excerpts from the book

The Iron Triangle

Inside the Secret World of the Carlyle Group

by Dan Briody

John Wiley and Sons, 2003, paper


... the Carlyle Group is a story of dealings inside "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.

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.

Merriam Webster's Dictionary defines nepotism as a noun, meaning favoritism based on kinship. It is a simple definition, inherently neutral, and easy to understand. After all, isn't it natural to favor your own family members over strangers? It seems harmless enough. But when applied to international politics, it could not be more inappropriate. Our world leaders have a responsibility to act on behalf of the people they represent. Many of them take an oath to that effect. So when a politician, particularly the president of the United States, demonstrates nepotism in his actions, it is cause for serious and immediate alarm. George Herbert Walker Bush and his son George W. Bush have repeatedly and flagrantly crossed this border of impropriety since the younger Bush became president in 2001. And the company creating this ongoing breach of the public's trust is the Carlyle Group.

... The ascension of George W. Bush to the presidency wasn't all good for the Carlyle Group. It was true that the new president had close ties to the company and would be in a position to send all kinds of business their way. It could even be said that the new president might be inclined, or at least not disinclined, to push policies and projects that might fatten his father's, and in a less direct way his own, bank accounts. But along with those newfound advantages for Carlyle came the continued, and at times increased, scrutiny of its behavior; fevered charges of cronyism; and the occasional accusation that the company was not a private equity firm at all, but rather a shadow government pulling the strings in Washington. Some of these concerns are more legitimate than others, but there was another more immediate issue: Who were they going to hire now that all the Republicans were going back to work?

Carlyle had been cultivating an unseemly reputation as a Republican boys club, whose membership privileges included the L thrill of deal making on a global scale and a hefty paycheck at the of the month.

When George W. Bush was sworn in to office in January 2001, everything changed suddenly and dramatically. One of the first things that young Bush did as president was call off the missile control talks that the Clinton administration had been conducting with North Korea for years. Bush revealed open hostility toward North Korea, calling it a rogue state that cannot be trusted. It was a stunning reversal of American policy, which heretofore had been to use diplomacy in mitigating North Korea's military aggression toward South Korea. And it was coming from a man that had virtually no experience in foreign affairs. The nation watched in disbelief.

Not surprisingly, the backlash from Bush's brash actions was felt far and wide. North Korea accused the United States of planting a "time bomb" in the midst of their fragile negotiations with South Korea. The South Korean government received Bush's actions as a rebuff to their safety, knowing that North Korea would be more inclined to attack without Washington's involvement. Kim Dae-jung, South Korea's president, was forced to turn to the European Union for help in filling the sudden gap the United States had created in the peace process between North and South Korea. He was also getting lambasted at home for not being on top of the situation in Washington.

Bush had made the South Koreans look bad, and undermined their safety, all with one fell swoop. Analysts speculated that Bush was motivated by his desire to create a national missile defense system, part of his campaign platform. If North Korea had no missiles to defend against, the thinking went, Bush's need for a missile defense system would evaporate. As absurd as it sounds, peace between North and South Korea, and between North Korea and the United States, did not further his broader agenda in the White House. Regardless of his rationale, he had created an international crisis on just his second month on the job.

This also threatened Carlyle's extensive investments in South Korea, which would plummet in value as instability in the region increased. The threat of war always sends local economies into a tailspin, much like America's economy since September 11. And Carlyle could kiss regulatory approval for future deals goodbye, with South Korean officials feeling slighted by the United States, and particularly George W. Bush. At first it seemed as if this was a rare case in which being associated with the Bushes was not going to work to the benefit of Carlyle. But that would not prove to be the case.

