The Power Of Nightmares:The Making Of The Terror Myth


(War) Profiteers

Each of the following links leads to further reports on the related issue

For additional information see also the section"Lies vs. Facts
" and "New World Order"in the Main Navigation
__________________
 

The Politics Of Fear

__________________

News & Comments

__________________
 

New York 9/11 -- A New Pearl Harbor

__________________

Madrid 3/11 -- An Election Tool?

__________________
 

London 7/7 -- A Staged Attack?

__________________
 

Cui Bono? - Who Benefits? Who Might Be Guilty?

__________________

Osama Bin Laden & Al Qaeda

__________________

The Neocon Movement

__________________
 

The Zionist Movement

__________________

The Right-Wing Christian Movement

__________________

Think Tanks

__________________

Organizations Of Influence

__________________
 

The Zionist's Israeli Administration

__________________

In The Name Of The Crown? -- The "Puppet" Tony Blair

__________________

The Bush Administration

_______________
(War) Profiteers

When Peace Is The Enemy

Criminality From The Ground Up On 9/11/2007

VIDEO - Why We Fight

Investing in War: The Carlyle Group profits from government and conflict

VIDEO The Iron Triangle: The Carlyle Group Exposed

Halliburton and Iran

Halliburton: Contract Sport

_______________
see also

VIDEO: Iraq's Missing Billions


Related Links:

September 11 News: Osama bin Laden Speeches

American Rhetoric: Rhetoric of 9-11

Americans Against Bombing - Americans Against World Empire, Inc

APFN American Patriot Friends Network

If Americans knew

Muslim- Jewish- Christian Alliance for 9/11 Truth (MUCJA-NET)

The Center for Public Integrity

The OMNI Center for Peace, Justice & Ecology: U.S. IMPERIALISM

TheUnjustMedia.Com

Very Pissed Off Combat Veterans -- And Blueprints For Change By John McCarthy

9/11 - 3/11 - 7/7 -- Cui Bono? Who Benefits?
- (War) Profiteers -

Home | John McCarthy | CIA | Treason in Wartime | 1941-2001 | Science vs Religion | Reality Or Hoax? | Israel & ME | 9/11 - 3/11 - 7/7 -- Cui Bono? | New World Order | Lies vs Facts | War on Terror - Terrorism of War | Patriotism vs Humanity | War Crimes - Committed 'In All Our Names' | Enviroment & Lobbyism | FOIA & Whistleblowers vs Cover-Ups | Recruiting Lies vs Military Reality | From Democracy to Dictatorship | Empire Agenda | Media Coverage | International (War)Crimes Tribunals | Take Action! - Take Back America! | Summaries & Previews | Index Part 1 | Index Part 2 | Multimedia Index
Outsourcing the Pentagon:
 
Investing in War
The Carlyle Group profits from government and conflict
 

By M. Asif Ismail

The Carlyle Group has employed some of the most powerful figures in Washington, including former Secretary of State James Baker, former President George H.W. Bush, former Secretary of Defense Frank Carlucci and former FCC Chairman William Kennard.
 
WASHINGTON, November 18, 2004 — The Carlyle Group, a Washington, D.C.-based private equity firm that employs numerous former high-ranking government officials with ties to both political parties, was the ninth largest Pentagon contractor between 1998 and 2003, an ongoing Center for Public Integrity investigation into Department of Defense contracts found.

A dozen companies in which Carlyle had a controlling interest netted more than $9.3 billion in contracts.

Overall, six private investment firms, including Carlyle, received nearly $14 billion in Pentagon deals between 1998 and 2003. (See related report, "The Sincerest Form of Flattery.")

From its founding in 1987, the Carlyle Group has pioneered investing in the defense and national security markets, and through its takeover of companies with billions of dollars in defense contracts became one of the U.S. military's top vendors, ranking among better known defense firms like Lockheed Martin, Boeing Co., Raytheon Co., Northrop Grumman and General Dynamics.

Unlike those firms, however, the Carlyle Group itself is not a manufacturer. It offers no services directly to the Pentagon, and has no defense contracts. Rather, it manages investments—some $18.4 billion from 600 individuals and entities in 55 countries, according to its Web site. The firm's business is making money for these investors, the vast majority of whose identities are not disclosed to the Securities and Exchange Commission or other government bodies.

Though Carlyle itself has won no contracts, the companies it has owned or controlled have done billions of dollars worth of business with the Pentagon. The Carlyle unit that brought in the largest share—$5.8 billion—was United Defense Inc., which manufactures combat vehicles, artillery, naval guns, missile launchers and precision munitions. United Defense also owns the country's largest non-nuclear ship repair, modernization, overhaul and conversion company, United States Marine Repair Inc. Its most famous product may well be the Bradley fighting vehicle. United Defense brought in more than 60 percent of Carlyle's defense business.

