Used with permission from Guerilla News Network
In one of the more ironic twists to come out of Fahrenheit 9/11, the Loews theater group, whose screens are currently showing the anti-Bush opus across the country, was recently bought by the Carlyle Group. The shadowy private investment firm is implicated by Moore as a key part of the insidious web that connects (or once connected) the Bush family to the Saudis, including the bin Laden family.
For most Americans, F-9/11 was the first they'd heard of Carlyle. What is it, who is involved and how does it make its money?
Dan Briody, who is featured in the doc, is the author of The Iron Triangle: Inside the Secret World of the Carlyle Group, as well as the newly released The Halliburton Agenda.
One of the foremost experts on the Carlyle Group, no one can accuse Briody of being a conspiracy theorist. He's a business reporter, formerly of Red Herring, who began following the Carlyle story shortly after 9/11. In our latest Cointel interview, GNN gets the lowdown on Carlyle's shady origins, the cosy relationship between the Military Industrial Complex and current and former elected officials, and why the big media has ignored the story:
GNN: What is the Carlyle Group and how did it start?
Briody: The Carlyle Group gets its name from the Carlyle Hotel in New York City. The founders believed that the name Carlyle portrayed some kind of blue blood, silk stocking air of an old-school kind of investment house and so the Carlyle Group was born from the Carlyle Hotel in New York.
The Carlyle Group actually started through a tax loophole - something called the Great Eskimo Tax Scam, that's what the company calls it today. The Tax Scam was essentially that Eskimo owned companies in Alaska were allowed to sell their losses to profitable companies in exchange for cash. The profitable companies would buy these losses then write them off their taxes and give a fraction of those losses to the Eskimo-owned companies who obviously needed cash. So a guy named Stephen Norris was a tax accountant essentially at Marriott Corporation, looking to exploit this tax loophole for Marriott and in so doing, he needed to find someone who could hook him up with Eskimos - Native Americans in Alaska, and he was able to find a guy by the name of David Rubinstein who was an aide in the Carter administration and who was renowned for his bulky rolodex.
If you needed to find someone or know someone, David Rubinstein was the guy to go to. So Stephen Norris and David Rubinstein hooked up and worked a deal for Marriott and Stephen Norris realized that this was a serious money making opportunity and that he was going to go into working this tax loophole full time, which he did, along with David Rubinstein, and they probably put close to a billion dollars through this tax loophole and took a 1% cut on all the transactions and were able to make a nice little cottage industry out of this tax loophole. The two of them used to meet often at the Carlyle Hotel here in New York and when they decided to incorporate, Norris wanted the company to have a sort of silk stocking air to it. He wanted to have a very blue blood feel to their private equity firm and since they met at the Carlyle Hotel a lot, he decided that should be the new name of the company and then the Carlyle Group was born…
GNN: What direct benefit has been accrued by Carlyle since the war and more specifically talk about what they own and what they are all about?
Briody: The Carlyle Group is a private equity firm, which essentially means that they invest in private companies - they take money from private investors and then invest that money into private companies. They essentially work like a mutual fund would, only instead of buying and selling stocks, they buy and sell companies. So they have different funds and among those funds are industries that are heavily government regulated. So health care, telecommunications and two of the biggies are defense and aerospace. Those are the industries that Carlyle got their start on back in the early 90s. It is what they have built their practice on.
Briody: I actually think that the American people, to some extent, have come to accept relationships like this between high-level ex-politicians and very profitable businesses. At the same time, the story of the Carlyle Group was something that was very much underneath the radar prior to 9/11. There had been a couple of stories that had come out by some enterprising journalists that had been good at scratching the surface of what this company was about, but overall they didn't really delve into just how enmeshed this company is, particularly in the current administration and with the political situation in Washington DC. After September 11, it became clear that the Carlyle Group was in bed with the bin Laden family.