Adding to the disarray George W.'s stance toward North Korea was causing, the unionists at KorAm bank were starting to rebel against their new American owners, accusing Carlyle of being nothing more than a speculative investor that had already broken its promise not to intervene with management. Employee representatives at the company believed that Carlyle intended to restructure the company, probably threatening jobs. And the union was rallying against Carlyle. The situation was dire. Carlyle had just ploughed nearly $1 billion into South Korea, and the man they all thought would be so good for business, George W. Bush, was on the verge of screwing it all up. Something had to be done.

On June 6, Bush reversed course. In a statement, the president announced plans to resume negotiations with North Korea, essentially picking up where the Clinton administration had left off. Among the issues that the new administration would work on with North Korea was improving relations between North and South Korea. The sigh of relief could be heard around the world, and especially from Carlyle's offices on Pennsylvania Avenue and in downtown Seoul. just like that, the situation was all better. But what could have created the sudden change of heart?

On June 10, 2001, just a few days after the welcome announcement by President Bush, the New York Times reported that the senior Bush had forcefully argued for his son to reopen negotiations with North Korea shortly before President Bush did just that. The article opened:

In an effort to influence one of his son's most crucial foreign policy decisions, former President George Bush sent to the president through his aides a memo forcefully arguing the need to reopen negotiations with North Korea, according to people who have seen the document.

It was the first time that anyone had tangibly seen the influence of the father on the son. According to the article, Bush Sr. felt that his son was being unduly influenced by the Pentagon, and that he should adopt a more moderate stance toward the Korean peninsula. He also spelled out that the hard-line policy toward North Korea was undermining the government in South Korea, thereby hurting U.S. interests in North Asia.

White House spokesman An Fleischer confirmed the report in the Times, and told the press that the argument for reopening negotiations came originally from Donald Gregg, former ambassador to South Korea under the first Bush administration. Fleischer said that Gregg had sent a memo to the senior Bush, who then sent the memo to national security advisor Condoleeza Rice, who then passed along "the thoughts in the note" to the president. It was a way of watering down the connection between George W. Bush and his father, even though it has been widely reported that the two speak regularly. Nobody in the White House wanted the press to get the impression that senior Bush was directly influencing the president. That's probably why Fleischer's accounting of the events made so little sense. Why Bush Sr. would have to go through Rice to relay crucial information on foreign policy to his son, when he talks to him twice a week on the telephone, is anyone's guess.

Bush Sr. went on to do even more damage control, recording reassuring remarks on U.S. policy to be distributed among participants in a crucial meeting between South Korean President Kim Dae-jung and North Korea's leader, Kim Jong-il, on Cheju Island. It seemed the former president was everywhere at once, acting as counsel to his son, ambassador to Korea, and businessman for Carlyle. For a man that had supposedly retired from politics, Bush Sr. was awfully busy.

Bush of Arabia (Bush Sr.)

The folks at Carlyle refuse to talk about how ex-president Bush is compensated for his work on their behalf. Former employees, however, say that he is invested in the funds that he helps raise and place. If that is the case, the senior Bush's involvement in foreign policy regarding South Korea is a clear conflict of interest. He stands to gain financially from decisions that he is urging his son to make. It doesn't get any more egregious than that. But the press missed the connection at the time. Indeed it was a difficult connection to make, given that Bush Sr.'s trips to Korea and his work on behalf of Carlyle was kept very quiet. Then another story hit the front pages. Bush Sr. was at it again.

This time the New York Times reported that in July 2001, just months after he had advised his son on North Korea, the elder Bush had placed a call to Crown Prince Abdullah of Saudi Arabia on behalf of his son, to reassure Saudi Arabia's leadership that his son's "heart is in the right place," when it comes to Middle East policy. The call was necessitated by the younger Bush, who had upset the Arabs with his one-sided approach to the Israeli-Palestinian conflict. And Daddy was again there to bail him out.

The report said "former President Bush said that his son's 'heart is in the right place' and that his son was 'going to do the right thing,' a Middle East diplomat said. A senior administration official said that the phone call, warm and familiar in tone, was designed to encourage Abdullah to think of the new president as having a grasp of the Middle East similar to that of his father. According to one of the accounts, President Bush was in the room when his father made the call."

