The Carlyle Group

"By hiring enough former officials to fill a permanent shadow cabinet, Carlyle has brought political influence to a new level and created a twenty-first-century version of capitalism that blurs any line between politics and business. In a sense, Carlyle may be the ultimate in privatization: the use of a private company to nurture public policy--and then reap its benefits in the form of profit. Although the fund claims to operate like any other investment bank, it's undeniable that its stable of statesmen-entrepreneurs have the ability to tap into networks in government and commerce, both at home and abroad, for advance intelligence about companies about to be sold and spun off, or government budgets and policies about to be implemented, and then transform that knowledge into investment strategies that dovetail nicely with US military foreign and domestic policy."

"A good analogy to the Carlyle system is a Japanese tradition known as amakudari (literally, "descent from heaven"). Under this system, senior officials from Japanese ministries retire, only to be instantly hired as senior advisers by the companies and industry groups they were paid to regulate. "What we're really talking about is a systematic merging of the private and public sectors to the point where the distinctions get lost," said Chalmers Johnson, president of the Japan Policy Research Institute and author of two acclaimed books on the Japanese system of governance. "The Carlyle Group is a perfect example. It's the use of former government officials for their access to government bureaucracies to determine contractual relations. It's inside knowledge--knowing where the government is going to spend money and then investing in it."

" Outside of the conservative Judicial Watch and the muckraking Center for Public Integrity, there has been little public interest in the Carlyle system of capitalism and where it is going. Congress, meanwhile, is too busy seeking Carlyle's advice even to ask the question. The people who run Carlyle may hate the word secrecy, but their words and actions make it impossible to know where the policy-making ends and the money-making begins."

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"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 defence budget, Carlyle has been able to extract massive profits from its defence holdings."

"The Hungarian-American Soros already had a reputation as the most prescient and successful investor in the world. So when he agreed to become a limited partner in Carlyle's new fund he was bringing far more than just $100 million. With his reputation for making gobs of money, Soros was also jump-starting a fund that would go on to be the most successful in Carlyle's history. By the time Carlyle Partners II closed in September 1996, the fund had raised more than $1.3 billion. From this massive fund, the company would spread its investments all over the defence world. Names like Aerostructures Corp., United Defence, United States Marine Repair, and US Investigations Services dominated the list of investments. And most of them had one thing in common: they depended on government contracts to make a living."

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