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Christopher Ullman

Vice President for Corporate Communications and spokesman for The Carlyle Group, Christopher Ullman.


Other segments from the episode on May 6, 2003

Fresh Air with Terry Gross, March 6, 2003: Interview with Dan Briody; Interview with Christopher Ullman.


TIME 12:00 Noon-1:00 PM AUDIENCE N/A

Interview: Dan Briody discusses The Carlyle Group

This is FRESH AIR. I'm Terry Gross.

The revolving door between government and the defense industry has raised many
questions about conflict of interest and special access. Such questions have
been raised about The Carlyle Group, a private equity firm which buys and
sells companies from around the world. The Carlyle Group is heavily invested
in the defense and aerospace industries, and it's well-connected to the Bush
administration. For example, former President George H.W. Bush is a paid
adviser to the company.

My guest, Dan Briody, has written a new book called "The Iron Triangle:
Inside the Secret World of The Carlyle Group." The Iron Triangle is an
expression for the intersection of politics, big business and the military.
Dan Briody is a business journalist who has written for Forbes, Wired and Red
Herring. A little later we'll hear from a spokesperson for The Carlyle Group.

I asked journalist Dan Briody to explain what The Carlyle Group does.

Mr. DAN BRIODY (Journalist; Author, "The Iron Triangle"): Well, the best way
to explain The Carlyle Group is to use a euphemism that Dwight Eisenhower
employed back in the 1960s when he was leaving office. He warned the country
against the formation of something called the `military industrial complex,'
and that is probably the best way to describe what The Carlyle Group does.

They are a very large $15.8 billion private equity firm that invests in
heavily government-regulated industries, like defense, like aerospace, health
care, telecommunications. And the way that they do this is they employ a
number of ex-politicians, very prominent ex-politicians, like George Bush Sr.;
James Baker III; Frank Carlucci, a former secretary of Defense under Reagan;
John Major, former UK prime minister. And they use these guys to help them
build their portfolios, bring in investments from around the world, and then
also to scour the investment landscape, and particularly these
government-regulated industries, to help them make better decisions.

GROSS: There's a couple of firsts that The Carlyle Group represents. It's
the first time a former president has worked on behalf of a defense

Mr. BRIODY: Yeah. And I think that this is the most important point about
The Carlyle Group. There are a number of conflicts of interest that arise
when you have this many politicians and ex-politicians on board who are going
sort of in and out of administrations. But the most important one that needs
to be pointed out is the fact that George Bush Sr. is working for this
company, which is the 11th-largest defense contractor in the country. At the
same time, his son is in office and waging war against Iraq and against
terrorism. This is a very clear conflict of interest, and there have been
groups in Washington, public interest groups, some very conservative in
nature, who have called for the resignation of George Bush Sr. because they
feel that it undermines the credibility of his son in office.

GROSS: Now there is the appearance of a conflict, but has there actually ever
been a conflict of interest posed by the fact that George Bush Sr. is
affiliated with The Carlyle Group while his son is president of the United

Mr. BRIODY: Well, there's a semantical issue here. There is clearly a
conflict of interest, whether that conflict has resulted in the influence of a
decision on behalf of George W. Bush or anyone else--Donald Rumsfeld, who's
very close with Frank Carlucci. It's not clear whether this kind of influence
peddling is effective or not. There have been examples of times that have
been widely reported in the press where George Bush Sr. has advised his son,
while in office, on foreign policy decisions, both in Saudi Arabia and South
Korea. Carlyle Group has extensive investments in both South Korea and Saudi
Arabia. And so when you start to see a pattern like that you raise the red
flag. But taking the next step into, you know, whether decisions were made in
a corrupt fashion is a very large leap to make and very difficult to prove.

GROSS: You say the scandal here isn't what's illegal. Nothing illegal has
necessarily gone on here. You say the scandal is what's legal. What do you
mean by that?

Mr. BRIODY: Well, we're starting to see this more and more now, especially
with the procurement process that's going on for the rebuilding of Iraq.
There is an accepted way of doing business in Washington, DC. Hiring these
former politicians, having them on the board of companies of which they have
no experience in those industries, has become somewhat of an accepted
practice. And like I said, there is very little regulation and almost no
legislation that is keeping these people in check. So this is something that
goes on relatively overlooked by any sort of legal standards.

GROSS: Now what does George Bush Sr., the former president, do with the
Carlyle Group?

Mr. BRIODY: Well, he does a couple things. The first thing he does is give
speeches around the world. So he's been known to travel all throughout Asia
to Kuwait to Saudi Arabia, give speeches, pack the house with very wealthy
individuals in order to extract their money and put it into funds for the
Carlyle Group. But he also meets with business leaders around the world. He
meets with political leaders. And these are much more direct business
practices that he is involved in with The Carlyle Group.

GROSS: Now George W. Bush, our current president, was once affiliated with
The Carlyle Group. What was his relationship to Carlyle?

Mr. BRIODY: George W. Bush was appointed onto the board of a company called
Caterair, which is a now-defunct company which did airline catering back in
the early '90s. And he was on that board for about four years. Cater Air was
an incredibly unsuccessful investment for Carlyle. They lost hundreds of
millions of dollars on that investment, and George W. Bush actually ended up
being pretty heavily criticized for his role in that company during his
gubernatorial campaign in Texas in 1994.

