They own Korean banks.
They produce phone books and weapons of war.
They bottle Dr. Pepper soft drinks.
They also make some people nervous.
They are the people associated with The Carlyle Group, the world's largest private equity manager with nearly $16 billion invested worldwide. The firm also invests heavily in political capital, employing a host of former government officials to help broker complex, and often lucrative transactions.
Perhaps best known for its involvement in the aerospace and defense industries, the Washington, D.C.- based Carlyle also has brokered deals in such diverse industries as energy, health care, information technology, telecommunications and real estate.
The company's expansive interests, as well as its well-documented political connections and ties to the highest levels of the business and military communities, have left some anxious over the purported clout Carlyle wields.
'Shadowy cartel'?
Various Internet sites have portrayed Carlyle as a shadowy, quasi-governmental cartel. Media publications such as the Village Voice have criticized Carlyle's front men for originating from "the dark, Bushy, corners, of the Republican Party ... their staff is like a fantasy camp for former world dignitaries and international policy wonks."
Carlyle "is one of the most powerful, well-connected and secretive companies in the world," according to business journalist Dan Briody. His book on the firm, "The Iron Triangle," was published in April.
Carlyle was founded in 1987 by David Rubenstein, a deputy domestic policy adviser under former President Jimmy Carter; former MCI Communications Corp. executive William E. Conway Jr. and former Marriott Corp. executive Daniel D'Aniello.
The company made its fortune buying smaller defense contractors and later selling them to larger defense companies when the industry consolidated during the 1990s.
Carlyle will not identify its investors, most of whom appear to be rewarded handsomely given the firm's 36 percent average annual rate of return. But the cadre of prominent political figures affiliated with Carlyle is hardly secret:
'Perceived conflicts'
The elder Bush, in particular, has come under fire for his involvement with Carlyle because of perceived conflicts of interest. Certain Carlyle holdings, such as United Defense, have done work for the federal government.
"Carlyle is as deeply wired into the current administration as they can possibly be," Charles Lewis, executive director of the Center for Public Integrity, told the Internet site bushwatch.org. "George Bush is getting money from private interests that have business before the government while his son is president."
Judicial Watch, a Washington, D.C., public interest law firm, has called for Bush to resign from Carlyle because of the firm's reported dealings with Saudi Arabian interests. Last year, Judicial Watch filed a lawsuit against more than 100 Saudi entities seeking damages for their alleged involvement in the 9/11 terrorist attacks.
Generally addressing the issue of employing so many people with government ties, the firm's Internet site states, "Each has different responsibilities and is a valued member of the Carlyle team. None of them lobbies his former government colleagues. This is who they are and what they do."
Despite its extensive political connections, Carlyle does not have a political action committee or contribute as a company to political candidates, although the firm's employees can -- and do -- make individual donations.
Rubenstein, the company's co-founder, downplayed his firm's perceived influence peddling in an April interview in The Washington Post. "We're not that well connected," he told the newspaper.
Possibly to alter the image that Carlyle is exclusively run by ex-government officials, Carlucci, the former defense secretary, was replaced last year as the firm's chairman. He was succeeded by someone whose background is in business rather than government -- Louis Gerstner, the former chairman of IBM.
Questionable influence
If Carlyle's influence is as great as some have suggested, the firm has had a difficult time demonstrating it of late.
The Washington Post noted that before the war in Iraq, the current Bush administration ignored the counsel of Baker, the former secretary of state, for restraint in the Middle East -- where Carlyle has investors.
Bush Sr.'s urgings for calm in the Korean peninsula, where Carlyle owns banks, also went unheeded by the administration. Additionally, Defense Secretary Donald Rumsfeld canceled an $11 billion Crusader howitzer program, which would have meant huge profits for its manufacturer, United Defense.
Despite that setback, Carlyle has managed to obtain a significant return on its initial 1997 investment in the company of $180 million.
Carlyle this month sold $270 million in United Defense shares after selling about $500 million in shares since 2001. According to a Bloomberg News Service report, the company also took in $350 million in dividends before the company went public and still owns about $350 million in stock.
Last year, Carlyle teamed with another investment firm -- Welch, Carson, Anderson & Stowe -- to buy Qwest Communications' yellow pages unit, QwestDex, for $7 billion. The purchase, the second-largest corporate buyout in U.S. history, made the firms the exclusive publisher of phone directories in 14 states.
Among Carlyle's diverse holdings are the Dr. Pepper-Seven-Up Bottling Group. Based in Dallas, the company is the largest independent manufacturer, marketer and distributor of carbonated beverages in the country.
Carlyle also owns the KorAm Bank in South Korea; Taiwan Broadband, the island's fourth-largest cable company; Mercury Communications, a South Korean telecom manufacturer and Pacific Department Stores, a chain of retail department stores in mainland China.
Myriad interests, certainly, but Carlyle co-founder Rubenstein insists the organization is not nearly as well connected -- or powerful -- as some conspiracy theorists have suggested. Still, while emphasizing the company does not actively lobby the government, Rubenstein told The Washington Post: "Maybe you get this influence by people thinking you have it."