The bin Laden family was an investor in the Carlyle Group. The fact that the bin Ladens were investing in a company that was largely a defense aerospace company at a time when George W. Bush was going to war against Osama bin Laden, left the company open to some serious criticism. At that time we started investigating a little bit further. I was working for a magazine called Red Herring, which no longer exists. We wanted to look at business stories coming out of 9/11. What kind of financial impact is the disaster of September 11 having on the financial industry? And we wanted to find companies that were actually doing well after 9/11 and Carlyle Group was actually one of those companies. They had investments spread out in all kinds of areas that set them up to profit from 9/11 including aerospace and defense obviously, and also biological cleanup. One of their companies scored the contract to clean up the Senate building after the anthrax scare. They had companies that do security background checks for government employees and airline employees, which obviously skyrocketed. So they had investments spread around a lot of different areas that benefited greatly from September 11.
GNN: What is it about this type of reporting? What is about the links between a company that benefits from war and its links to administration officials that makes it so highly suspect, do you think?
Briody: I think that first of all, conflicts of interest between administrations and businesses is a very subtle type of story to report. You are not going to find a document that is signed by George W. Bush that says give Carlyle more contracts - let's do something to beef up their business. That's not going to happen. Those things don't exist and in many ways, those things don't even need to be said. A lot of these things are understood among the Washington DC community. Everyone in Washington knows that George H. W. Bush worked for Carlyle and everybody knows his son is president. These things are understood to some extent and some of these deals are made over a beer, a wink, or a cup of coffee, that kind of thing. So there is no hard evidence that you're going to find. That's why conflict of interest laws in this country are so severe and that the appearance of conflicts of interest is what really counts when we are talking about these kinds of relationships.
Investigating a story like this, you know you are not going to be able to talk to the folks who are part of the company. You know the administration is not going to talk to you. So you have to find the people that will talk and many of them are afraid of repercussions from either the company or the administration, as we are seeing now just with the story about the CIA link leaks - that this administration is certainly capable of those kinds of repercussions.
GNN: We all remember being warned of the military industrial complex but after that it became quite moot. We understand that there is this business that makes weapons and benefits from war, and like any business we know that people try to create business by creating favorable conditions for it. So two parts:
1: Has there been a traditional taboo about reporting on this business of weaponry and encouraging politicians to use it?
2: Is there an implicit benefit of going to war and how do they create environments that are favorable to this business?
Briody: Your second question is the question that needs to be investigated I think. Can these companies - can the military industrial complex influence the administration's decision to go to war? If that is the case then Dwight Eisenhower's worst nightmares have been realized and we do have a military industrial complex, which is moving our country toward war for the sake of profit. That is a collective issue. That is not something that just the Carlyle Group is involved with. That's something that all the defense contractors and further privatization of the military are working in concert to further. I think in the 40 years since Eisenhower warned us about the military industrial complex there has been a gradual acceptance by the American people of this type of business.
It's taken 40 years - year after year after year, more and more of the military becomes privatized. More and more of the defense industry becomes ingrained in the political environment in Washington DC. So over time we have come to accept that this is just the way we do business here in the U.S. We have the strongest military in the world. Do we want to sacrifice that? Not really. So that is just one of the collateral effects of that industrial complex. But just because it is happening gradually and just because we have grown immune or numb to it, doesn't mean that it isn't a terrible situation that needs to be addressed now, or as quickly as possible.
Since the war in Iraq, we have seen more and more of these issues coming to light and they don't stop coming. There is company after company that seems to be tied closely to the Bush administration or the previous Bush administration that are cashing in on war and the rebuilding effort. You've got Halliburton, Carlyle, Bechtel, Newbridge, this new company that is designed to advise people on how to invest in Iraq. The list goes on and on. At what point do we as people and we as a media say enough is enough.
This is the story and it needs to be investigated more than just by the media. It needs to be investigated by the Congress. Something needs to change.
GNN: There is a phenomenon from gangster movies where the mafia come in, they beat up a storeowner, he pays them some money and they don't talk about it. In what ways is the defense industry sort of saying, We are taking care of your ass, you don't want to come after us and start pulling us apart. Is there a phenomenon at work almost of gangsterism?