The news was stunning, and it undermined the credibility of George W. Bush on foreign policy. Who was making the decisions in the White House? Why didn't Bush Senior run for president instead? But more than that, the news of Bush Sr.'s continued involvement in foreign policy was undermining the credibility of both Bushes ability to keep politics and family business apart. Like the situation on Korea, Carlyle's extensive business interests in Saudi Arabia and throughout the Middle East, were in grave danger if the younger Bush kept pissing off the royal family. So the Senior Bush needed to step in and preserve the relationship once again. It was testament to the sway ex-president Bush still held over foreign affairs. And it didn't look good.

The reports of Bush Sr.'s actions sent the Washington, DC-based public advocacy groups into a tizzy. Tom Fitton, general counsel of judicial Watch, a conservative watchdog group in the Beltway, is beside himself to this day. "It screamed conflict of interest," he says. "We asked publicly that the senior Bush should step down. To this day we don't understand why he hasn't resigned. It's causing a scandal."

That Judicial Watch has called on Bush Sr. to resign from Carlyle is more telling than you might think. This is not your average, ultraliberal watchdog organization. Judicial Watch is a public interest group that was conceived during the Clinton administration as a way to monitor activities that diminish the public's trust in government. It is an extremely conservative group, designed originally to bring down a Democratic president that the group felt was corrupt. "The Clinton administration was the most corrupt in history," says Fitton. "He was a rapist who took money from the Chinese. But he's lowered the bar so far that there is an acceptance of this everyday type of corruption." Other watchdog groups had been howling at Carlyle's antics for years, but when judicial Watch, which had a reputation as a Republican-friendly group, could no longer look the other way, Carlyle had to take notice. "We're a conservative group, but we're not Republican. The Carlyle Group has been very upset with us, but this is an extraordinary company, very unique," says Fitton. "They hire these people, and I don't think they hire them for their good looks. I'm sure it smarts for them to know that we have raised ethical concerns on the part of the president's father."

Fitton points out that not only has the former president been making investments for Carlyle and weighing in on foreign policy that directly affects those investments, but he is also privy to CIA briefings whenever he sees fit, referred to internally at the CIA as "President's daddy's daily briefing," a right that all ex-presidents maintain. And according to press reports, Bush Sr. still requests and receives CIA briefings often. Despite being 10 years removed from his presidency, Bush Sr. remains an extremely powerful and influential man. Imagine what a global enterprise, that does large amounts of business with arms contractors and foreign governments, could do with weekly CIA briefings. Or a company with the ability to influence foreign governments and global events. A company like that would have access information that would set it apart from any company to come before it. A company like that could be very successful. A company like that might look a lot Carlyle.

By 2001, the world outside of Washington, DC, was becoming dimly aware of the Carlyle Group. People would chat about them casually at cocktail parties, noting the intimidating employee roster and joking about shadow governments and X-files episodes. But it was all speculation at that point. No one in the media had put together the apparent conflicts of interests the Bushes had cultivated in Korea and Saudi Arabia. Yet people had a vague and nagging notion that there was something wrong with the way Carlyle was conducting its business. They were just having trouble putting a name to it. Everyone was looking for the proverbial smoking gun. Little did they know that it was literally a smoking gun they would find.

The saga began in the summer of 1997, when Carlyle was raising money like mad, hiring world leaders, and, in general, becoming the dominating global private equity firm it is today. Among the investments Carlyle had targeted for its Carlyle Partners II fund-the one chock full of defense, aerospace, and security companies-was a maker of armored vehicles named United Defense. The owners of United Defense were FMC Corporation and Harsco Corporation-the same company that Carlyle had unsuccessfully and hostilely tried to acquire six years earlier. All Carlyle got for its $63 million back then was one lousy board seat with Harsco. But what a valuable board seat that had suddenly become.

