Take a Look at the Carlyle
An interview with Dan Briody
(Author of "The Iron
Triangle: Inside the Secret World of the Carlyle Group")
Buzzflash, June 23, 2003
They are at the epicenter of the military-industrial-complex-Bush-Cheney-crony-capitalism
administration. The Carlyle Group is the model example of the
nearly seamless connection between the Bush administration, self-enrichment
and companies who receive big government defense contracts.
The roster of Carlyle "consultants"
reads like a whoís who guide to government officials of
the 1980s, starting with former president George Bush, former
secretary of state James Baker, and former defense secretary Frank
The most chilling aspect of Briody's book
is that the political connections and lobbying activities he unmasks
are not illegal.
It is a testament to the brain dead mainstream
media that the relationship between the Carlyle group and the
Bush-Cheney cartel is not a national scandal.
Brady is an award winning journalist who
has written for Forbes, Wired, Red Herring and the Industry Standard.
BuzzFlash: If we were looking at the
Carlyle Group -- aside from its controversial nature and the political
world of who runs it and the consultants affiliated with it --
what business model does it represent?
Dan Briody: Itís whatís
known as a private equity firm. And thatís a very vague
term to describe a whole umbrella of different types of companies.
What Carlyle specializes in is buyouts, which means that they
operate very similar to a mutual fund. Only instead of buying
and selling stock, they buy and sell private companies. And they
also do venture capital and real estate. So theyíre in
a variety of different kind of financial transactions-based businesses.
But their bread and butter is buyouts. And within that area,
they focus heavily on government-regulated industries ñ
anything that depends very heavily on policymaking and legislation
coming out of Washington, D.C. As such, they hire a number of
ex-politicians to help them in that regard.
BuzzFlash: In terms of companies that
they buy out, most notably in terms of their political-business
crossover, theyíre probably most known for their relationship
to the defense industry, even though thatís not by any
means exclusively what they do.
Dan Briody: They got their start in the
defense buyout business. They struggled for the first couple
of years before they hired Frank Carlucci, who was the outgoing
Secretary of Defense from the Reagan administration. And Carlucci
brought them in the direction of defense buyouts in the late ë80s,
early ë90s, in between the Cold War and the Gulf War, when
defense properties were undervalued. And the company struck gold
a couple times in that business and was able to build a very healthy
buyout practice on the back of these defense LBOs, or leveraged
>From there, they have diversified
over the ensuing 10-12 years, into everything from healthcare
to telecommunications, to aerospace and others. But defense is
still the cornerstone of their practice. And when people think
of the Carlyle Group, the first thing they think of is defense.
BuzzFlash: On the cover jacket of your
book, it says that the book will provide witness to how the Carlyle
Group profited from the Sept. 11 terrorist attacks and continues
to profit from the ongoing war on terrorism. What evidence do
you provide for that?
Dan Briody: There are a number of transactions
that the company profited from directly following the Sept. 11
attacks. The most important one was the fact that they were able
to take United Defense, their crown jewel of defense holdings
public shortly after the attacks. In fact, in the prospectus that
they circulated, before that IPO, they cited the Sept. 11 attacks
as one of the reasons why they were able to sell public stock
in this company at this time. So that was all on the back of
the defense build-up following Sept. 11.
There are also a number of other holdings
of theirs -- like at that time, they owned a company called the
IT Group, which is a company that cleans up hazardous materials
and won a very lucrative contract to clean up the Hart Senate
Building in Washington, D.C., which had been tainted by anthrax.
They also own a company called U.S. Investigative
Services, USIS, which is a company that does background checks
and provides varying levels of security clearance for different
government employees, airline employees ñ things like that.
Obviously their contracts went through the roof after Sept. 11.
In addition to that, they own companies
that do all kinds of security, different aerospace companies.
So whenever thereís a big defense buildup, those companies
profit. So there are a number of ways that theyíve profited
very handsomely from Sept. 11.
