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Company Man

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Last November Frank Carlucci, chairman of the Carlyle Group, spoke to a conference on national security sponsored by the Pentagon and the Institute for Foreign Policy Analysis, a conservative think tank where he sits on the board of directors. His topic, "Employing the Instruments of National Power in a Complex Environment," was a perfect metaphor for Carlucci's career, which has taken him from the CIA to the highest ranks of the defense and national security establishment and, finally, to the top of one of the world's largest private equity funds.

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About the Author

Tim Shorrock
Tim Shorrock, who has been contributing to The Nation since 1983, is the author of Spies for Hire: The Secret World of...

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Typically, Carlucci was introduced to his panel not as one of the country's wealthiest executives but as National Security Adviser and Defense Secretary during the Reagan Administration. Carlucci began by praising the Bush Administration's conduct of the war. He didn't mention that Carlyle's biggest defense company, United Defense Industries, decided in the wake of September 11 to go public, a deal that would raise the value of Carlucci's stake in that company to $1.2 million by mid-March.

Then he launched into a subject he holds dear: the weakening of US intelligence capabilities. The CIA, he lamented, "has been used as a political football since the days of the Church committee. They've overlaid the process with regulations. We've forced the CIA to disgorge information threatening the protection of sources and methods. We've created in effect a risk-averse atmosphere; we've indicted CIA officers for implementing policy." As a result, "we have no covert action capability."

Carlucci should know. After a brief stint in the 1950s as an executive with the Jantzen swimsuit company, he joined the foreign service, serving in Congo, Brazil and several other countries where US intelligence played a key role during the cold war. President Carter later recognized Carlucci's service by appointing him deputy director of the CIA.

Although he is one of Washington's most powerful financiers, Carlucci avoids the limelight. But his facade cracked slightly last year, when Haitian director Raoul Peck released Lumumba, a dramatic account of the life and times of Patrice Lumumba, Congo's first prime minister, who was brutally murdered in 1961. In one scene of the film, a group of Belgian and Congolese officials holding Lumumba prisoner vote to kill him. One of the Belgians turns to a gentleman sitting off to the side. "Carlucci?" he asks. The American mumbles something about the US government never involving itself in the internal affairs of other countries, and abstains.

Carlucci, who was the second secretary of the US Embassy in Congo from 1960 to 1962, has vehemently denied that he played any role in Lumumba's demise. When Lumumba was shown at the Visions Theater in Washington last July, Carlucci made a personal appearance to address Peck's charges. "The scene is tendentious, false, libelous; it never happened and it is a cheap shot," he said. But he didn't stop there. When HBO aired the film in February, lawyers for Carlucci managed to convince the company to delete the scene.

There is plenty of documentation of Carlucci's role in the US intervention in postcolonial Congo, including an account, partly verified by Carlucci, of his role in seeking Lumumba's overthrow in Jonathan Kwitny's 1984 book on US foreign policy, Endless Enemies (see also Francis Shore's recent article in CounterPunch, "The Strange Career of Frank Carlucci,"). Nation contributor Lucy Komisar, a journalist who spent time in Zaire in the early 1990s, wrote an incisive analysis for Pacific News Service in February.

The most famous story about Carlucci involves a visit to President John F. Kennedy of Cyrille Adoula, the Congolese prime minister who succeeded Lumumba. As recounted by former Director of Central Intelligence James Schlesinger at a recent New York dinner of US business and labor leaders honoring the Carlyle chairman, the prime minister opened a meeting at the White House by asking, "Where is Carlucci?" Said Schlesinger: "This caused some consternation on the part of President Kennedy, who said 'Who the hell is Carlucci?'" JFK quickly dispatched Dean Rusk to find him, thus beginning Carlucci's rise as what Schlesinger called "an itinerant laborer of the executive branch."

Carlucci was brought into the Nixon Administration by Donald Rumsfeld, his roommate and wrestling partner at Princeton, and quickly make his way into senior positions at the Office of Economic Opportunity (where he worked with Dick Cheney), the Department of Health, Education and Welfare (where he was mentored by Caspar Weinberger) and the White House Office of Management and Budget (where he hired an up-and-coming Army officer named Colin Powell). In the mid-1970s Carlucci was ambassador to Portugal, at a time of revolutionary ferment that led to the dismantling of the country's empire in Asia and Africa. Carlucci, following long-established CIA practice of working with the left when it was convenient, decided to back a faction of moderate socialists after a group of pro-Communist military officers seized power in Lisbon. Back home, recalled Schlesinger, "I had to listen to Henry Kissinger suggesting that Carlucci was giving away Portugal to the Communists."