The news around the defense industry August 1997 was that General Dynamics had bid $1 billion for United Defense, far more than any other bidder. General Dynamics already made armored vehicles, so United Defense's expertise-they made the Bradley fighting vehicles used in the Gulf War-fit perfectly with that of General Dynamics. The deal seemed like a no-brainer: highest bidder, synchronized interests, little overlap. There really was no competition. But at the last minute, Harsco and FMC decided instead to sell to the Carlyle Group, which had submitted a low-ball bid of $850 million, 15 percent less than General Dynamics had been offering. It turns out that rumors had begun to circulate around Washington, DC, that General Dynamics was going to run into antitrust issues. Eventually, the rumors grew so loud that General Dynamics was forced to back out of the bidding, and Carlyle was there to pick up the scraps. It was another stunning victory for Carlyle.

Despite paying a fire-sale price for United Defense, Carlyle was not without its challenges regarding the new acquisition. Since 1994, United Defense had been working on a massive gun: a mobile howitzer that can fire 10 rounds of 100 pound shells per minute, 25 miles in distance, cruise at 29 mph, and reload on the battlefield. The "Crusader" was the most advanced artillery system the U.S. Army had ever conceived. It is the kind of weapon that makes the United Stated unbeatable in large scale, open warfare, lobbing multiple shells at varying trajectories so that they rain down at their desired target at the same time. It is a fearsome weapon. A killing machine. It was also United Defense's future cash cow.

Cashing in on Tragedy (9-11)

The partners of Carlyle-(Rubenstein, Carlucci, Conway, and D'Aniello stood to gain the most of anyone in the company, possibly in the country. Those four would have to shake off the devastation of September 11, and look forward to their big payday. It is not an exaggeration to say that September 11 was goingo to make all of them very, very rich men. This is the reality of the business L they chose. And in the defense industry, war time is boom time.

"Capitol Hill is prepared to do whatever the Pentagon wants," said Gordon Adams, a budget official in the Clinton administration, in a New York Times piece a week after the attacks. Indeed Capitol Hill provided enough money to the Pentagon to make the budget woes and tough decisions of the past year suddenly irrelevant. Among the weapons programs that had been given new life was, of course, the unkillable gun: the Crusader.

The money was pouring in now and there was no longer any reason to deny the army its precious gun. After the attacks, opponents to the gun were silenced, not wanting to assume the political liabilities of killing a weapons program in the midst of war. On September 26, just two weeks after that attacks, the army signed a $665 million contract with United Defense for the next phase of the Crusader's development. The money would carry the gun maker through 2003. But the first prototype for Crusader was not due to be delivered until 2004, and production of the units would not come for years after. It was highly unlikely the war in Afghanistan would still be ongoing by that time. And nothing had changed the original argument against the gun: it was still too heavy, even at 42 tons, and the need for this type of open battlefield weapon was waning, as the fighting in the caves and tunnels of Afghanistan was demonstrating. But none of that was important anymore. There was enough money to go around for everyone. "A rising tide does lift all boats," said John Williams of the National Defense Industrial Association, in a New York Times article.

Bin Laden's Business

... Carlyle had been doing business with dozens of families and businesses throughout the Middle East since the early 1990s. And they had been extremely successful in the region. So successful that they had garnered a reputation for having a tremendous amount of influence over the deal flow in the area. After all, the company had been running the Saudi Economic Offset Program for years, a government funded program designed to encourage foreign investment into Saudi Arabia, under the condition that a portion of the profits be reinvested in Saudi Arabia. In a sense, Carlyle had become the gatekeeper to foreign investing in Saudi Arabia.