Briody: I think there is a patriotism effect. It doesn't operate like the mob so much as being afraid of getting your legs broken. It's more that to report about the defense industry and to undermine that industry in any way can be seen as an unpatriotic act. You don't believe in our country. You don't believe in the protection of our country. It's so easy to dismiss people who criticize the defense industry, especially after 9/11. It's almost impossible to come out and really be critical of the defense industry. So I think there is some sort of phenomenon in this country with Americans in general and I think that spills over into the media, where there is a certain unwillingness to take on the defense industry, and to a certain degree that has been exacerbated since September 11.
GNN: What happens to someone who steps outside of the safe zone of healthy criticism?
Briody: There have been politicians and there have been Congressmen and Congresswomen who have taken up this fight. The first one that comes to mind is obviously Cynthia McKinney, when she said the right thing at the wrong time - when she talked about the Bush administration's ties to the Carlyle Group and the potential benefit of Carlyle from 9/11 and the war on terrorism. At the time that she said these things, Americans were not willing to hear this kind of talk. They were still mourning September 11, they were still angry, and patriotism was running at an all time high. So at that time, to question the Bush administration and to question our military was political suicide, and Cynthia McKinney committed that. At the same time, things have changed dramatically since then. In the six months since she made her comments, we now see Senators and Congressmen, dozens of them coming out.
Right now the issue is Halliburton. Right now that's the easiest issue for these guys politically to latch onto, and we have seen a lot of criticism of the administration for its close ties to these businesses that are war profiteers and making money on the rebuilding in Iraq. So I think the culture has changed to some extent, and I think that that's a healthy thing, and I hope it continues and that maybe we can actually get some legislation to further regulate these businesses.
GNN: Capitalism…let's talk about the philosophy. To what extent does the pursuit of the American dream prohibit us from being critical of situations like Halliburton, where we have Cheney sitting in the White House and benefiting from the company. Talk about the more psychological underpinnings of capitalism that make it difficult for us as a culture - and for Tom Brokaw - to talk about those relationships.
Briody: What the Carlyle Group demonstrates and what stories of this nature demonstrate is that Americans are having a tough time distinguishing between capitalism and democracy. I think many of us around the world believe that we are exporting something that's like democracy but that looks more like capitalism actually. And when you see how the administration is planning to rebuild Iraq, what's more important in Iraq - democracy or capitalism? Because they go hand in hand now.
So it's difficult to distinguish the two for the average American and certainly all of us, to some extent, have ingrained within us this belief that we live in a society that's free, which means we can do whatever we need to do to be successful financially in this country… and many people are brought up willing to do whatever they have to do, and if that means mixing politics with business, that's not a problem. That hasn't been a problem for many years, so the laws of conflict of interest still dictate that a politician entering office should have absolutely no business ties to any company, which could impede their judgment when they are making decisions. They should be unimpeded, and that's something that has been clearly lost in the past two decades. There are plenty of business ties and I think that is something that continues to get worse actually.
GNN: Why does that make it more important for the media to give more scrutiny to these stories?
Briody: The media is the vehicle which drives a lot of social change, so if the media picks up on this story and starts to really pound away at it and point out the conflicts of interest and the inappropriateness of these relationships, then we can start to see our congressmen and senators get more involved and start to push through first, investigations of these relationships, secondly some legislation, and thirdly ultimately regulations of these types of relationships and the industry. The media has got to be the vehicle that brings this issue to the front pages and makes it politically acceptable for our congressmen and senators to really start pushing these hot buttons.
GNN: Are you hopeful?
Briody: I think that those Americans that I have met with who have been exposed to this story and who have been exposed to the book have been very receptive. They have been galvanized. They get very excited and they want to make a change. They want to make things happen. The problem is getting the word out to more people and that should be the role of the media. The more people who know about this issue, the more people will not accept it as a standard way of doing business. It's not the kind of issue where people just say, this is not a story, it's not interesting. Everybody finds this story interesting and everyone wants to do something about it, it's just that many people don't even know about it. So I think the first and most important thing that needs to happen is that the word needs to get out about it, and for that to happen it has got to fall on the shoulders of the media.
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