masood Al-Darmaki, executive director of the Abu Dhabi Investment Authority
• William Long, Reagan's deputy undersecretary of defense for acquisition management
• Michael Orloff, former general director of the World Health Organization
• Jerome Powell, Bush's assistant secretary of the treasury for domestic finance and undersecretary of finance
• Fred Malek, Bush's campaign manager and Richard Nixon's "Jew counter"

• Bush headed Carlyle's entry into South Korea, meeting with the prime minister and business leaders and helping it win a competition for control of KorAm, one of its few healthy banks.
• Bush and Baker, who before, during and after the Gulf War developed extensive ties with the royal House of Saud and many of Saudi Arabia's wealthiest families, have used these contacts to attract investments and make purchases. In January 2000 both were instrumental in helping Carlyle acquire a significant stake in the Saudi phone system.
• In February, 2001 Carlucci met with secretary of defense Donald Rumsfeld (his former college classmate) and Vice President Dick Cheney to discuss military affairs. Although he denies doing any lobbying, which would be illegal, he does not say that he is not privy to information which would help him make better investment decisions. Since it is likely that members of the second Bush administration will take jobs with Carlyle down the road, it would behoove them to help it stay profitable now. (It's illegal for Carlyle to ask for a favor. But who says they have to ask?)
• In 1995, shortly after George W. Bush took office as Texas governor and quit his job as a corporate director of a Carlyle-owned company, the University of Texas Board of Regents voted to invest $10 million with the Carlyle Group. In November 2000, the Texas teachers' pension fund (with a board appointed by Bush) invested $100 million.

Right and left-wingers suspicious of government have raised serious eyebrows over connections between the Carlyle Group and the second Bush administration, especially in the context of the war in Afghanistan. Clinton nemesis Judicial Watch, while criticizing Bush the elder's contacts with the bin Laden family, urged the current President Bush to "not ask, but demand, that his father pull out of the Carlyle Group."(Carlyle announced that it will probably suspend dealings with the bin Ladens, but that Bush will stay on board.) Many others have noted that Afghanistan and Pakistan are critical areas for oil exploration, or at least pipeline construction, in which Carlyle has an interest.