Carlyle Connection

By Steven Staples, Toronto Star, 18 July 2002

IN THE WORLD of business, a game of golf is just another way to hold a business meeting. Last week in Moncton, N.B., two unlikely businessmen met to hit the links — former U.S. president George Bush Sr. and former New Brunswick premier Frank McKenna.

This golf game draws attention to the main sponsor of the event — the Carlyle Group. Both Bush and McKenna are tied to the Carlyle Group, a private equity-investment firm with $13 billion U.S. in assets based in Washington D.C. It buys and sells privately held companies and claims to be the largest investment firm of its kind.

The Carlyle Group has been dubbed "the ex-presidents' Club." Former president Bush Sr. has served on its Asia advisory board since he left the Oval Office. Carlyle also claims James A. Baker III, George Bush Sr.'s former secretary of state; Frank Carlucci, Ronald Reagan's former defence secretary and former deputy director of the CIA; John Major, a former British prime minister; Fidel Ramos, former president of the Philippines; and a host of other Washington hawks.

The group's traditional involvement in the defence and aerospace industry and its roster of former national security mandarins has placed the Carlyle Group in the murky world of the military-industrial complex. When the current president, George W. Bush, declared the "War on Terror" and opened the floodgates of military spending, the Carlyle Group was uniquely positioned to profit.

Until now, few people had ever heard of the Carlyle Group. Who even knew that there was a Canadian advisory board? Apparently there is, and its membership includes ex-premier McKenna along with Peter Lougheed, the former premier of Alberta; Power Corp.'s Paul Desmarais, Bombardier's Laurent Beaudoin, former Canadian Ambassador to the United States Allan Gotlieb, and others.

Even more, since June every Canadian has had a stake in the Carlyle Group.

That's when the Canadian Pension Plan Investment Board committed to investing $60 million (U.S.) into a Carlyle Group venture fund over the next five years. The board invests Canadians' accumulated pension contributions that are not needed to pay benefits.

The dramatic rise in the fortunes of arms makers has cast a bright light on the arms industry and the Carlyle Group, especially Carlyle's series of "coincidences and ironies" involving U.S. defence and foreign policies.

One of the biggest coincidences surrounds Carlyle's crown jewel, United Defense Incorporated — the U.S. army's fifth-largest contractor and builder of armoured vehicles, artillery, defence electronics and naval guns used on destroyers. "It's the first time the president of the United States' father is on the payroll of one of the largest U.S. defence contractors," said Charles Lewis, director of the Center for Public Policy, one of Carlyle's critics.

When Carlyle bought United Defense in 1997, it held contracts to build a rapid-firing howitzer called the Crusader.

This $20-billion weapon program was harshly criticized by the Pentagon's own review panels, saying the gun was too slow and too heavy for modern warfare. Nevertheless, Crusader was a difficult target to hit on Capitol Hill.

President Bush continued to support contracts for Crusader despite expert opinion. Following the Sept. 11 attacks, Carlyle took the president's support for Crusader and the market's scramble for defence stocks and made a public offering of United Defense. In a single day, Carlyle raised $237 million from the sale of United Defense stocks.

The Pentagon finally cancelled the Crusader program in May, but not before Carlyle had reaped $400 million in dividends and capital gains from its original $170 million cash investment.

From coincidences to ironies. One can't overlook the fact that the Carlyle Group's investors once included the Saudi Bin Laden Group, the $5-billion construction firm run by Osama Bin Laden's estranged family. Relations with the family were severed on October 26, 2001, but for a time they were in the strange position of standing to profit from the war against their own son.

When the controversial CPP Investment Board was created in 1997, many groups such as the Council of Canadians and the Canadian Labour Congress argued that the board would overlook ethical and social concerns that reflect Canadians' values. Apparently, the critics were right.

The CPP Investment Board should divest from this Carlyle Group, and instead invest in Canadians' needs such as water infrastructure, medical research, affordable housing, and other socially positive endeavours that could guarantee a reasonable rate of return and leave a positive legacy.

Steven Staples is a director at the Polaris Institute, an Ottawa-based corporate watchdog organization.

