The Military-Industrial-Complex With A Vengeance II

Those who think that they can easily connect the dots in order to reveal a shadow government that moves in and out of the world of military contractors, the Pentagon, and White House should think again. That approach may have worked in the 1960s but will not get one as far in the 21st century. This realization may prove to be especially critical to grasp in the Bush administration, which may have more connections to the private defense industry, the intelligence community and Wall St. than any presidency in American history.

We can begin to demonstrate this by taking a look at the Carlyle Group, a $12 billion private equity firm, that has over two-thirds of its investments in defense and telecommunications companies.

We first referred to the Carlyle Group in our editorial "Military Industrial-Complex With A Vengeance", which pointed out the fact that James Baker III's involvement in the Florida recount was no accident and should have sent signals to those interested in just who would be guiding much of George W. Bush's decisions, if he were to become president. Though the mainstream media never mentioned it at the time, it turns out that Baker is a partner in the Carlyle Group.

And we comfortably state that James Baker and Carlyle stand to make much more money with George W. Bush in the White House than he would have with Al Gore in the White House.

Certainly a lot of money rides on who becomes President of the United States.

Many may not have realized this reality when chads were being examined in Florida, but with each passing day, it seems, more evidence pours in to support the belief that a Bush White House may mean brisk business for the Bush family and the most prominent members of the Reagan and Bush administrations of old.

"To the winner goes the spoils", the old saying goes, and this has never been more true than in American politics - the 2001 edition.

In an article about the Carlyle Group in the March 5, 2001 New York Times entitled, "Elder Bush in Big G.O.P. Cast Toiling for Top Equity Firm", Leslie Wayne writes:

"Many of those involved with Carlyle, which invests largely in companies that do business with the government or are affected by government regulations, have ties to the Oval Office.

For instance, Frank C. Carlucci, a Reagan secretary of defense who as much as anyone is responsible for Carlyle's success, said he met in February with his old college classmate Donald H. Rumsfeld, the secretary of defense, and Vice President Dick Cheney, himself a defense secretary under former President Bush, to talk about military matters - at a time when Carlyle has several billion-dollar defense projects under consideration."

But Carlyle does not just depend upon members of the Bush administration to get it business. It goes right to source. Former President Bush is a compensated adviser to the Carlyle Group. Although it is hard to track the flow of cash, both Bush and Baker stand to make a pretty penny for their respective roles with the company.

Wayne writes:

"It is difficult to determine exactly how much money the senior Mr. Bush and Mr. Baker have made. Mr. Baker is a Carlyle partner, and Mr. Bush has the title senior adviser to its Asian activities. With a current market value of about $3.5 billion on Carlyle's equity and with the firm owned by 18 partners and one outside investor, Mr. Baker's Carlyle stake would be worth about $180 million if each partner held an equal stake.

It is not known whether he has more or less than the other partners. Unlike Mr. Baker, Mr. Bush has no ownership stake in Carlyle; he is an adviser and an investor and is compensated by obtaining stakes in Carlyle investments. Carlyle executives cited, for example, Mr. Bush's being allowed to put money he earns giving speeches for Carlyle into its investment funds. Mr. Bush generally receives $80,000 to $100,000 for a speech. He sits on no corporate boards other than Carlyle's."

And then there is the reality that George W. Bush himself has benefited from the Carlyle Group and the appearance that he helped to steer business its way:

"Carlyle also gave the Bush family a hand in 1990 by putting George W. Bush, who was then struggling to find a career, on the board of a Carlyle subsidiary, Caterair, an airline-catering company...the Texas teachers pension fund - whose board was appointed when George W. Bush was governor - gave Carlyle $100 million to invest in November."

A coincidence? The appearance of impropriety? Or just business as usual for the military-industrial complex?

With the news that Treasury Secretary O'Neill has $100 million in stock options with Alcoa and Bush Chief of Staff Andrew Card enters the Oval Office from his days as a chief lobbyist for the auto industry and with the various stock holdings of members of the Bush administration gaining media attention, legitimate questions can and should be raised about the reality that a shadow government looms very large in the Washington D.C. skyline.

We'll see who continues to trace its silhouette.

Cedric Muhammad

Wednesday, March 7, 2001

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