The Carlyle Group: Birds That Drink From Cesspools

THE CARLYLE GROUP

Birds that drink from cesspools.

~ o ~

From the book, “American Dynasty,” by Kevin Phillips:

The Axis of Evil -
and the Web of War Profits

Wars, profits, and new wealth have historically been closely linked in the United States, as in the rest of the world. Supplying armies and navies paid well. So did government-licensed looting....

In the United States, at least the politics of obtaining wealth through war has not had a particular party label... Each war had its profiteers, but there was no regional, party, or ideological continuity.

By the end of the twentieth century, however, what began three generations earlier as a new U.S. military-industrial complex had achieved glossy permanence....While many mid-twentieth-century plants had been built by government funds–from 1940 to 1942–a peak of 67 percent of industrial financing was federal–private capital totally dominated the last quarter of the twentieth century.

Military preparedness increasingly became a for-profit activity. By 2003, through an initiative launched by Defense Secretary Richard Cheney in 1992, many government-run military support activities were being replaced by privatization and national security entrepreneurs–the private military corporations (PMSs) that did everything from train police in Croatia to handle Alabama airbase logistics or restore captured oil fields....

If these functions collectively commanded a somewhat lower share of national gross domestic product in 2004 that they had during the Eisenhower years, the opportunities for private enterprise were greater. The much increased share of money going to Pentagon functions, information systems, high technology, homeland security, the CIA, and other intelligence services, “black operations,” and PMC contracts avoided the highly unionized workforces of yesteryear, creating a higher ration of commercial niches.

In the Eisenhower era, aerospace companies earned only a 2 to 3 percent return on assets, half that of manufacturing corporations overall. By the Bush-Cheney years, military contractors could expect two or three times that return....

Indeed, the basic 2004 U.S. military budget of $400 billion a year was more than twice as much as the combines outlays for past and potential foes like Russia, China, Iraq, Syria, Iran, North Korea, Libya, and Cuba. The Axis of Evil was also the Axis of Reduced Military Resources. The U.S. outlay was twice that of all the NATO nations combined, and in 2002 the United States had accounted for 45.5 percent of all global conventional weapons deals and 48.6 percent of those concluded with developing nations. As weaponry became the most successful U.S. manufactured export, markets became economic drivers. Preparedness itself was not simply a necessary posture but a giant interest group.

Private military enterprises, rare to unthinkable in Eisenhower’s day, were becoming important governmental auxiliaries. Senior military officers liked how PNCs could edge into a difficult overseas situation without officially committing the United States or technically violating U.S. neutrality laws. They could sidestep public attention and congressional oversight....

The downside was that the PMCs aroused their own resentment, some of it fierce. One of the best know, the Vinnel Corporation – a specialist in training and advising police and military units in the Balkans and the Middle East (and a CIA cover) – became especially disliked during its quarter century of operations trainign internal security forces in Saudi Arabia, where its personnel reached several thousand. Its Riyadh facilities were car-bombed in 1995, killing five Americans. They were attacked again by a suicide bomber in May 2003 after the second Iraq war, when Turkish security forces trained by Vinnell turned back thousands of Iraqi Kurdish refugees to certain death, gunmen shot up the company’s Ankara, Turkey, offices. The killed a retired U.S. Air Force chief master sergeant.

The Carlyle Group, founded in 1987 as a merchant bank focused on political influence and defense-sector investments, became famous for turning its impressive portfolio of national-security-related companies – United Defense, BDM, Vinnell, U.S. Investigations Services, Composite Structures, EG&G, Federal Data Corporation, Lear Siegler, and Vought Aircraft – into winners for Carlye’s operation or profitable resale. This was achieved through the acumen and rainmaking of high-powered people ranging from George H.W. Bush, former secretary of state James Baker, and former defense secretary Frank Carlucci down to dozens of lesser cabinet, subcabinet, and senior regulatory agency officials.

Thirty to 40 percent yearly gains were common, but from the early days of the second Bush administration, there were conflict-of-interest charges. Carlyle’s preoccupation was with companies that could profit from its Washington connections. One newspaper called Carlyle “the thread which indirectly links American military policy in Afghanistan to the personal financial fortunes of it celebrity employees, not least the President’s father.”