Carlyle took United Defense public in 2001; by April 2004 it had sold all its shares in the company.

Lear Siegler Services, a leading contractor in aircraft logistics support, maintenance, pilot training and ground support, received contracts worth more than $1 billion. Carlyle sold the company in August 2002.

Southwest Marine Inc. also received contracts worth more than $1 billion since 1998, and Norfolk Shipbuilding & Drydock received contracts worth $827 million. In 1998, Carlyle merged these two companies into United States Marine Repair.

Vought Aircraft Industries, a large subcontractor doing work for military cargo planes, bombers, and fighters, received contracts worth $85 million. Vought is among the few defense contractors that the Carlyle Group has not sold.

Among other private equity firms, New York-based

firm that employs many former high-ranking military officials received Pentagon contracts to the tune of more than $2.2 billion. Veritas is the 41st ranked defense contractor.

Companies under the ownership of Vectura Holding Co., another New York-based group, got deals to the tune of $1 billion, while companies controlled by Berkshire Hathaway, led by billionaire investor Warren Buffett, won contracts worth $688 million. Companies owned by Green Equity Investors II LP ($275 million) and Gores Technology Group ($153 million) also received substantial defense money.

New market

Private equity firms did not have any significant presence in the defense industry until the end of the Cold War. Traditionally, the Defense Department depended on mega contractors such as Boeing Corp., Lockheed Martin and Raytheon for weapons and services. But since the 1990s, the military has increasingly outsourced to private contractors a variety of jobs and services, ranging from planning of operations to the supply of linguistic services. A U.S. government decision in the 1990s to encourage small-business participation in contracts also contributed to the expansion of the market for smaller, privately-owned companies.

The Carlyle Group acquired controlling interests in several underperforming defense contractors, installed its own management teams and revitalized the companies, in part by landing big Pentagon contracts. Then, they sold the contractors to other investors for a large profit.

"There have always been [private equities] that went in with management and bankrolled management," said Stuart McCutchan, editor of Defense Mergers & Acquisitions. "What Carlyle has done differently is they have taken it to a new level both in terms of size and in terms of being committed to an entire sector."

"Carlyle is the biggest single success in Washington of a venture capital firm," Dr. Loren B. Thompson Jr., a national security expert at the libertarian Lexington Institute, said.

In 1997, for example, the group made a 650-percent profit when it sold BDM International Inc., a McLean, Va., defense contractor. And in December 2001, Carlyle sold off the majority of its holdings in United Defense Inc. Altogether, Carlyle earned $1 billion in profit from the United Defense investment.

A windfall of war

The group cashed out many of its investments when the stock of defense companies rose dramatically in the aftermath of September 11 and the buildups to the Afghanistan and Iraq wars.

"Defense properties are too expensive these days," explained Carlyle spokesman Chris Ullman.

In 1997, Carlyle liked the price of United Defense, and beat out General Dynamics and Alliant Techsystems, which also coveted the underperforming artillery firm. General Dynamics bid more than Carlyle offered for the company, but potentially faced a lengthy, drawn out antitrust battle if it acquired United Defense. Carlyle ended up winning the bid.

Carlyle finally sold its stakes in United after taking it public in the aftermath of the September 11 attacks. The Washington Post called the hugely successful public offering "one of the most successful single venture investments of recent years."

But United did not seem all that lucrative before September 11.

"They [Carlyle] were really kind of in a pickle with United Defense," McCutchan said. "They wanted to cash out on the equity. There wasn't much money to be made... When 9/11 happened and the defense budget took off, suddenly they had a winner on their hands."

Even Carlyle, which typically does not disclose its financial and operational details, crowed over the sale.

"It was one of Carlyle's best investments," Carlyle's Ullman told the Center. "We did make more than a billion dollars on that deal, and we are very pleased that we served our investors quite well."

The reason Carlyle's defense portfolio is lean at the moment is the high value of defense firms, thanks in part to the ongoing U.S. wars. "If there comes a time when defense properties are priced in a way that we think makes sense for private equity investors, then we will certainly consider investing more of our dollars in that sector," Ullman told the Center.

Investment expertise

Carlyle has a diversified portfolio, focusing its investments in sectors that have heavy government regulation and contracting—defense, telecommunications and banking. Carlyle has matched its investments with the expertise of high ranking government officials, whom the firm has courted almost from its inception.

It was under the leadership of former Defense Secretary Frank Carlucci—first as a managing director, from 1989 to 1993, and as chairman from 1993 to 2003—that Carlyle grew from a small private equity to a global investment giant, and became a major player among defense contractors.