BuzzFlash: I recall that reading in the
British papers that Tony Blair was considering privatizing a portion
of the intelligence apparatus in Britain, and that the Carlyle
Group was going to be subcontracted to do some of that.
Dan Briody: He did, in fact. The new
company is called Qinetiq. Itís spelled Q-I-N-E-T-I-Q.
Itís the research arm of the ministry of defense in the
U.K., which is essentially equivalent to DARPA [the Defense Advanced
Research Projects Agency] here in the U.S. And the Carlyle Group
was part of that transaction, so they own part of Qinetiq. It
was a very controversial transaction in the U.K., obviously.
I mean, if you could try to imagine a foreign company coming in
and buying DARPA from the United States. Itís unimaginable.
And particularly a company thatís so stockpiled with very
powerful former politicians.
BuzzFlash: So Tony Blair essentially
condoned the privatization of a large section of the British defense
intelligence apparatus to the Carlyle Group. It would be comparable
for us to subcontract that to a foreign company.
Dan Briody: Yes, which I don't think
would ever happen.
BuzzFlash: You mentioned in another interview
that we heard - I believe it was on NPR, Terry Gross ñ
that your book doesnít detail illegal activity of the Carlyle
Group. And whether that exists or not, you donít know.
But it details the legal activity, which is, to you, probably
the more worrisome issue ñ that all of this is legal.
By that, do you mean the seamless relationship between the private
military sector and the governmental military sector?
Dan Briody: Thatís exactly what
I mean. The book opens up with a mention of Dwight Eisenhowerís
farewell speech, in which he warned the country against the formation
of this military-industrial complex. And I think that that is
exactly what weíre seeing today. Weíre seeing a
very tight-knit group of companies and private military contractors
that are virtually indistinguishable from various administrations
and the political infrastructure of Washington, D.C. ñ
so much so that itís not clear whose interests weíre
acting on when we go to war.
BuzzFlash: And now we see the extension
in the case of Britain, to the British defense intelligence industry.
Dan Briody: Right. And weíre
also seeing Carlyle expand into Italy. They just bought part
of Fiatís aerospace division, which was a state-controlled
Italian military agency. And they are also in the running to
buy out DaimlerChryslerís aerospace division in Germany.
So weíre seeing a real broadening of the military activity
around the Carlyle Group, so much so thatís becoming more
than just a domestic concern here ñ itís becoming
an international concern.
BuzzFlash: Now Carlyle is ñ correct
me if Iím wrong ñ a holding company. Is it publicly
Dan Briody: It is not publicly traded.
BuzzFlash: So itís a limited partnership?
Dan Briody: Yes. Itís a limited
partnership. And as such, itís under no obligation to
release any of its financial data. So itís very difficult
for the average citizen to find out what the holdings of this
company are and where the conflicts of interest might be. You
may have noticed that they "opened up" their website
recently because they were receiving a lot of criticism for being
secretive and closed up. But theyíre still controlling
what information theyíre putting on that website, so itís
not like weíre getting a look under the hood, so to speak,
of this company. And theyíll never go public. They would
never do that.
BuzzFlash: Now probably the most controversial
relationship is the relationship of former President Bush to the
company. As you point out, so many of the members of the cast
of characters in the Carlyle Group have been associated with past
administrations, particularly Reagan and Bushís. Former
President Bush has probably the highest profile relationship.
What is his relationship to the Carlyle Group, and what has he
been used for?
Dan Briody: George Bush Sr. is a senior
advisor to the company -- again, an ambiguous term -- but essentially
his role is to travel abroad and meet with foreign business leaders
and foreign heads of state, give speeches on behalf of the Carlyle
Group, and pack the house full of wealthy investors who will contribute
to Carlyleís buyout fund. And also he has had his hand
in a number of deals for Carlyle. He has worked closely with
business leaders in South Korea and in Saudi Arabia. Heís
very close with the bin Laden family. Heís close with
the royal family in Saudi Arabia. So heís been very, very
involved and a very effective business partner for the Carlyle
Group for a number of years now.
BuzzFlash: Is there cause to be concerned?
