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This morning, I appeared on NPR’s “Diane Rehm Show” to discuss Michael Moore’s Fahrenheit 9/11. The other guest was conservative activist Grover Norquist. Perhaps later on I will describe the back and forth we had. But at one point he dismissed the film’s references to the Carlyle Group as nothing but the product of Moore’s various conspiracy theories. While I did take issue with some of Moore’s overly conspiratorial explanations of the war in Afghanistan and Iraq, I noted that the connections between the Bush clan and the Saudi government–which are reflected in the operations of the Carlyle Group–are troubling and pose serious conflicts of interests. Even the conservative government-watchers at Judicial Watch have decried these relationships. And I promised to post on this website a piece I had written several years ago about the Carlyle Group. In this article, my coauthor and I broke the news that Bush the Elder had met with the Saudi leadership to win business for Carlyle, as Bush the Younger was campaigning for the presidency. In keeping with my vow, here is that story:

BUSH OF ARABIA
The Nation
March 27, 2000

by DAVID CORN and PAUL LASHMAR

In January former President George Bush and former British Prime Minister John Major paid a social call on Saudi Arabian Crown Prince Abdullah at his luxurious tent compound outside Riyadh. While chitchatting, the Prince asked his guests to excuse him for elevating an injured foot in their presence. Bush then started discussing a podiatric mishap recently experienced by his wife. As Bush launched into details, the Prince used a remote to raise the volume on several television sets playing in the room, according to an account of the meeting. Major, politely hinting that the televisions had become too loud, quipped that he traveled to the desert to escape television. Ignoring Major’s remark, the Prince kept the televisions blaring.

Such a scene might seem humorous, but both former leaders were in Saudi Arabia in conjunction with serious business. Bush, taking time off from assisting his son’s presidential campaign, and Major were traveling the Middle East to help the Carlyle Group, a multibillion-dollar private investment firm based in Washington, which has investments around the world–from soda bottling to waste treatment to jet-wing manufacturing–and which is managed by former members of the Reagan and Bush administrations. Carlyle has extensive interests in Saudi Arabia, and it has been pursuing a deal in partnership with SBC, the telecommunications giant (which owns Southwestern Bell, Ameritech, Pacific Telesis and Cellular One), to acquire about 25 percent of the Saudi phone system.

Accompanied by several Carlyle execs, Bush and Major–the leaders of the alliance that pushed Saddam Hussein out of Kuwait in 1991–were out to win friends and influence Saudis on behalf of Carlyle. (Bush, Major and the Carlyle officers also made a stop in Kuwait.) A day or two after the short session with the Prince, Bush and Major were whisked by the Carlyle team, headed by Carlyle founder David Rubenstein, a former Carter White House aide, to the city of Jeddah. They spent four hours on a yacht cruising the Red Sea with Saudi business officials and then attended a swank party at a private residence, again hobnobbing with prominent Saudis.

Bush was compensated for the trip, but his office would not provide a figure. He serves as a member of Carlyle’s Asian advisory board, and he is paid to give speeches for Carlyle around the world. “He is friendly with the management of Carlyle,” says Gian-Carlo Peressutti, a Bush spokesman. (Indeed. James Baker, Bush’s Secretary of State, is senior counselor to the company; Richard Darman, Bush’s budget director, is a senior adviser; and Frank Carlucci, Reagan’s Defense Secretary, is chairman.) Peressutti notes that Bush did not “know the exact nature of the business Carlyle was conducting on that trip.” One Carlyle source maintains that Bush and Major “had no knowledge” of Carlyle’s specific business activities in Saudi Arabia, including the potential SBC deal. “We used them for good-will gestures,” this source says, “for lunches and dinners. People like to see former presidents and former prime ministers. It’s a very good way of getting people to pay attention to you.”

Can it be true that Bush and Major hire themselves out as props, without realizing what Carlyle deals they might be abetting? To schmooze without being aware of the end results? In any event, they did not have to explain their presence in Saudi Arabia, for both had been invited to speak at an economic forum in Jeddah. Bush and Major were also received by King Fahd. “But for part of the time they were just with us,” says the Carlyle source. According to two sources familar with the mission, Carlyle executives were focusing on the telephone system deal. In 1998 the Saudi government announced it was privatizing the kingdom’s phone service, and the Saudis have been seeking foreign investors. Several companies from around the world have expressed interest. SBC has been looking at this potential deal for about a year and brought in well-wired Carlyle as a partner.

It might not trouble the (supposedly) unknowing Bush that he is aiding SBC, a Texas-based company run by executives who have contributed nearly $50,000 to George W. Bush’s gubernatorial and presidential campaigns. Governor Bush’s administration has also been supportive of SBC, which spends more on lobbying in Texas than any other corporation (at least $5 million in 1999). In December the Texas Public Utilities Commission, comprising three Bush appointees, approved SBC’s highly controversial request to enter the long-distance market in that state. Critics of SBC complained that the company had not opened up the local market as it had promised, and after the PUC granted its OK, the Justice Department, citing SBC’s anticompetitive ways, urged the Federal Communications Commission to reject the company’s long-distance application. (By the way, SBC once donated $400,000 to a reading initiative promoted by Govenor Bush.)

John Major’s relationship with Carlyle may be more problematic. As a member of Carlyle’s European advisory board, he is profiting by assisting a US-based firm in partnership with a US competitor of British Telecommunications, and he is doing so while an active member of the British Parliament.

“It’s pretty obvious,” says one person with knowledge of the trip. “Carlyle wanted to open up doors, and they bring in Bush and Major, who saved the Saudis’ ass in the Gulf War. If you got these guys coming in for SBC or any other company, those companies are going to have a pretty good chance.”

The Carlyle connection runs in the family. In 1990, a year after Carlyle acquired Caterair, a large airline-catering firm, Fred Malek, a longtime Bush associate, helped place George W. on the board of Caterair. And this past fall the Bush campaign received a scare when one of its lead fundraisers, GOP lobbyist Wayne Berman, was implicated in a scandal involving Carlyle. On September 23 former Connecticut State Treasurer Paul Silvester pleaded guilty to federal racketeering charges regarding his handling of state pension funds. Berman pocketed about $1 million from Carlyle for helping the firm win $100 million in pension investments from Silvester. Shortly before Silvester left office in early 1999, Berman allegedly promised him a job while angling for another $50 million investment in a Carlyle fund. Berman then hired Silvester for a position in the consulting firm he operates with former Senator Alfonse D’Amato.

After Berman’s role in the affair became public, the Bush campaign announced that Berman, who had worked in the Bush Administration, was no longer fundraising for George W. Carlyle has been good to the Bushes. But if the Berman-Carlyle scandal spreads, it may draw more attention to the back-scratching, deal-making financial political world in which the Bush family and their friends have flourished. That won’t be good for the son of Carlyle’s most famous meet-and-greeter.

David Corn is The Nation’s Washington editor. Paul Lashmar is an investigative writer for the London Independent.