Not many people knew any of this at the time of the September 11 attacks. But by the end of September, the general public would know far more about Carlyle's business than anyone at Carlyle was comfortable with. In the weeks following the attacks, the name Osama bin Laden leaped onto the forefront of America's consciousness as public enemy number one. Storefronts hung pictures of his likeness, cut out of newspapers, with headlines of "Wanted: Dead or Alive." Not since the Red Scare of the 1950s had the United States had a more tangible opposition. It seemed that the entire nation was united in its hatred of one man. Then, on September 27, the Wall Street Journal ran a story entitled "Bin Laden Family Is Tied to U.S. Group." That group, of course, was Carlyle.

Carlyle had a relationship with the bin Ladens that began in the early 1990s, when they tried to put together a deal for the Italian Petroleum (IP) company. At the time, Basil Al Rahim, a young Carlyle associate, was traveling from Saudi Arabia to Amman to Bahrain, to United Arab Emirates, drumming up support for Carlyle's forthcoming international funds. "I met with 101 different potential clients in 16 days," recalls Al Rahim. "No one had really ever heard of us." Since that time, Carlyle's business in the Middle East blossomed. One of the clients that Al Rahim helped secure was the bin Laden family, which owned a $5 billion construction business by the name of Saudi Bin ladin Group.

The bin Laden family consists of more than 50 brothers and sisters, all the progeny of Mohammed bin Laden. Osama had his Saudi citizenship revoked in 1991, and was reportedly cut off from his family. Since his father's passing, Bakr bin Laden became the head of the business and the family, and as such he committed money to Carlyle on several occasions. It was a fruitful relationship for both parties involved. But now, all of that had changed.

The article in the Wall Street Journal pointed out the most stunning and atrocious irony of Carlyle's history: through Carlyle, the bin Laden family was in a position to make millions from the war being waged against their own brother. The news that George Bush Sr., James Baker III, and Frank Carlucci had visited the bin Ladens in recent years also stunned the American public. It was, in fact, the Carlyle Partners II fund in which the bin Laden family was invested. The same fund that held United Defense, as well as a host of other defense holdings.

Carlyle told the press that the bin Ladens were only in for $2 million, a relatively small amount of money considering the whole fund was worth $1.3 billion. But one bin Laden family financial representative says the number was much larger. And Al Rahim says that earlier in his time with Carlyle, which ended in 1997, the bin Laden family had several times that amount invested in the company. Regardless of the actual amount, the irony ultimately approved too much for Carlyle, and by the end of October, they severed ties to the family, liquidating their holdings.

A Congresswoman's Accusations (Cynthia McKinney)

In a March 2002 interview with a Berkeley, California, radio station, Representative Cynthia McKinney, a Democrat from Georgia, spoke publicly what was already making so many Americans uneasy: "Persons close to this administration are poised to make huge profits off America's new war." She went on to say, "An administration of questionable legitimacy has been given unprecedented power... We know there were numerous warnings of the events to come on September 11 ... What did this administration know and when did it know it... Who else knew, and why did J they not warn the innocent people of New York who were needlessly murdered... What do they have to hide?"

In the address, McKinney named the Carlyle Group as an example of the cronyism she was talking about. McKinney was implying that the Bush administration knew the attacks were coming, allowed them to happen, and was now reaping the profits, both financial and political, through its connections to the Carlyle Group. The comments resonated with a growing group of cynics on the Internet and spread like wildfire across the Web. For weeks there had been reports of an intelligence breakdown and foreknowledge of the attacks in the major news outlets. McKinney was simply giving a voice to what many already suspected. And she was absolutely lambasted for it.

Crusader Denouement

By 2002, Carlyle's decade of cultivating ties with prominent politicians and acquiring countless defense contractors was really paying off. President Bush was creating an Office of Homeland Security, and Secretary of Defense Rumsfeld was talking of the war on terrorism being a long, drawn out affair, perhaps something that never ends. Defense budgets were soaring and Carlyle was already looking to take other defense-related businesses public in the coming year.