“It should be a deep cause for concern that a closely held company like Carlyle can simultaneously have directors and advisers that are doing business and making money and also advising the president of the United States,” said Peter Eisner, managing director of the Center for Public Integrity.” The problem comes when private business and public policy blend together. What hat is former president Bush wearing when he tells Crown Prince Abdullah not to worry about U.S. policy in the Middle East?”

Richard Perle, the neoconservative stalwart who chaired the Pentagon’s Defense Policy Board, was simultaneously an investor in Middle East war preparations. As described by Seymour Hersh in The New Yorker, Pearl is also a managing partner in a venture-capital company called Trireme Partners, L.P., which was registered in November, 2001, in Delaware. Trireme’s main business, according to a two-page latter that one if its representatives sent to [Saudi financierAnan] Khashoggi last November, is to invest in companies that are of value to homeland security and defense.”...

Homeland security became a cornucopia as the new Homeland Security Department’s annual budget hit $40 billion, and hundreds of Secretary Tom Ridge’s former aids and other insiders registered to lobby for companies seeking a slice of the pie.

“Homeland Security appears to be viewed by the lobbying firms as a huge honeypot,” complained Fred Wertheimer, president of the public interest group Democracy 21.

Those better connected than former Ridge aids had found the pot of gold within months of 9-11. Marvin Bush, the brother of George W. Bush, was a large shareholder–through his Winston Partners investment firm–in Sybase, which marketed a “Sybase PATRIOT Compliance Solution” to put companies and banks in compliance with the anti-money-laundering provisions of the 2001 USA Patriot Act. Clients included the People’s Bank of China and Sumitomo Mitsubishi Bank.

Former CIA director James Woolsey, a leading neoconservative, was a principal of the Paladin Capital Group, a private firm investing in companies that defended against terrorist attacks; Richard Perle had a stake in the Autonomy Corporation, a supplier of eavesdropping equipment to intelligence agencies.

I. Paul Bremer III, the antiterrorist expert named by Bush to govern Iraq in May 2003, was profiled this way by The Nation a month later: “On October 11, 2001, just one month after the terror attacks in New York and Washington [Bremer,] once Ronald Reagan’s Ambassador at Large for counter-terrorism, launched a company designed to capitalize on the new atmosphere of fear in U.S. corporate boardrooms. Crisis Consulting Practice, a division of insurance giant Marsh & McLennan, specializes in helping multinations come up with ‘integrated and comprehensive crisis solutions’ for everything from terror attacks to accounting fraud.”

Another group of firms, concentrated in and around Washington, D.C., profited from the CIA subcontractor market. Although the combined intelligence budgets were not only secret but tunneled like Swiss cheese by so-called black ops, estimates for the early 2000s put the total at some $35 billion a year. From this exchequer came tens of billions of dollars in annual contracts, most pouring into the so-called intelligence-industrial complex that surrounded the CIA’ Northern Virginia headquarters.

So loosely administered were some of these accounts that a 1996 congressional investigation “revealed that the National Reconnaissance Office (NRO), a super-secret agency whose existence was publicly acknowledge only a few years ago, lost track of a $2 billion slush fund because it was so highly classified even top officials had no control over it.”

The world of CIA largesse was grand enough that “the CIA’s own 4,000 intelligence analysts are dwarfed by the more than 40,000 analysts who work for private companies that have government intelligence contracts.”

A second controversial aspect of CIA wealth and influence involved the Agency’s frequent, if unofficial, assertion of a modern version of benefit of clergy. If a CIA asset (as opposed to a mere salaried clerk or researcher) was indicted or arrested, the CIA officer intervened–with frequent success–to talk the local law enforcement agency, the FBI, or the U.S. attorney’s office out of prosecuting. Leave matters to us, the CIA said. This has been a virtual “get out of jail free” card enabling many CIA-connected operatives to avoid prosecution for various styles of moneymaking: drug running or, back during the eighties, milking federally insured mortgage programs or federally insured savings and loan associations.