Some people who cover Carlyle also mention that one shouldnít
solely focus on him, because he sort of jumps in and out. Itís
more the day-to-day people who cross back and forth between their
relationships with government officials and the private industry
- the military-industrial complex, if you will, as Eisenhower
called it. But former President Bush is the most visible symbol.
Do you have any speculation on how that might impact foreign
policy, since heís the father of the current president?
Dan Briody: There have been numerous
reports that have been widely circulated, and not disputed, by
the New York Times, Wall Street Journal, of how the father of
the president is advising his son on foreign policy. Certainly
in the first year, he was very active in advising his son on policy
toward Korea and toward Saudi Arabia. And in both cases, he stepped
in and placed phone calls himself to the leaders of those nations
to try to smooth things over for his son, who was struggling a
little bit in the early going, in dealing with some of those more
sensitive areas. So I think that the impact of the father on
the son in foreign policy has been very significant and very inappropriate,
given the investments of George Bush Sr.ís company in both
regions ñ in both the Korean peninsula and in Saudi Arabia.
BuzzFlash: On pages 144 to 146, you discuss
a little bit of the relationship between Carlyle and the bin Laden
family. Can you just mention that in passing, and what that relationship
was and perhaps is now?
Dan Briody: The Carlyle Group started
working in Saudi Arabia in the early ë90s through a Saudi
prince, who is one of the biggest foreign investors here in the
United States. And through that relationship, they started expanding
their business in Saudi Arabia very significantly. One of the
most important investors that they found in the kingdom was the
bin Laden family, which, of course, owns the Saudi Binladin Group.
It's about a $5 billion construction company -- extremely wealthy
family, extremely successful company, and who officially disavowed
Osama bin Laden back in the early ë90s.
So they had been doing business with the
bin Laden family for, give or take, five or six years, when Sept.
11 happened. And suddenly, Osama bin Laden became public enemy
number one. He was on the cover of all the newspapers. And it
came to light that this company that was employing George Bush
Sr. counted the bin Laden family among their investors. And they
had to divest themselves from that relationship because of the
BuzzFlash: And although you donít
mention it, there are those, including author Greg Palast, who
have claimed that the Bush administration ferreted out members
of the bin Laden family on special planes after Sept. 11. But
again, thatís not a part of whatís in your book,
but weíre just pointing that out.
Letís look at United Defense as
one example of the relationship between the private industry,
the defense industry, and, in this case, itís a publicly
held company owned by the privately held Carlyle Group. Is that
Dan Briody: Thatís right. And
they own 50% of it.
BuzzFlash: And what is United Defense?
Maybe you can give us as a case study of the interrelationship
between a company that has an umbilical cord to the U.S. government,
about how a company like that is never a loser.
Dan Briody: United Defense is a classic
military contractor. They make guns and gun systems, large Howitzer-type,
mobile Howitzers. They make the Bradley fighting vehicles and
the Paladin gun systems that weíve seen a lot of on TV,
especially during the Iraqi war. They are one of the largest
defense contractors to the Army in the nation. And the Carlyle
Group has owned this company since 1997.
When they bought the company, there was
a gun program that was the future of United Defense. It was a
gun called the Crusader. It was essentially a next-generation
Paladin gun system ñ a very large, mobile Howitzer. It
looks like tank, but itís essentially an enormous gun.
And the Crusader was heavily criticized by a national defense
panel that was put together to assess the military requirements
going forward. It was called too heavy, too slow ñ a Cold
War relic. And it was on the chopping block for years after that.
But the Carlyle Group was able to mount a very successful campaign
by using strategically placed lobbyists, by extending their personal
relationships with folks in the Pentagon and in Washington, and
by waging essentially a public relations campaign for the gun,
and they kept it alive through successive rounds of defense budget
cuts ñ miraculously.
