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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