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Republican-controlled Carlyle Group

Republican-controlled Carlyle Group poses serious Ethical Questions for Bush Presidents, but Baltimore Sun ignores it

by Alice Cherbonnier

AN IMPORTANT TENET of journalism is that you should always ask, “Who benefits?”

In the case of a war, the answers to this question become of paramount importance. Suppose, for example, that profits from military contracting were to go in the pockets of a former U.S. President whose son (and a presumed future heir) is now President? Suppose further that such profits escalate in times of conflict. Wouldn’t this be of concern to the public? Wouldn’t you expect the media to be all over such an important ethical (not to mention moral, and maybe legal) angle?

Though described by the Industry Standard as “the world’s largest private equity firm,” with over $12 billion under management, chances are readers haven’t ever heard of The Carlyle Group. Isn’t that a little odd, considering it is run by a veritable who's who of former Republican political leaders. Former Defense Secretary Frank Carlucci is Carlyle’s chairman and managing director (who, by the way, was college roommate of the current Defense Secretary, Donald Rumsfeld). And that partners in this mammoth venture include former U.S. Secretary of State James A. Baker III, George Soros, Fred Malek (George H.W. Bush’s campaign manager, forced to resign when it was revealed he was Nixon’s “Jew counter”), and—presumably—George H.W. Bush?

We say “presumably” because the privately-held Carlyle doesn’t have to reveal information about its partners or investments to the SEC or to anyone else. Our former President is reported to be active in seeking investments for the Carlyle Group from the Asian market, and word is he’s paid between $80,000 to $100,000 per presentation.

All told, Carlyle has about 420 partners all over the globe, from Saudi princes to the former president of the Philippines. Its investments run heavily in the defense sector; they make money from military conflicts and weapons spending. But who in Baltimore knows about it?

A search of the Baltimore Sun’s website reveals no mentions whatsoever of The Carlyle Group, though it’s been around since 1988 and has been involved in numerous buy-outs and buy-ins, sometimes with SEC-regulated companies that have to report these things. Contrast this news blackout with the Washington Post’s 378 mentions, and the New York Times’ 332 hits. Even the Philadelphia Inquirer weighed in with 15 mentions.

Not only have some newspapers and magazines brought The Carlyle Group out of the shadows it prefers, but this enterprise has attracted the attention of The Center for Public Integrity and Judicial Watch, both of which have concerns about the ethical propriety of having high-placed former government officials—trained at taxpayer expense, too—out there reaping over 20% to 40% a year by working their connections. You have to wonder if these former public servants are just simply greedy, or if they’re telling themselves they’re true patriots by doing behind-the-scenes cloak-and-dagger stuff.

This is a big story. We were wondering if, in the wake of current events, we were the only newspaper that was asking that question, “Who benefits?” And then we found that the Wall Street Journal was asking the right questions, too, and we were vastly relieved not to be left hanging out to dry. On Sept. 27, the WSJ published a “Special Report: Aftermath of Terror” with the headline “Bin Laden Family Could Profit From a Jump In Defense Spending Due to Ties to U.S. Bank.” The “bank” is actually The Carlyle Group (and by the way, we peons can’t invest in it, and it sure isn’t taking deposits from the general public). The lead sentence reads: “If the U.S. boosts defense spending in its quest to stop Osama bin Laden’s alleged terrorist activities, there may be one unexpected beneficiary: Mr. bin Laden’s family.” And, though the WSJ curiously did not mention this, another beneficiary may be George H.W. Bush’s family.

Check for Greg Palast's article on The Carlyle Group, which is still in progress as of 10/11/01.

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This story was published on October 3, 2001.
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