No one could believe that this gun had
survived as long as it did. And then finally after Sept. 11,
when all ships were sort of, you know, rising on the tide of defense
spending, they were able to take United Defense public, make hundreds
of millions of dollars off of that IPO, only to then finally have
the Crusader program cancelled in a very public fashion by Donald
Rumsfeld in an announcement. But of course, behind the scenes,
what the public didnít see was that United Defense was
awarded a brand-new contract for a brand-new gun that very same
day that the Crusader program was cancelled. In fact, the press
release that United Defense put out about it had the announcement
of the new contract in it as well.
BuzzFlash: So they were essentially held
Dan Briody: Yes, exactly.
BuzzFlash: Perhaps this is more of a
comment, but we found it not-so-curious that after the controversial
visit of Bush to the U.S.S. Abraham in the flight suit, that he
returned to California from 30 miles offshore and gave a speech
at, of all places, the United Defense plant. Do you have any
thoughts there about the fact the President of the United States
is speaking at a plant that is 50% owned by a company that his
father is a consultant with?
Dan Briody: I think itís brazen,
and I think itís shameless. And I think that that will
go down as a hallmark of this administration. We have seen an
absolute affinity for mixing business and politics, and throw
in a war and youíve got the Bush administration. And that
scene of him giving that speech at United Defenseís plant
in Santa Clara summed up perfectly what this administration is
BuzzFlash: So all the interconnections
were right there -- he was boosting the war effort, talking about
keeping the country secure, which meant, in this case, he was
praising the employees of United Defense, who, in essence, are
employees, in part, of the Carlyle Group, with which his father
Dan Briody: He was doing it all. He
was pitching a tax cut for the very wealthy while doing an advertisement
for his fatherís company, and professing the war to be
over, and kicking off his reelection campaign, all in one fell
swoop. It was an amazing achievement.
BuzzFlash: And yet for all these connections,
I did not see any of them in the press. I only made them because
of your book, and knowing about the Carlyle Group, and just going
back and confirming that United Defense was, in essence, a company
that the Carlyle Group had ownership of.
Dan Briody: It was missed by most of
the mainstream media, and that was very disappointing. But The
Nation picked up on it, thank God.
BuzzFlash: Going in another direction,
you detail how the firm, when it was opened in 1987, picked the
name, "the Carlyle Group."
Dan Briody: Well, the co-founders, David
Rubenstein and Stephen Norris, were, at the time, meeting frequently
at this hotel on the Upper East Side of New York called the Carlyle
Hotel. And the Carlyle was very, very, very opulent and itís
a very swanky establishment. Itís a beautiful hotel.
And these guys were looking for a name that gave them a sense
of legitimacy and credibility in the industry. They wanted something
that was a little blue-blood, or, as Steve Norris put it, gave
them a silk-stocking air. And so they thought that the Carlyle
Group was the right way to go. And certainly it does have that
blue-blood, old money kind of feel to it, even though itís
only 15 years old.
BuzzFlash: Your book about the Carlyle
Group, subtitled Inside the Secret World of Carlyle Group, is
called The Iron Triangle. Why did you choose that title?
Dan Briody: Well, "the iron triangle"
is the euphemism that is employed in a number of different areas.
But among the areas that itís employed is this confluence
of business and politics that Eisenhower was talking about when
he referred to the military-industrial complex. This is a combination
of power and influence that is very dangerous and can result in
foreign policy decisions that are based solely on monetary concerns
of very few people. And thatís what I think weíve
found here today.
BuzzFlash: Recently we've read that the
Carlyle Group is starting to dabble into media acquisition. Is
that right? And if so, should we be worried about that?
Dan Briody: Yes, they have picked up
a couple media companies. They, for a while now, have owned a
very popular publication called Le Figaro in France, and they
have been expanding their media acquisitions. And I definitely
think this is something that we should be concerned about. I
mean, anytime you see a company that has this much political clout
-- and obviously has a political agenda -- picking up media properties,
youíve got to be concerned, especially with the action
that the FCC has taken so far this year. Weíre looking
at the potential for having a real controlling influence in the
media. And I personally would not like to see Carlyle Group controlling
the information that I receive on a daily basis.