Carlyle caught in Iraq spotlight
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by Vyvyan Tenorio
TheDeal.com
Posted 05:04 EST, 13, Oct 2004
Less than a month after Carlyle Group co-founder David Rubenstein told a New York audience that his Washington buyout firm would rely less on politically connected executives in the future, those renowned connections have once again brought the firm unwanted attention.
In the November issue of The Nation, contributor Naomi Klein charged that former Secretary of State James Baker III's duties as a special envoy lobbying for forgiveness of Iraq's debts conflict with his position as a partner and senior counsel at Carlyle. Klein reported that the firm is part of a consortium secretly negotiating with the Kuwaiti government to help recover $27 billion in unpaid reparations from Iraq's 1990 invasion of Kuwait — a collection effort that would be at odds with Baker's diplomatic mission.
The Guardian in Britain also published an abridged version of the story this week.
Both Carlyle and Kuwait's ambassador to the U.S. said that the proposal to have Carlyle aid Kuwait is dead. But the press reports have nonetheless unearthed confidential documents that speak volumes about the type of glad-handing Rubenstein recently sought to downplay.
President Bush appointed Baker as an unpaid special envoy in December 2003, calling the job "a noble mission." At the time, the story said, there was widespread concern that Baker's business dealings in the Middle East would compromise the mission.
The article cited a confidential 65-page proposal as evidence of Baker's divided loyalties. It said the consortium proposed a complex transfer of as much as $57 billion in unpaid Iraqi debts, including reparations.
The consortium would offer a roster of former top-ranking U.S. and European politicians who have "personal rapport with the stakeholders in the anticipated negotiations" and who could persuade world leaders that Iraq must "maximize" its debt payments to Kuwait, the report said.
That proposal, submitted in January and resubmitted in August, is directly at odds with the stated U.S. foreign policy goal of paring down Iraq's debt burden, it said.
According to letters published online by The Guardian, the consortium also includes Albright Group LLC, led by former Secretary of State Madeleine Albright; international law firm Coudert Brothers LLP; Emerging Markets Partnership, an affiliate of American International Group Inc. led by Moeen Qureshi, former prime minister of Pakistan; France's BNP Paribas SA; and Nexgen Financial Solutions Ltd., an investment firm owned by the French and Singapore governments.
But Carlyle spokesman Christopher Ullman said emphatically Wednesday, Oct. 13, that his firm is not part of the consortium.
"When James Baker was named special envoy in December 2003, Carlyle withdrew from those discussions and did not join this consortium," he said. "However, we had indicated to them that if the Kuwaitis wanted to invest any of that money, we would be happy to manage it for them, as we already do for the Kuwaitis." The Kuwaiti Investment Authority is an investor in Carlyle funds.
Ullman said the consortium presented its proposal without Carlyle's knowledge and without anyone at Carlyle seeing the document. "We disavow any connection to that document," he said.
As for Kuwait, Salem Abdullah al-Jaber al-Sabah, its ambassador to the U.S., said Wednesday that "as far as I know, my government is not entertaining or considering this proposal or any other proposal." He said he had told Klein that Tuesday.
A State Department spokesman could not be reached for comment. |