Other former government officials who have recent or current ties to the firm include former British Prime Minister John Major and former Philippines President Fidel Ramos; former Office of Management and Budget director Richard Darman; former Clinton chief of staff Thomas F. "Mack" McLarty; former Securities and Exchange Commission chairman Arthur Levitt and former Federal Communications Commission chairman William E. Kennard. Former Secretary of State James Baker works for the firm, as did his former boss, President George H.W. Bush, who was an adviser for the firm's Asian investment funds until he left Carlyle in 2003.

Critics have long denounced Carlyle's practice of recruiting former high-ranking government officials at the same time as it invests in companies regulated by their former agencies, dubbing it "access capitalism." For example, Kennard, who served as Bill Clinton's FCC chairman, is now managing director for Carlyle's global telecommunications and media group, directing the firm's business investments in companies he regulated.

"Carlyle would never have gotten to the level that it is at today had it not been for this premeditated commingling of business and politics," said Dan Briody, author of The Iron Triangle: Inside the Secret World of the Carlyle Group, a book that takes a critical look at the rise of the firm.

One of Carlyle's most controversial hirings was of former president Bush to serve as a senior adviser for its "Asia advisory board."

"The fact that George H.W. Bush was working for them while his son was president, while his son, in fact, was dramatically increasing defense spending—that seems to me one of the most blatant conflicts of interests in history," Briody said.

Bush—who joined Carlyle in 1998, before his son, George W. Bush, became president—ended his relationship with the firm in October 2003, Ullman told the Center. But that hasn't stopped the former president from continuing to give speeches for Carlyle, which he did at a Shanghai event sponsored by the firm in April 2004.

Ullman refused to disclose the remuneration Bush received for his services. "That's not information that we disclose," he said. "That's his personal business. You are certainly welcome to ask him."

Bush's office did not respond to the Center's request for an interview. Written questions faxed to the former president's Houston office, at an aide's request, did not elicit any response.

Though none are placed as closely as the president's father, Carlyle's other Washington insiders have ties to current Bush administration officials. Current Defense Secretary Donald Rumsfeld and Carlucci went to college together, for example, and Secretary of State Colin Powell was Carlucci's deputy on the National Security Council in the mid-1980s.

The continued presence of Baker and Carlucci riles critics such as Briody. "If you look at the relationship that Frank Carlucci still maintains with Don Rumsfeld and Colin Powell and the reach that he has to those folks—and he has in fact used that reach in the past and tried to influence decisions those folks were making, decisions that could directly or indirectly affect Carlyle's fortune," Briody said.

Carlyle dismisses the notion that Carlucci or any other former government or military leader on its payroll has any conflicts of interest. "Are you aware of any solicitations from [Carlucci] to Secretary Rumsfeld to ask for any particular benefits to United Defense or any of our other portfolio companies?" Ullman said. "All they [Carlyle critics] do is, they say: 'Oh, Carlucci used to work in the government and he went to college with Donald Rumsfeld, and Carlyle has defense investments, and now Secretary Rumsfeld is secretary of defense. Therefore, there is a conflict of interest.'"

Despite Ullman's assertions, media accounts have noted occasions when former government officials working for Carlyle have approached the Pentagon brass. For example, Fortune magazine reported in March 2002 that Carlucci had contacted at least two senior Pentagon officials, though Carlyle claimed these contacts did not constitute lobbying.

Ullman added that all former government officials working for Carlyle abide by "all of the conflict of interests rules related to lobbying former colleagues for a year." He pointed out that the Pentagon had cancelled the Crusader artillery system, produced by United Defense, adding, "So if we are as powerful as everyone thinks, why did they cancel it?"

Rumsfeld announced in May 2002 the termination of the artillery system; until then, the Pentagon had paid United Defense some $2 billion to develop the Crusader.

Researcher Sheetal Doshi contributed to this report.

 

Source:

The Center for Public Integrity

Check for latest Site-Updates

Index of Posted Articles

or copy and paste the URL into Google Translate

Important note:

We neither promote nor condone hate speech in any way, shape or form. We have created this website to search for truthful facts that can shape unconventional conclusions and restore historical integrity. The work is therefore protected by the First Amendment of the US Constitution as well as by Article 19 of the UN Declaration of Human Rights: “Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.”

In accordance with Title 17 U.S.C. Section 107, the articles posted on this website are distributed for their included information without profit for research and/or educational purposes only. This website has no affiliation whatsoever with the original sources of the articles nor are we sponsored or endorsed by any of the original sources.

 
Copyright John McCarthy 2005 if not indicated otherwise

 
Ages ago, I taught my children "never to point with a naked finger towards dressed people" and I usually keep that for myself as well but for this website I have to quote:
"The Emporer Has NO Clothes On!"
Traude
 

 
Want to get in touch? You can send email at:
 

or

Disclaimer And Fair Use