1
00:00:00,000 --> 00:00:10,000
The Carlyle Group is a global alternative asset management group. In a nutshell, they buy and sell companies using private investors' money.

2
00:00:10,000 --> 00:00:16,000
The story of the Carlyle Group is the story of a new kind of capitalism emerging in America.

3
00:00:16,000 --> 00:00:23,000
We'll start the story with this guy, Frank Carlucci. He had served in a variety of government positions,

4
00:00:23,000 --> 00:00:31,000
but from 1987 to 1989 he was serving as the United States Secretary of Defence for Ronald Reagan.

5
00:00:31,000 --> 00:00:38,000
He changed the rules on procurement at the Pentagon so that companies would be put on long-term supply contracts.

6
00:00:38,000 --> 00:00:45,000
He also had to cooperate with Operation 111 Wind, an investigation looking into corruption at the Pentagon

7
00:00:45,000 --> 00:00:50,000
with officials being bribed to secure large defence contracts.

8
00:00:50,000 --> 00:00:57,000
Six days after he finished his term as Defence Secretary, he went straight to the Carlyle Group

9
00:00:57,000 --> 00:01:01,000
and he advised Carlyle to take a look at a company called BDM.

10
00:01:01,000 --> 00:01:08,000
They had been hit hard by Operation Wind and their share price had plummeted.

11
00:01:08,000 --> 00:01:13,000
Eventually, Carlyle acquired BDM for $130 million.

12
00:01:13,000 --> 00:01:20,000
It was a steal because it turned out that BDM were on a long-term contract with the Pentagon.

13
00:01:20,000 --> 00:01:26,000
Is it possible that a person like Frank Carlucci might have known which companies were on long-term contracts

14
00:01:26,000 --> 00:01:27,000
and which were not?

15
00:01:27,000 --> 00:01:28,000
Who knows?

16
00:01:28,000 --> 00:01:36,000
But the Carlyle Group sold BDM in 1997 for $975 million.

17
00:01:36,000 --> 00:01:43,000
After Frank Carlucci came the appointment of James Baker, he had worked in politics for 18 years.

18
00:01:43,000 --> 00:01:47,000
He'd led presidential campaigns for President Ford, Reagan and Bush.

19
00:01:47,000 --> 00:01:56,000
He'd served as Chief of Staff, as Secretary of the Treasury and eventually as Secretary of State under George Herbert Walker Bush.

20
00:01:56,000 --> 00:01:59,000
He was and is a big deal.

21
00:01:59,000 --> 00:02:00,000
People know me.

22
00:02:00,000 --> 00:02:02,000
I'm kind of a big deal.

23
00:02:02,000 --> 00:02:07,000
But it wasn't going to just be former White House staff joining the ranks at Carlyle.

24
00:02:07,000 --> 00:02:15,000
Before long, the former president himself, George Bush Senior, would be giving speeches on Carlyle's behalf.

25
00:02:15,000 --> 00:02:19,000
He was senior advisor to Carlyle's Asia Investment Board.

26
00:02:19,000 --> 00:02:27,000
Neither the Carlyle Group nor the former president have been forthcoming in the way that he was renumerated for his relationship with the Carlyle Group.

27
00:02:27,000 --> 00:02:33,000
The former South Korean president, Park Hae-Joon, was also now working for Carlyle.

28
00:02:33,000 --> 00:02:38,000
And he'd helped them secure nearly $1 billion in Koran Bank.

29
00:02:38,000 --> 00:02:46,000
So when George Bush Junior gave the United States a pretty radical change in policy towards North Korea.

30
00:02:46,000 --> 00:02:52,000
North Korea is a regime arming with missiles and weapons of mass destruction while starving its citizens.

31
00:02:52,000 --> 00:03:05,000
States like these and their terrorist allies constitute an axis of evil arming to threaten the peace of the world by seeking weapons of mass destruction.

32
00:03:05,000 --> 00:03:08,000
It did not go down well in South Korea.

33
00:03:08,000 --> 00:03:25,000
It caused a lot of tensions when the new policy provoked North Korea into doing what it does best, issuing threats.

34
00:03:25,000 --> 00:03:29,000
And threats and instability are not good for business.

35
00:03:29,000 --> 00:03:42,000
It was widely reported at the time that Daddy Bush, still acting in his role of Carlyle's Asia advisor, sent a strongly worded memo to his son through a former ambassador.

36
00:03:42,000 --> 00:03:46,000
And he argued that he should continue negotiations with North Korea.

37
00:03:46,000 --> 00:03:52,000
And sure enough, by July, the Secretary of State announced that talks with North Korea would resume.

38
00:03:52,000 --> 00:04:00,000
Perhaps it was simple fatherly advice.

39
00:04:00,000 --> 00:04:06,000
Nevertheless, it showed just how much influence Daddy Bush had over policy in the United States,

40
00:04:06,000 --> 00:04:12,000
whilst he worked for a private company profiting from decisions that government made.

41
00:04:12,000 --> 00:04:17,000
He said, every available ambulance, everything you've got, the World Tracer has now.

42
00:04:17,000 --> 00:04:23,000
Before long, the Carlyle Group found themselves at the center of a huge controversy.

43
00:04:23,000 --> 00:04:31,000
On September the 11th, 2001, Carlyle were holding their annual investors dinner in Washington, D.C.

44
00:04:31,000 --> 00:04:39,000
In attendance was James Baker, Frank Carlucci, and George Bush Sr., who left on the morning of the attacks.