One of Florida governor Jeb Bush’s former Miami business associates, real estate operator Camilo Padreda, a pre-Castro Cuban counterintelligence officer, ducked an S&L indictment in Texas when the CIA helped. Miguel Recarey, who had CIA connections and used his Miami-based International Medical Centers to help treat wounded Nicaraguan contras, was the business associate who had paid Jeb Bush a $75,000 real estate fee. When Recarey was indicted for large-scale Medicare fraud, his connections got him expedited $2.2 million IRS refund that allowed him to flee to Venezuela....

March 28, 2008

Carlyle Group faces Hawaiian Telcom heat

By admin, FierceTelecom

Fourth quarter 2007 financial results for Hawaiian Telcom, one of the oldest ILECs in the U.S., are scheduled to be reported on Monday, but The Wall Street Journal is reporting today that the owning the company has turned out to be a tremendous challenge for private equity firm Carlyle Group. Carlyle acquired the telco in 2005 for $1.6 billion from Verizon Communications, but mounting customer service and back office problems led to increased spending to fix the problems, lay-offs and a CEO switch.

When a PE-acquired company stumbles after a deal, the inclination is to blame the greedy buyer who probably knows nothing about telecom anyway, but that lets the experienced telecom managers in the acquired company off the hook too easily. Strangely, employees and customers sometimes end up pining for the former owner, which in most cases was a larger, more experienced telecom company. But to do so is to forget who sold them out and why.

The new CEO brought in by Carlyle, a company with other well-documented financial troubles of its own, is short on telecom experience but long on turnaround experience. If you worked for, or were being served by a telecom company in financial trouble, which kind of experience would earn more of your faith?

Source URL:

http://www.fiercetelecom.com/story/carlyle-group-faces-hawaiian-telcom-heat/2008-03-28

Mar 14, 2008

"SPITZER WAS SILENCED."

THE $200 BILLION BAIL-OUT FOR PREDATOR BANKS
AND SPITZER CHARGES ARE INTIMATELY LINKED

By Greg Palast

Reporting for Air America Radio's Clout*

While New York Governor Eliot Spitzer was paying an 'escort' $4,300 in a hotel room in Washington, just down the road, George Bush's new Federal Reserve Board Chairman, Ben Bernanke, was secretly handing over $200 billion in a tryst with mortgage bank industry speculators.

Both acts were wanton, wicked and lewd. But there's a BIG difference. The Governor was using his own checkbook. Bush's man Bernanke was using ours.

This week, Bernanke's Fed, for the first time in its history, loaned a selected coterie of banks one-fifth of a trillion dollars to guarantee these banks' mortgage-backed junk bonds. The deluge of public loot was an eye-popping windfall to the very banking predators who have brought two million families to the brink of foreclosure.

Up until Wednesday, there was one single, lonely politician who stood in the way of this creepy little assignation at the bankers' bordello: Eliot Spitzer.

Who are they kidding? Spitzer's lynching and the bankers' enriching are intimately tied.

HOW? FOLLOW THE MONEY.

The press has swallowed Wall Street's line that millions of US families are about to lose their homes because they bought homes they couldn't afford or took loans too big for their wallets. Ba-LON-ey. That's blaming the victim.

Here's what happened. Since the Bush regime came to power, a new species of loan became the norm, the 'sub-prime' mortgage and it's variants including loans with teeny 'introductory' interest rates. From out of nowhere, a company called 'Countrywide' became America's top mortgage lender, accounting for one in five home loans, a large chuck of these 'sub-prime's.

Here's how it worked: The Grinning Family, with US average household income, gets a $200,000 mortgage at 4% for two years. Their $955 a month payment is 25% of their income. No problem. Their banker promises them a new mortgage, again at the cheap rate, in two years. But in two years, the promise ain't worth a can of spam and the Grinnings are told to scram - because their house is now worth less than the mortgage. Now, the mortgage hits 9% or $1,609 plus fees to recover the 'discount' they had for two years. Suddenly, payments equal 42% to 50% of pre-tax income. Grinnings move into their Toyota.

Now, what kind of American is 'sub-prime'. Guess. No peeking. Here's a hint: 73% of HIGH INCOME Black and Hispanic borrowers were given sub-prime loans versus 17% of similar-income Whites. Dark-skinned borrowers aren't 'stupid', they had no choice. They were 'steered' as it's called in the mortgage sharking business.

