The Iron Triangle: Inside the Secret World of the Carlyle Group
“…strongly recommended to anyone who enjoys a good conspiracy theory.” (The Spectator, 21stJanuary 2006)A TRUSTED adviser to the Pentagon stands to make $725,000 for advising a company seeking a deal that the government opposes on national security grounds. When the country is at war, no less.This very recent tale, of Richard N. Perle, who was chairman of the Defense Policy Board, a voluntary citizens advisory body, but thought nothing wrong of his arrangement, shows that few topics could be more timely than the web of government, business and military interests that lobbyists and bureaucrats call the iron triangle.Now a first-time author, Dan Briody, has come along with "The Iron Triangle: Inside the Secret World of the Carlyle Group" (Wiley, $24.95), which aspires to tell the ultimate tale of private interests trampling on public trust. Carlyle is the Washington buyout firm that has made the most of its unusual political connections to complete some rarified deals. As the author warns in his preface, "the scandal here is not what's illegal but what's legal."The firm and the world in which it operates have been the subjects of previous profiles, most memorably a 1993 article by Michael Lewis in The New Republic. He called Carlyle the "neat solut ion f or people who don't have a lot to sell besides their access, but who don't want to appear to be selling their access." Mr. Briody himself wrote about the firm in December 2001 in Red Herring magazine.And therein lies the problem. The book is one-stop shopping for anyone who wants a laundry list of accusations against Carlyle since its inception in 1987. But in the year or so that the author was researching and writing the book, he did not unearth enough hard proof of self-dealing to sustain 210 pages. It feels padded, even without the 50 pages of addenda.Clearly, with a Bush back in the White House, Mr. Briody and his publisher must have been expecting that Carlyle's connections to the Bush family would sell the book. But even if Carlyle's deals eventually enrich the current president and his father, the former president, that does not mean that their every action was for that reason.Readers might also ask if it is surprising that a firm like Carlyle, which has long made its living in the military industry, would be making big money now that the country is obsessed with security. A book of this ambition ought to be able to weed out apparent conflicts of interest from actual ones and coincidences from conspiracies.The chapters in which the author comes closest to finding conflicts involve instances in which public officials awarded contracts, gave favorable treatment or turned over public money to Carlyle before leaving office. Then, in a blink, they turn up working for the firm or companies associated with it.Certainly, permissive laws that rely on former politicians' own sense of shame about capitalizing on connections have helped buoy Carlyle's fortunes. As of June 2002, the firm had $13.5 billion "under management," as they say on Wall Street.What makes Carlyle so utterly different is its pedigree. It was started by Stephen L. Norris, a former tax whiz for Marriott, and David M. Rubenstein, a onetime aide to President Jimmy Carter. What brought them together initially was a tax break that let Eskimos sell their business losses to outsiders for cash. The two teamed up to broker those tax breaks, earning $10 million in fees and costing the government $1 billion in taxes from profitable companies.In September 1988, Carlyle started hiring a string of other Washington insiders, starting with Frederic V. Malek, a former aide to President Richard M. Nixon who also had undeniable connections to the Bush family, Saudi royals and others worth knowing, the author writes.The all-star cast grew to include Frank C. Carlucci, a former defense secretary and former deputy director of the C.I.A., and John Major, the former British prime minister.It even hired a former oil man to serve on the board of one of its companies. That director, George W. Bush, is now president.CARLYLE'S purchase of a company called Vinnell in 1992 confirms the author's worst suspicions. He argues that it illustrates the perils of the iron triangle "in one neat utterly secretive package." Vinnell trained foreign armies, and the book quotes an unidentified former board member as saying the company was a front for the C.I.A. But much of the intrigue that is recounted here happened before Carlyle bought the company. It sold the unit to TRW in 1997.Certainly, the stakes grew when James A. Baker III joined Carlyle in 1993. Here was a man — chief of staff for two presidents, Mr. Reagan and the elder Mr. Bush, as well as a former Treasury secretary and a former secretary of state — who could provide influence globally the way Mr. Carlucci, with his 32 corporate board seats, had done at home.One of Mr. Briody's more fascinating revelations is at the end of the book, and one only wishes he had made more of it. He argues that because state pension funds plow money into Carlyle, bigwigs inside the Beltway aren't the only people who stand to become rich. That also explains, perhaps, why the public does not have much incentive to shut the crony capitalists down. (The New York Times, Sunday, April 13, 2003)"...Undoubtedly, the story of the Carlyle Group is fascinating...a book worth reading..." (Professional Investor, June 2003)"...useful reading for anybody interested in American politics today..." (Economist, 28 June 2003)"...conspiracy theorists will love this investigation in to the Carlyle Group..." (EN Magazine, July 2003)