45
00:04:39,000 --> 00:04:47,000
Also in attendance was a man by the name of Shafiq bin Laden, the half-brother of Osama bin Laden.

46
00:04:47,000 --> 00:04:56,000
And it was just six days later that George Bush Jr., the current president, would name Osama bin Laden as the prime suspect.

47
00:04:56,000 --> 00:05:02,000
There's an old poster out west, as I recall, that said, wanted, dead or alive.

48
00:05:02,000 --> 00:05:08,000
The bin Laden family maintained they had severed all contact with their estranged brother in 1991,

49
00:05:08,000 --> 00:05:10,000
when he lost his Saudi citizenship.

50
00:05:10,000 --> 00:05:15,000
But the connections between Bush Sr. and the bin Ladens through the Carlyle Group

51
00:05:15,000 --> 00:05:19,000
raised a few eyebrows in the United States at the time.

52
00:05:19,000 --> 00:05:24,000
Carlyle said that the bin Laden family had invested just $2 million.

53
00:05:24,000 --> 00:05:28,000
But other sources said the actual amount was much higher.

54
00:05:28,000 --> 00:05:36,000
The Wall Street Journal ran an article suggesting that Bush, Baker and Carlucci had all met with the bin Laden family

55
00:05:36,000 --> 00:05:40,000
at their headquarters in Jeddah on more than one occasion.

56
00:05:40,000 --> 00:05:49,000
And that in the ensuing war on terror, the bin Laden family might actually profit from the hunt for their own brother,

57
00:05:49,000 --> 00:05:52,000
because of their investments in Carlisle.

58
00:05:52,000 --> 00:05:58,000
So Carlisle were forced to terminate the relationship between themselves and the bin Laden family.

59
00:05:58,000 --> 00:06:00,000
And it was all pretty embarrassing.

60
00:06:00,000 --> 00:06:03,000
But they managed their way through the PR catastrophe quite well.

61
00:06:03,000 --> 00:06:08,000
Cynthia McKinney, who sat in the House of Representatives at the time, said,

62
00:06:08,000 --> 00:06:15,000
It is known that President Bush's father, through the Carlyle Group, had at the time of the attacks,

63
00:06:15,000 --> 00:06:22,000
joint business interests with the bin Laden construction company and many defence industry holdings,

64
00:06:22,000 --> 00:06:26,000
the stocks of which have soared since September 11th.

65
00:06:26,000 --> 00:06:29,000
It all looked pretty damning on paper.

66
00:06:29,000 --> 00:06:34,000
The President of the United States was the son of George Bush Senior,

67
00:06:34,000 --> 00:06:40,000
who was involved in the work of the Carlisle Group, which managed investments from the bin Laden family,

68
00:06:40,000 --> 00:06:45,000
which looked set to profit from the war which was already being spoken about.

69
00:06:45,000 --> 00:06:48,000
Our war against terror is only beginning.

70
00:06:48,000 --> 00:06:57,000
It wasn't made much better when the President George Bush Junior announced a massive increase in defence spending in 2003.

71
00:06:57,000 --> 00:07:00,000
My budget nearly doubles funding for a sustained strategy.

72
00:07:00,000 --> 00:07:12,000
It was made all the more potent by an earmark in the defence budget of $476 million for the development of a mobile howitzer gun called the Crusader,

73
00:07:12,000 --> 00:07:21,000
which was manufactured by a company called United Defence, who were owned by, you guessed it, the Carlyle Group.

74
00:07:21,000 --> 00:07:27,000
Carlyle's Head of Communications, Christopher Allman, would later say it was one of Carlyle's best investments.

75
00:07:30,000 --> 00:07:36,000
Defence contractors weren't the only companies increasing their share price in the years following September 11th.

76
00:07:36,000 --> 00:07:39,000
Intelligence agencies were starting to swell too.

77
00:07:39,000 --> 00:07:45,000
For more information about that, take a look at our video on the history of NSA wiretapping, it's there.

78
00:07:45,000 --> 00:07:55,000
So in 2007, George Bush, as you guys know, would announce Mike McConnell as the Director of National Intelligence from his previous role at Booz Allen Hamilton.

79
00:07:55,000 --> 00:08:04,000
One year later, right in the middle of his term as Director of National Intelligence, the Carlyle Group made their move to buy Booz Allen Hamilton.

80
00:08:04,000 --> 00:08:10,000
In 2008, Mike McConnell headed straight back to his former employer, now a Carlyle Group company.

81
00:08:10,000 --> 00:08:25,000
Needless to say, Forbes reported that from their initial $910 million investment, the Carlyle Group made a tidy $2 billion in realised and unrealised profits from the Booz Allen Hamilton deal.

82
00:08:25,000 --> 00:08:39,000
It's probably worth noting at this point that Mike McConnell had served as head of the National Security Agency from 1992 to 1996 and he was nominated to that position by George Bush Senior.

83
00:08:39,000 --> 00:08:53,000
So when you begin to investigate this kind of access capitalism, as it was called at the time, it does raise quite a few interesting questions and a whole range of paths that you might take to further an investigation.

84
00:08:53,000 --> 00:08:57,000
But we'll let you guys decide where we head next with this.

85
00:08:57,000 --> 00:08:59,000
Let us know your thoughts about all of this in a comment.

86
00:08:59,000 --> 00:09:07,000
And if you liked this video, please do hit the like button and share it on your Facebook page, on your Twitter account or anywhere else you can think of.

87
00:09:07,000 --> 00:09:10,000
Thanks for watching and we'll see you guys again next time.