"Steering," sub-prime loans with usurious kickers, fake inducements to over-borrow, called 'fraudulent conveyance' or 'predatory lending' under US law, were almost completely forbidden in the olden days (Clinton Administration and earlier) by federal regulators and state laws as nothing more than fancy loan-sharking.

But when the Bush regime took over, Countrywide and its banking brethren were told to party hardy "it was OK now to steer'm, fake'm, charge'm and take'm."

BUT THERE WAS THIS ANNOYING PARTY-POOPER.

The Attorney General of New York, Eliot Spitzer, who sued these guys to a fare-thee-well. Or tried to.

Instead of regulating the banks that had run amok, Bush's regulators went on the warpath against Spitzer and states attempting to stop predatory practices. Making an unprecedented use of the legal power of 'federal pre-emption', Bush-bots ordered the states to NOT enforce their consumer protection laws.

Indeed, the feds actually filed a lawsuit to block Spitzer's investigation of ugly racial mortgage steering. Bush's banking buddies were especially steamed that Spitzer hammered bank practices across the nation using New York State laws.

Spitzer not only took on Countrywide, he took on their predatory enablers in the investment banking community. Behind Countrywide was the Mother Shark, its funder and now owner, Bank of America. Others joined the sharkfest: Goldman Sachs, Merrill Lynch and Citigroup's Citibank made mortgage usury their major profit centers. They did this through a bit of financial legerdemain called 'securitization.'

What that means is that they took a bunch of junk mortgages, like the Grinnings, loans about to go down the toilet and re-packaged them into 'tranches' of bonds which were stamped 'AAA' - top grade - by bond rating agencies. These gold-painted turds were sold as sparkling safe investments to US school district pension funds and town governments in Finland (really).

When the housing bubble burst and the paint flaked off, investors were left with the poop and the bankers were left with bonuses. Countrywide's top man, Angelo Mozilo, will 'earn' a $77 million buy-out bonus this year on top of the $656 million - over half a billion dollars - he pulled in from 1998 through 2007.

BUT THERE WERE RUMBLINGS THAT THE PARTY WOULD SOON BE OVER.

Angry regulators, burned investors and the weight of millions of homes about to be boarded up were causing the sharks to sink. Countrywide's stock was down 50%, and Citigroup was off 38%, not pleasing to the Gulf sheiks who now control its biggest share blocks.

Then, on Wednesday of this week, the unthinkable happened. Carlyle Capital went bankrupt. Who? That's Carlyle as in Carlyle Group. James Baker, Senior Counsel. Notable partners, former and past: George Bush, the Bin Laden family and more dictators, potentates, pirates and presidents than you can count.

The Fed had to act. Bernanke opened the vault and dumped $200 billion on the poor little suffering bankers. They got the 'public treasure' and got to keep the Grinning's house. There was no 'quid' of a foreclosure moratorium for the 'pro quo' of public bail-out. Not one family was 'saved,' but not one banker was left behind.

Every mortgage sharking operation shot up in value. Mozilo's Countrywide stock rose 17% in one day. The Citi sheiks saw their company's stock rise $10 billion in an afternoon.

And that very same day the bail-out was decided - what a coinkydink! - the man called "The Sheriff of Wall Street" was cuffed.

SPITZER WAS SILENCED.

Do I believe the banks called Justice and said "Take him down today!" Naw, that's not how the system works. But the big players knew that unless Spitzer was taken out, he would create enough ruckus to spoil the party. Headlines in the financial press, one was 'Wall Street Declares War on Spitzer' - made clear to Bush's enforcers at Justice who their number one target should be. And it wasn't Bin Laden.

It was the night of February 13 when Spitzer made the bone-headed choice to order take-out in his Washington Hotel room. He had just finished signing these words for the Washington Post about predatory loans:

'Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which he federal government was turning a blind eye.'

Bush, said Spitzer right in the headline: 'was the 'Predator Lenders' Partner in Crime.' The President, said Spitzer, was a fugitive from justice. And Spitzer was in Washington to launch a campaign to take on the Bush regime and the biggest financial powers on the planet.

Spitzer wrote: When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners the Bush administration will not be judged favorably."

FALLEN ON HIS OWN GUN

But now, the Administration can rest assured that this love story - of Bush and his bankers - will not be told by history at all ''now that the Sheriff of Wall Street has fallen on his own gun.''