Source: Toronto Star website

WASHINGTON (Reuters) -- The Federal Reserve sent record payouts of more than $4 billion in cash to Baghdad on giant pallets aboard military planes shortly before the United States gave control back to Iraqis, lawmakers said Tuesday.

The money, which had been held by the United States, came from Iraqi oil exports, surplus dollars from the U.N.-run oil-for-food program and frozen assets belonging to the ousted Saddam Hussein regime.

Bills weighing a total of 363 tons were loaded onto military aircraft in the largest cash shipments ever made by the Federal Reserve, said Rep. Henry Waxman, chairman of the House Committee on Oversight and Government Reform. (Watch Democrats put the former top U.S. official in Iraq on the spot )

"Who in their right mind would send 363 tons of cash into a war zone? But that's exactly what our government did," the California Democrat said during a hearing reviewing possible waste, fraud and abuse of funds in Iraq.

Founder of neo-con run Carlyle Group buys only copy of Magna Carta in private hands.

The only copy of Magna Carta in private hands sold for $21.32 million (£10.6 million) this morning in the first auction of the “birth certificate of freedom”.

The 1297 example, described as the most important document to come up for sale, was acquired by David Rubenstein, the founder of the Carlyle Group, at Sotheby’s in New York. He has paid $8,528 a word.

The 14in-by-16in (35.6cm-by40.6cm) sheet of animal-skin vellum is one of only 17 originals of the founding “Great Charter” of English liberties first signed by King John at Runnymede — near present-day Staines, Surrey — in 1215.

The document established the principle of habeas corpus, which protects people against unlawful imprisonment by ensuring such rights as trial by jury and freedom from unlawful arrest.

Clause 39 proclaims: “No free man shall be taken or imprisoned or disseised or outlawed or exiled or in any way ruined, nor will we go or send against him, except by the lawful judgment of his peers or by the law of the land.”

Four of the surviving 17 copies date from the reign of John, eight from that of Henry III and five from that of Edward I. The Sotheby’s example bears the wax seal of King Edward I hanging from a ribbon at the bottom of the parchment — one of only five that still carry the royal seal.

1297 was the year that Magna Carta was formally entered into the statute rolls as the law of England. It came into being as a result of a dispute between King John and the English barons and went some way towards limiting the authority of the king.

The only other original outside Britain was a gift by the country to “The People of Australia”. It is on display at the Parliament in Canberra.

Mr Rubenstein, the founder of the Carlyle private equity group and a former deputy domestic policy adviser to President Carter, said that he would put the document back on public view at the National Archives in Washington, where it had been on loan.

“I thought it was very important that the Magna Carta stay in the United States, and I was concerned the only copy in the United States might escape the United States as a result of this auction,” he said.

“I am a person who has served in government myself. I worked in the White House as a young man. At that time I recognised the importance of these kind of documents and the importance of freedom.”

He admitted that he could not actually read it because he had avoided learning Latin at school — a decision he now regrets.

The 2,500-word document, written in medieval Latin, was put up for sale by the Texan software billionaire and two-time independent presidential candidate Ross Perot.

Mr Perot acquired it for $1.5 million in 1984 from relatives of James Thomas Brudenell, the 7th Earl of Cardigan, who led the Charge of the Light Brigade during the Crimean War. Magna Carta had been at the Brudenells’ family seat at Deene Park, Northamptonshire, for more than half a millennium.

In a catalogue essay Professor Nicholas Vincent of the University of East Anglia theorises that the Brudenells obtained it in Buckinghamshire after William Brudenell, the founder of the family’s fortunes, married an heiress there during the reign of Edward III.

After displaying Magna Carta at Independence Hall in Philadelphia, Mr Perot loaned it to the US National Archives in Washington, where it has been seen by a million people.

“It’s in remarkable condition for a document that dates from 1297,” Chris Rudy Smith, an archivist at the institution, said before the sale.

Proceeds of the sale will go to Mr Perot’s foundation to make funds available for medical research and care for wounded military veterans.

$8,528 Or £4,233 — the cost per word of buying the only edition of Magna Carta in private hands. A copy of J. K. Rowling’s The Tales