After the unrelenting bad press about the Crusader approval reached a fever pitch in Washington, Rumsfeld, at the behest of Deputy Secretary of Defense Paul Wolfowitz, finally gave the order to kill the gun once and for all, but only after United Defense had already made gobs of money from its public offering. It also came after Rumsfeld was publicly embarrassed by an Army-sponsored lobbying campaign of Congress that went on behind Rumsfeld's back, after the Defense Secretary had already made it clear the program was to be cancelled. The actions on the part of the Army would result in Rumsfeld launching an investigation (still ongoing) and excoriating those responsible for the clandestine lobbying effort. "I have a minimum of high regard for that kind of behavior," Rumsfeld would tell the press in an article by the Associated Press.

But Carlyle had already taken its profits. And besides, the very same day the U.S. Army officially notified United Defense of the termination of the Crusader contract, that same Army awarded United Defense a brand new contract for a new artillery system, much like the Crusader only much, much lighter.

"United Defense and its industry partners welcome the new contract and the challenge of bringing the technological advances matured in the Crusader program to the Objective Force and the Future Combat System," said Keith Howe, vice president and general manager of United Defense's Armament Systems Division, in the same press release that announced the end of the Crusader contract. "The contract recognizes the tremendous capability and the performance of the over 2,200 employees nationwide that brought Crusader to the Army's Proving Ground and who will now focus their energies and talents on the need to field a less than 20-ton system to the Army by 2008."

Everyone was happy with the result. Rumsfeld and Carlyle avoided a damaging public relations fiasco over the Crusader by killing the program in a decidedly public manner. The Army was assured of getting an even better gun in the same time frame as the Crusader had been promised. And United Defense got to prop up its stock price by announcing the new contract the day they announced the death of the old contract, without ever skipping a beat. It was classic Carlyle. United Defense also picked up

in September 2002, a contract to provide Taiwan with $250 million worth of amphibious assault vehicles. The deal happened after Carlucci, who is the chairman of the U.S.-Taiwan Business Council, met with Tang Yao-Ming, the defense minister in Taiwan. Just another day in Carlyle's global playground.

The saga of Crusader is one of the clearest examples of how Carlyle does business. To the outside observer, the company lives on the edge, deftly maneuvering its way through the revolving door of politics and business. Keenly aware of public opinion, and how to manage the press, Carlyle has always been able to avoid the kind of scandal that brings a company down. "No one has any proof because there is no proof," explains Chris Uliman, the company's spokesperson.

Though more financial companies are learning from Carlyle's example-hiring politicians like Al Gore or Rudolph Giuliani, during their political downtime-we may never see another company like Carlyle. The sheer volume of political capital the company has amassed in its 15 years of existence is unprecedented, and would be nearly impossible to duplicate.

( With $13 billion under management, close to 500 employees throughout the world, and hundreds of defense, aerospace, telecom and health care companies in their portfolio, it is safe to say that Carlyle has already gone well beyond Eisenhower's vision of a military industrial complex. There is every indication that with the current administration, and war remaining on the foreseeable horizon, Carlyle's power and reach may exceed anything Eisenhower might have imagined when he first warned against the formation of an Iron Triangle.

The important thing to remember is that the story of Carlyle, while it makes good reading, is still young. The amount of influence the company wields is already disconcerting, but at only 15 years old, the company is in a relative infancy. The potential of the company should not be underestimated, and a healthy dose of paranoia is probably in order when viewing any of the Carlyle Group's actions. As America's most revered companies are brought down through scandals and abuses of the public's trust, it has never been more important for the average citizen to remain vigilant and skeptical, of our country's business and political leaders, even during war time, when we are expected to be exceedingly patriotic. While the Carlyle Group is certainly not about patriotism, it is a uniquely American story. It is about money, power, war, and politics. All of the things that build America's might, and compromise its integrity.