A note on 'Prosecutorial Indiscretion.'

Back in the day when I was an investigator of racketeers for government, the federal prosecutor I was assisting was deciding whether to launch a case based on his negotiations for air-time with 60 Minutes. I'm not allowed to tell you the prosecutor's name, but I want to mention he was recently seen shouting: "Florida is Rudi country! Florida is Rudi country!"

Not all crimes lead to federal bust or even public exposure. It's up to something called 'prosecutorial discretion.'

Funny thing, this "discretion." For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him in diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.

Naming and shaming and ruining Spitzer - rarely done in these cases - was made at the 'discretion' of Bush's Justice Department.

Or maybe we should say, 'indiscretion.'

************

* Listen to Palast on Clout at http://www.GregPalast.com

Greg Palast, former investigator of financial fraud, is the author of the New York Times bestsellers Armed Madhouse and The Best Democracy Money Can Buy.

-0-

Fwd. by the Foreign Press Foundation - Related links:

* But where does all the loot go, also via the 'Central Banks' many people are wondering? Well, for instance via the privately owned Bank of England, and all other so called 'central banks' of this cartel, it is 'recycled' through the rather secret 'head office' of this London group in Basle, Switzerland. The likewise privately owned 'Bank of International Settlements', the BIS, which is functioning as one of the main 'central banks' to central banks. And it is difficult to believe, but their BIS bank has greater immunity than a sovereign nation, is accountable to no one, runs global monetary affairs and is privately owned. - BIS Url.: http://www.augustreview.com/index.php?option=com_content&task=view&id=7&Itemid=4

And it may be difficult for many of us to grasp, but it is true: none of the humanoids involved in 'The City', at the by them owned 'Bank of England' or at the Swiss based BIS is ever anywhere on earth accountable for what is done to you, your family or friends, or anybody else, including countries and continents. The 'Board' has all the same names, the known vultures are there, like Wolfowitz, Greenspan, Bernanke etc. - as their money-printing business in the US - the Federal Reserve which also has the cartel as private banking owners. The bookkeepers and usurers are absolutely immune and there is NO law nor any kind of court on this earth which ever can stop them. They think...

Many of them operate from 'The City' their own 'state within a state' in London, England, where the 'evil empire' can be found and the 'Board of Directors' of the so called 'Evil empire' - their Animal Farm - which is built on the corpses of millions of human beings. For those who don't know it yet. - Url.: http://tinyurl.com/2zj7wl

* The "visible and audible leaders" are mere puppets who dance on command. They have no power. They have no authority. In spite of all the outward show they are mere pawns in the game being played by the financial elite. - Url.: http://tinyurl.com/2zj7wl

* HITLER: AN OFFICER AND A GENTLEMAN? - History's warning regarding a compliant media. - Url.: http://tinyurl.com/2xcbce

*NEWSPAPERS (AND OTHER MEDIA) MAINTAIN THAT THEY ARE ENTITLED BY A “PRIVILEGE” TO LIE, etc., by proxy – that is, by printing the lies, etc. of others without verification and/or qualification. Yet, that is not the whole of it. -

Url.: http://tinyurl.com/3a8c9p

* WHY U.S. AMERICANS (AND MANY IN OTHER COUNTRIES) WILL BELIEVE ALMOST ANYTHING THEIR 'GOVERNMENT' AND PROPAGANDA MEDIA TELL THEM -

Url.: http://www.rense.com/general78/believe.htm

* THE US IS A 'CRIMOCRACY' - Christopher Bollyn: "This is how the U.S. government, which I call a "crimocracy" works. -

Url.: http://www.rumormillnews.com/cgi-bin/forum.cgi?read=110673

FOREIGN PRESS FOUNDATION

Editor: Henk Ruyssenaars

http://tinyurl.com/2wegpc

The Netherlands

fpf@chello.nl

For more, GO TO > > > The Chubb Group; Confessions of a Whistleblower; Dirty Gold in Goldman Sachs; Dirty Money, Dirty Politics & Bishop Estate; Googling for the Ghost of Ken Lay; Marsh & McLennan: The Marsh Birds; Nests Along Wall Street; The Silence of The Whistleblowers; The Story of Enron;

March 7, 2008

Party seems to be over
for buy-out firms

By Henny Sender in New York, The Financial Times

When Carlyle Group established its now struggling mortgage-backed fund and decided to list it, last year, it seemed like a smart and even risk-free thing to do. Today, with the credit markets in full meltdown, that plan seems both arrogant and hazardous.

