"We nonviolently oppose the reliance on unilateral military actions rather than cooperative diplomacy."


October 14, 2004

In an important exposé posted on Tuesday, October 12, on the Nation magazine's web site and appearing in the issue dated November 1, 2004, journalist Naomi Klein has revealed that former U.S. secretary of state and Bush family intimate James A. Baker III, named by George W. Bush last December 5 as special envoy to negotiate the reduction of Iraq's foreign debt, took advantage of his position to attempt a scheme to enrich the Carlyle Group, a private equity firm he joined in 1993.

Although Baker's mission as presidential envoy was to negotiate the reduction of Iraq's debt with the leaders of the world's nations, he placed himself in a position in which he was, at the same time, through his partnership in the Carlyle Group, exerting pressure on Kuwait to sign an agreement by which he would profit from working to maximize the amount of Iraqi debt that would be maintained and paid to Kuwait.

In a world that valued a minimal standard of integrity, this would be a political scandal of the very first order.

Jerome Levinson, an expert on political and corporate corruption at American University, said the arrangement in which James Baker involved himself was "one of the greatest cons of all time. The consortium [of which the Carlyle Group is a part] is saying to the Kuwaiti government, 'Through us, you have the only chance to realize a substantial part of the debt. Why? Because of who we are and who we know.' It's influence peddling of the crassest kind."

This extraordinary and staggering attempt to profit from a conflict of interest also involved complex machinations with the Albright Group, another private equity firm headed by another former U.S. secretary of state, Madeleine Albright, apparently in order to conceal what was going on.

The Carlyle Group itself is essentially an ingenious and extremely successful attempt to transform access to decision makers into corporate assets.

As Craig Unger explains in his book House of Bush, House of Saud (Scribner, 2004), in 1993 the Carlyle Group made James Baker a full partner (though the firm's web site now lists him as a "senior counselor"). By joining the firm in 1993, he allowed it to "go global." The Carlyle Group had dealt mostly with U.S. financial interests till then.

The Carlyle Group became, in the 1990s, according to Unger, a way for the Saudi royal family "to show their deep gratitude to President Bush for defending the Saudis in the Gulf War." (George H.W. Bush, the former president, is not a partner, but joined the firm as a senior adviser in 1995; he has often been paid $80,000 to $100,000 per speaking engagement by the Carlyle Group.) Unger, who appears briefly in Michael Moore's "Fahrenheit 9/11," has estimated the amount of money that the Saudis have invested in the Carlyle Group as $1,268,600,000, much of it involved in Saudi military contractor deals with companies owned by the Carlyle Group, like Vinnell (the subsidiary of a company owned by Carlyle from 1990 to 1998).

Essentially, James Baker has been clever enough to turn war profiteering into an enterprise that is profitable on a colossal scale, and thanks to these extraordinary leaked documents, Naomi Klein has caught him red-handed at it.

Politically, no one is more closely tied to the Bush dynasty than James Baker, who has served as adviser, attorney, White House chief of staff, cabinet officer, campaign manager, presidential debate negotiator, and whatever you want to call the role he played in Florida in December 2000.

Corruption on this scale takes one's breath away.

Like wounded sea anemones, the suspect parties are at present furiously pulling in their tentacles while proclaiming the purest of motives. Now that the "confidential" proposal has been outed, "the plan is clearly dead," a spokeswoman for the Albright Group told the Washington Post yesterday. But why should the Carlyle Group, the Albright Group, and the others involved back off, if their motives were really "to help secure justice for victims of Saddam's invasion of Kuwait and ensure that compensation to Kuwaiti victims, fully consistent with U.S. policy, be used to promote reconciliation, environmental improvements and investment in Kuwait, Iraq and the region," as Madeleine Albright's "consulting firm" said yesterday? And in any case, we are told by a spokesman for the Carlyle Group, care would have been taken to make sure that James Baker would not have benefited personally from the Kuwaiti business.

If the U.S. mainstream press were an agent of democracy rather than the moribund corporate captive that it is, this extraordinarily blatant (albeit secret) effort to earn enormous profits from influence trading would be an opportunity to expose the routine level of corruption and influence-peddling endemic to the American national security market-state, as well as to educate the public about the values of the U.S. political class. As it is, the New York Times, for example, has still not even mentioned this scandal, and the Washington Post buried its article in the "Business" section.

United for Peace of Pierce County is not a partisan organization and endorses no candidates. But we may point out that one strong though not often heard argument for John Kerry's candidacy is the fact that he led the Senate probe into the BCCI international banking scandal, an earlier manifestation of this sort of global corporate corruption, and showed that he has a thorough understanding of how BCCI used "shell corporations, bank confidentiality and secrecy havens, layering of corporate structure, front men and nominees, back-to-back financial documentation among BCCI-controlled entities, kickbacks and bribes, intimidation of witnesses, and retention of well-placed insiders," to quote Kerry's and Senator Hank Brown's The BCCI Affair: A Report to the Committee on Foreign Relations, United States Senate (December 1992). (Quoted in Craig Unger, House of Bush, House of Saud: The Secret Relationship between the World's Two Most Powerful Dynasties [Scribner, 2004], pp. 121-22.)

United for Peace of Pierce County calls on Congress to investigate this matter further, to determine whether criminal statutes and administrative regulations banning government officials from participating in government business from which they could derive a profit -- which includes actions that affect an outside company that employs the official -- were violated in this affair. In the aftermath of the unjustified invasion of Iraq and the Abu Ghraib torture scandal, it is in the highest national interest to get to the bottom of this affair.


"We nonviolently oppose the reliance on unilateral military actions rather than cooperative diplomacy."