In the summer of 2002, Carlyle helped form the China Venture Capital Association, a nebulous organization charged with warding off corruption in China and strengthening ties with the Chinese government. Chang Sun, the chairman of the group, said "within the industry we need to have a minimal level of code of conduct so that we don't have people who ruin the reputation of the industry. We will talk about how to regulate ourselves rather than be regulated by the government." A truly scary prospect, but nothing we haven't seen before.

China, like Saudi Arabia decades ago, is fertile ground for American investment. Edging its way toward a more capitalistic society, China is still a massive untapped market controlled largely by the government: a combination tailor made for Carlyle's special brand of access capitalism. In other words, watch this space.

Another area to keep an eye on would be Europe. In the fall of 2002, Carlyle completed an acquisition of Qinetiq, the research and development arm of the United Kingdom's Ministry of Defense. When news of the acquisition broke in England, the MOD came under fire for potentially compromising the national security of the United Kingdom by selling such a crucial unit to an American company run by so many ex-politicians. Fiona Draper, a representative of the trade union Prospect, which includes the scientists at Qinetiq, told reporters, "the fact that they are a foreign company will obviously exacerbate my members concerns, given Carlyle's fairly opaque structure, there must be concerns over whether undue influence may be brought to bear which may not be in Britain's interest."

The "opaque structure" to which Draper refers is not uncommon for private companies, especially private equity companies. The nature of the business is such that a private company buys other private companies, none of which are obligated to reveal their financial records. All of which makes gathering information on Carlyle very challenging. Though it excels in buying and selling businesses that are under heavy government regulation, Carlyle itself is under almost no scrutiny from federal overseers. The only thing keeping Carlyle the least bit honest at this point is public interest groups and the media. And at a time when American patriotism is at an all-time high following the attacks on the World Trade Center and the Pentagon, criticizing the current president and his father for questionable business practices is a tricky business. There is frighteningly little tolerance for muckraking at the moment.

Conspiracy theorists that obsess on secret societies and outlandish plots overlook the more insidious and destructive effects of a company like Carlyle. By insinuating itself into the very fabric of the world's economic structure, Carlyle has accomplished far more than any Trilateral Commission or Masonic society could dream. They have made themselves an indispensable part of the international community's cash flow. Millions of people are invested in Carlyle and don't even know it, like the 1.3 million people relying on CalPERS to manage their pension fund. Do they even know that CalPERS is a part owner of Carlyle?

Ultimately, the success of the Carlyle Group depends on its continuing ability to gain access to high-level government officials, thereby getting a jump on policy changes, both domestic and international. And that access hinges on Carlyle's remarkable track record of hiring the most powerful men in the world. To keep their stockpile of political powerhouses fresh, don't be surprised to see the company reach deep into the current Bush administration after the president leaves office and snare anyone from Cohn Powell to Dick Cheney to Donald Rumsfeld to George W. Bush himself. The revolving door to Carlyle is always turning.

Though company officials are outwardly amused by the rumors and accusations that swirl around Carlyle, there is a reason why people fear them. It's difficult to explain away certain aspects of the company. Like why George Bush Sr., in the face of mounting criticism and the undermining of his son's credibility in office, doesn't simply resign from the company? He is already wealthy, with his family's legacy secure. And there must be a thousand different job opportunities available for the ex-president that don't involve obvious conflicts of interest or incidents of international political intrigue. Or why James Baker III, with his own law firm and a foundation that bears his name, feels the need to continue toiling for a firm that clearly threatens his heretofore untarnished reputation? It begs the question: What are these men up to?

From Watergate to Iran-Contra to Lewinsky-gate, the public and the press have performed admirably in keeping our politicians honest, or at least accountable, while they are in office. But the civil checks and balances mechanism breaks down after politicians leave office. The power and influence of politicians diminishes upon their retirement from public service, but it is still formidable. And the work that Carlyle's ex-politicos perform, both in nature and in scale, is unlike anything that's come before them. That's why Carlyle will continue to be both a compelling story to follow, as well as a cautionary tale.

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