The private equity firms were the most powerful players in capital markets across the globe and were buying up ever bigger public companies. Carlyle’s co-founder David Rubenstein appeared at conferences, predicting that $80bn-$100bn buy-outs would soon be possible.

Investors were throwing money at private equity firms. They, in turn, were keen to attract as much of that money as possible because many of the leading private equity groups were considering plans to go public and part of the dynamic was to have size and scale, which meant having as many assets under management and collecting as many fees as possible.

Carlyle marketed its mortgage-backed fund to the investors in its flagship buy-out funds as a safe place for them to park their cash, while waiting to write cheques for deals, such as the $15bn purchase of Hertz.

The idea was doubly seductive for Carlyle since it would swell its assets under management and its fees. It was equally attractive for investors since interest rates were low and the fund promised lucrative returns. Listing would help the fund grow even more quickly.

The fund also looked attractive because after all what could be safer than its triple-A-rated mortgage securities? It was nothing like the complicated and high-risk vehicles, such as the structured investment vehicles (SIVs), which borrowed short-term and lent long-term, and had already blown up months before.

Only a careful read of the offer memo would have informed would-be investors that the fund had the ability to use borrowed money ... and plenty of it – more than 90 cents on the dollar.

That in turn exposed the fund to twin risks. If there were losses in the value of the debt, those losses would be magnified by the use of leverage. Secondly, the fund was exposed to the risk that skittish banks might one day cut back credit lines.

That second fear appeared remote even eight months ago, when the fees the private equity firms paid Wall Street were measured in the hundreds of millions of dollars, making the buy-out groups the banks most lucrative customers. That the banks would dare to stand up to these powerful clients seemed inconceivable.

Today, however, after the market capitalisation of most banks has been halved, and with their own backs to the wall, those same banks are in a very different position.

“There comes a time when the banks have to ask our clients to live up to their side too,” says the head of the group which deals with private equity firms at one major US bank. There are only so many times the banks can forestall or turn a blind eye. They have to say you put up the margin or we are taking the collateral.”

Today both the Carlyle fund and a similar Kohlberg Kravis Roberts fund are in bad shape, introducing a rare bout of humility for the two firms which launched them. Private equity firms such as TPG, which refrained from such diversification and looked ultra-conservative in 2007, now look far less tarnished by contrast.

It is likely that the equity of Carlyle’s fund will be wiped out and that if the financing evaporates, Carlyle will be forced to liquidate the fund. In a release on Friday, Carlyle noted “additional margin calls and increased collateral requirements could quickly deplete its liquidity and impair its capital”.

February 9, 2008

HawTel chiefs ring up big pay

By Jennifer Sudick, Honolulu Star-Bulletin

jsudick@starbulletin.com

Hawaiian Telcom's new upper management team comes with a price tag more than six times that of former CEO Michael Ruley, who was abruptly fired Monday in favor of a turnaround expert brought in by Washington, D.C.-based owner Carlyle Group.

The hiring of Stephen Cooper, chairman of Kroll Zolfo Cooper, a New York restructuring advisory and interim management company, as well as Kevin Nystrom, a senior director at the firm, as the company's chief operating officer, will cost Hawaiian Telcom a base fee of $600,000 a month -- plus bonuses based on improvements in the company's earnings. The chief operating officer position was created for Nystrom.

Ruley's compensation totaled $1.14 million in 2006, according to the company's latest annual filing.

The new executives' base pay, which amounts to $7.2 million a year, is what the company "feels is appropriate based on the experience that both Cooper and Nystrom have had over the years," spokesman Joel Matsunaga said.

Cooper, who replaced Kenneth Lay in 2002 as interim head of since-dissolved Enron Corp., has led a number of restructuring projects, including the bankruptcy of American Home Mortgage last year. Nystrom has served as director of restructuring of American Home Mortgage since August.