Carlucci's background as an intelligence operative came to public light in 1977, when Carter appointed him to the number-two spot at the CIA. His work for a Democratic administration led some conservatives to question Carlucci's credentials when he was appointed Weinberger's deputy at the Pentagon in 1981. But Carlucci's record in reforming the Pentagon's procurement process and his use of lie detectors to crack down on leakers erased any doubts about the CIA man from Princeton.

In 1982 Carlucci left the Pentagon to run Sears World Trade, which was designed to replicate a Japanese-style trading company. Fortune, citing international traders, speculated that SWT "was providing cover jobs for US intelligence operations," an accusation that gained credence when the Washington Post revealed that SWT operated a secret subsidiary that advised US and foreign companies on selling arms overseas (Carlucci denied the story). SWT went bankrupt in 1986, but Carlucci walked away with a $735,722 termination settlement.

Since leaving government, Carlucci has spent much of his time as a director for the most powerful multinational corporations in North America, including General Dynamics, Westinghouse Electric, Bell Atlantic, Nortel, Quaker Oats, CB Commercial Real Estate Group and BDM International, a military consulting company with extensive operations in Saudi Arabia that Carlyle sold to TRW in 1998.

Carlucci is currently chairman of the board of Neurogen, the Connecticut pharmaceutical giant, and Infraworks, an Austin, Texas, company that sells e-mail software to intelligence agencies and the private sector (the e-mail disappears after a second reading). In addition, Carlucci is a member of corporate boards at United Defense, Ashland, Kaman (another big military contractor), Pharmacia (which was created by a merger between Monsanto and Pharmacia-Upjohn), Texas Biotechnology and Sun Resorts, a South African hotel chain based in Mauritius.

Carlucci's extraordinary reach in the corporate world is an obvious boon to Carlyle. "Carlucci is most handy at picking up the phone and making a call, not to people in the government but people in the commercial world," said William Conway, one of Carlyle's founding partners, who recruited Carlucci in 1989.

Carlucci also sits on the boards of numerous think tanks and associations, including the RAND Corporation, the National Endowment for Democracy and the Middle East Policy Council. He is chairman of the national advisory board of the Private Sector Council, which advises the government on privatization and procurement policies. And he exerts considerable clout as chairman of the US-Taiwan Business Council, which represents US multinationals doing business in both Taiwan and mainland China, including Boeing, General Electric, Honeywell and Babcock & Wilcox. In March the council and several US military contractors--including Carlyle's United Defense--sponsored a three-day, closed-door summit of US and Taiwanese defense officials. During the conference, at Carlucci's invitation, Tang Yao-Ming, Taiwan's Defense Minister, met with Deputy Defense Secretary Paul Wolfowitz in the highest-level defense contact since diplomatic relations between the two countries were severed in 1979.

But Carlucci's record as a corporate director is spotty at best. When he was chairman of Nortel, the company experienced what the Toronto Star recently described as a "disaster of epic proportions," losing more than $360 billion worth of shareholder value. "The company has fired almost 50,000 employees, a record in Canadian business," the Star reported. "Nortel's $19.2 billion loss in the second quarter [of 2000] exceeded the GNP of El Salvador." It charged that Carlucci, who sat on eight other corporate boards during his tenure at Nortel, wasn't "paying attention."

In 1996 Carlucci was the worst offender in a Teamsters union survey of "America's Least Valuable Directors." The survey criticized twenty-three executives for earning huge salaries while serving on multiple boards and at problem companies. A year earlier Carlucci was number two on a BusinessWeek survey of "directors with the least-distinguished track records." Ironically, that survey drew heavily on research on shareholder value conducted by the California Public Employees Retirement System, which has invested $475 million in the Carlyle Group.

"Does that mean that we tacitly approve of Frank Carlucci's multiple board memberships?" asked Pat Macht, a CalPERS spokeswoman. "The answer is, absolutely--that we don't approve, because it is contrary to what our corporate governance actions are about." But CalPERS, she said, "can't have a personal bone to pick with Carlucci as it relates to Carlyle, because it has been a very good performer for us." Carlucci did not agree to be interviewed for this article.

In December Carlucci granted his first press interviews since the war began. Not surprisingly, the topic was his old pal at the Pentagon, Donald Rumsfeld. "The military likes a leader--and has got one," he told the Baltimore Sun.

Just as this issue went to press, Carlyle announced another defense IPO: This time it will sell $160 million worth of its controlling shares in United States Marine Repair, the country's largest nonnuclear ship repair company, which does 75 percent of its business with the US Navy. Carlucci, not surprisingly, sits on its board of directors. What's good for America, it seems, is good for Carlyle--and Frank Carlucci.

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