The fee, disclosed yesterday in a filing with the U.S. Securities and Exchange Commission, also covers any additional associate directors the new team might hire. Matsunaga declined to say how many that would be.

http://starbulletin.com/2008/02/09/news/story01.html

Dec. 07, 2007

Commentary: The CIA's Gift to
Conspiracy Theorists

By Robert Baer, Time

The CIA has proved, once again, that the cover up is worse than the crime. Or at least let's hope that's the case.

CIA Director Gen. Michael Hayden has admitted that in 2005 the CIA destroyed two videotapes of interrogations of al-Qaeda prisoners, including a central figure in 9/11, Abu Zubaydah. Hayden said the tapes were destroyed to protect the identities of the CIA interrogators from members of al-Qaeda and other terrorists who might try to retaliate. He also claims that the tapes were made to safeguard against unlawful treatment of detainees, and that they were only destroyed after it was confirmed that suspects were not being tortured.

At a time when Congressional Democrats are trying once again to pass a torture ban, it's a given that the revelation is going to further inflame the torture debate — since the tapes apparently showed harsh interrogation techniques. The assumption will be that the CIA did not want the tapes seen in public because they are too graphic and could lead to indictments.

But more to the point, the revelation will raise another question: What other evidence has the CIA destroyed? And can the CIA be trusted to tell us? The CIA had told the 9/11 Commission, when it formally requested such materials, that there was no taping of interrogations. CIA lawyers also told federal prosecutors trying the Zacarias Moussaoui terror case that the agency did not possess recordings of interrogations sought by the judge and Moussaoui's defense lawyers. The CIA insists that the tapes destroyed were not the ones in question.

I would find it very difficult to believe the CIA would deliberately destroy evidence material to the 9/11 investigation, evidence that would cover up a core truth, such as who really was behind 9/11. On the other hand I have to wonder what space-time continuum the CIA exists in, if they weren't able to grasp what a field day the 9/11 conspiracy theorists are going to have with this — especially at a time when trust for the government is plumbing new depths.

I myself have felt the pull of the conspiracy theorists — who believe that 9/11 was an inside job, somehow pulled off by the U.S. government. For the record, I don't believe that the World Trade Center was brought down by our own explosives, or that a rocket, rather than an airliner, hit the Pentagon. I spent a career in the CIA trying to orchestrate plots, wasn't all that good at it, and certainly couldn't carry off 9/11. Nor could the real pros I had the pleasure to work with.

Still, the people who think 9/11 was an inside job might easily be able to believe that Abu Zubaydah named his American accomplices in the tape that has now been destroyed by the CIA.

It isn't going to help that the Abu Zubaydah investigation has a lot of problems even without destroyed evidence. When Abu Zubaydah was arrested in Pakistan in 2002, two ATM cards were found on him. One was issued by a bank in Saudi Arabia (a bank close to the Saudi royal family) and the other to a bank in Kuwait. As I understand it, neither Kuwait nor Saudi Arabia has been able to tell us who fed the accounts.

Also, apparently, when Abu Zubaydah was captured, telephone records, including calls to the United States, were found in the house he was living in. The calls stopped on September 10, and resumed on September 16. There's nothing in the 9/11 Commission report about any of this, and I have no idea whether the leads were run down, the evidence lost or destroyed.

If this sounds like paranoia, it is. But the CIA certainly is not helping by destroying evidence. And they should know better than to destroy evidence in the biggest criminal case in American history. More than anything what we need right now is complete and total transparency on 9/11.

Robert Baer, a former CIA field officer assigned to the Middle East, is TIME.com's intelligence columnist and the author of See No Evil and, most recently, the novel Blow the House Down

http://www.time.com/time/nation/article/0,8599,1692518,00.html

May 22, 2004

Isle ties vital to
Verizon buyer

Local investors join a D.C.-based
firm in the $1.65 billion phone
company deal

By Dave Segal, Star-Bulletin

The private-equity Carlyle Group, which announced yesterday it was buying Verizon Hawaii for $1.65 billion, said it wants to return the telephone company to its local roots.

And to prove its commitment, the Washington, D.C.-based company has brought in BancWest Chairman and Chief Executive Walter Dods to lead a group of local investors.

"A big part of our plan is to return Verizon Hawaii to its roots as a local phone company, empowering local management," said William Kennard, Carlyle's managing director and a former Federal Communications Commission chairman. "It's sort of a version of 'Back to the Future,' if you will."

Dods, who will be retiring as chairman and CEO of First Hawaiian Bank and parent BancWest at the end of this year, stressed that his investment is personal and has nothing to do with the bank.

"I'm a strong believer in community involvement, and I've talked to the Carlyle Group (and Kennard) and he strongly agrees with the idea of bringing local community involvement back to Hawaii," Dods said. "I've signed up a group of local investors to be part of the transaction."

Dods declined to divulge any of their names.

But Kennard said the group of local business people Dods assembled represents a cross section of business, banking, various retail operations, real estate and hospitality.

"The notion here is that we're just not paying lip service to the desire to reconnect to the local community," Kennard said. "We want local business leaders investing alongside of us."

The Carlyle Group, which has more than $19 billion under management, already has a presence in Hawaii through Horizon Lines LLC, which it purchased from CSX Corp. for $300 million last year. Horizon is the second-biggest ocean shipping operator in the state behind Matson Navigation Co.

"We think that this is a great market, and we're excited about the prospect of investing more money here," Kennard said.

Kennard wouldn't break down the cash and debt structure of the deal with parent company Verizon Communications Inc., but a source familiar with the situation said that each local investor is putting in at least $1 million.

Kennard said the Carlyle Group is still evaluating the current management team and isn't ready yet to make any decisions. Verizon Hawaii is headed by Melvin Horikami, who took over as president for the retired Warren Haruki in September. Kennard wouldn't say whether Haruki was involved with the Carlyle purchase, but other sources said Haruki will play a role.

Kennard said all of Verizon Hawaii's employees will retain their jobs, and there eventually will be an increase in the work force as Carlyle brings back to Hawaii jobs that had been handled on the mainland by Verizon's parent.

Kennard said the former GTE Hawaiian Tel, which was renamed Verizon Hawaii in 2000 when GTE Corp. merged with Bell Atlantic, also will get a new name.

"We don't have a name we can disclose right now, but I can assure you it will be a name that conveys the local character of the company," Kennard said.

The transaction, which Kennard said had been eight months in the making, needs approval from the state Public Utilities Commission, the FCC and the U.S. Department of Justice. He said he was optimistic that Carlyle could receive PUC approval by the end of this year and that the deal could close early in the first quarter. Kennard said he hopes to file an application with the PUC within a month.

Kris Nakagawa, chief legal counsel for the PUC, said complex cases such as the Carlyle-Verizon Hawaii deal normally take six months to a year for the three-member commission to render a decision. He said there was no way now to offer a precise timetable since there are certain statutes and rules that Carlyle must follow. Nakagawa also said objections from other parties could extend the decision-making process.

The Carlyle Group said the deal includes Verizon Hawaii's local telephone operations, print directory, long-distance operations and Internet service provider business.

Verizon Wireless operations and assets in Hawaii are not included in the transaction. Verizon also will retain two units in the state that provide services for federal government customers: Verizon Federal Network Systems and Verizon Federal Inc.

Verizon Hawaii, which has about 1,700 employees, had sales last year of $610 million, operating income of $58 million and depreciation expense of $111 million. The company has 707,000 local phone lines.

"We will offer new services to our customers, including expanded broadband, and we expect to add many new jobs after the acquisition," Kennard said. "Importantly, rates will stay the same as we reposition the business as a true local company."...

Carlyle Group

The global investment firm buys companies around the world, with a concentration in communications.

Offices: Headquarters in Washington, D.C., 23 offices in 14 countries

Assets: $19 billion under management

Portfolio companies: More than 150,000 employees and $31 million in revenues

Hawaii presence: Purchased shipper Horizon Lines LLC from CSX Corp. for $300 million last year.

Managing director: Former Federal Communications Commission Chairman William Kennard

Prominent advisers: Former President George H.W. Bush; former British Prime Minister John Major; former U.S. Secretary of State James A. Baker, III; former U.S. Secretary of Defense Frank C. Carlucci; former U.S. Speaker of the House and Ambassador to Japan Thomas S. Foley

Web site: www.carlyle.com

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