GROSS: If you're just joining us, my guest is Dan Briody. He's the author of
the new book "The Iron Triangle: Inside the Secret World of The Carlyle

Now Frank Carlucci was the chairman of Carlyle. He's now chairman emeritus.

Mr. BRIODY: That's correct.

GROSS: One of the questions that's been raised about Frank Carlucci, who
was--well, let's start with what his credentials are.

Mr. BRIODY: Frank Carlucci has been in just about every position of public
servancy in the United States government imaginable. He was secretary of
Defense; he was deputy director of the CIA; he served in various capacities as
foreign ambassadors during the '70s, and his pedigree is extensive in federal

GROSS: OK. So one of the questions that was raised about him is does he have
special access to Secretary of State Donald Rumsfeld because they were good
friends in college? They wrestled together. I guess they were on the same
wrestling team. Do I have that right?

Mr. BRIODY: Yes. That's right. Frank Carlucci...

GROSS: They were roommates.

Mr. BRIODY: Yup. Frank Carlucci and Don Rumsfeld went to Princeton
University together. They were roommates and they were on the wrestling team
together, and they are very good friends. So the obvious thing to infer there
is whether Frank Carlucci, as the chairman of a very large defense contractor,
has any sway with Donald Rumsfeld as secretary of Defense. And the best we
were able to do in turning up any evidence of that were some letters that
Frank Carlucci sent to Donald Rumsfeld lobbying for various policy changes in
the Pentagon, and even sending some letters to Secretary of State Colin Powell
lobbying for some foreign affairs changes to take place, which is exactly the
kind of thing that blurs the boundary between a private citizen working in the
private sector and someone who has been a career politician. It's very
difficult to tell where those two things leave off.

GROSS: OK. So it may be easier to get a letter to Donald Rumsfeld if you're
his old college buddy. On the other hand, though, if we look at the latest
development in this, there's a weapons system that one of the Carlyle-owned
companies, United Defense, was developing. It's called the Crusader, and it
was this very contemporary howitzer, the most powerful howitzer or cannon that
would have ever been made. Donald Rumsfeld was one of the people who wanted
to kill the Crusader even though, you know, Frank Carlucci and Carlyle wanted
to see this built. And, in fact, it was finally killed. And, in fact, Donald
Rumsfeld fired, or at least just accepted the resignation of, the secretary of
the Army, Thomas White, who was an advocate of building this Crusader.

Mr. BRIODY: Right.

GROSS: So this would argue that, well, that influence really doesn't go very
far, does it?

Mr. BRIODY: That's right. On the surface it does appear that way, and there
certainly were a lot of shenanigans that went on behind the saga of the
Crusader and of United Defense. But it's important to point out in this whole
story that United Defense made Carlyle a lot of money. Shortly after
September 11th, they were able to take the company public. They made $237
million in one day in that IPO. This was just after Congress passed the new
defense budget in December of 2001.

So United Defense was able to go public, despite the fact that the Crusader
had been on the chopping block for years and years before that, well into the
Clinton administration as well. This gun had survived successive rounds of
budget cuts, miraculously, over time.

And then also another important thing to remember is that, though Donald
Rumsfeld did kill the Crusader program in a very public announcement and made
a very big show of that, there was a new gun contract awarded to United
Defense the very same day that the program was cancelled. That was not as big
of a press announcement.

GROSS: The story that helped make The Carlyle Group the subject of a lot of
speculation was the fact that the bin Laden family was involved with The
Carlyle Group, and this came to a lot of public attention after September
11th, when the name of bin Laden started to really register on the minds of
many Americans. And George Bush Sr. was involved with Carlyle Group at the
same time the bin Laden family was. What was the connection of the bin Laden
family to The Carlyle Group?

Mr. BRIODY: Well, the bin Laden family is an investor, or was an investor, I
should say, in The Carlyle Group. They were an investor in a fund called
Carlyle Partners II, which is one of the largest defense funds for Carlyle.
And the irony of that whole situation that emerged after September 11th was
that the bin Laden family stood to gain financially, because they were
invested in this defense fund, from the war that was being waged essentially
against their son Osama. So it was a tragic irony, and The Carlyle Group
picked up on it right away and divested themselves from the family.

GROSS: So the bin Laden family is no longer affiliated with The Carlyle

Mr. BRIODY: That's correct.

GROSS: And the bin Laden family said that they were no longer in contact with
their son, Osama, at the time that they were involved with The Carlyle Group.

Mr. BRIODY: That's right. They'd disavowed Osama back in the early '90s.

GROSS: At the very least it certainly seemed ironic that at the same time
that George Bush Sr. and the bin Laden family were involved with The Carlyle
Group that George Bush's son, George W. Bush, president of the United States,
was declaring war against Osama bin Laden.

Mr. BRIODY: Yeah. It was terribly ironic. And after the press picked up on
it was something that The Carlyle Group couldn't bear anymore, and they
obviously had to take some action, and they did. But in some ways, you know,
this is a coincidence. It's a small world when you're talking about
international finance and people who have the kind of money that can invest in
a company like Carlyle. We're talking about hundreds of millions of dollars
just to get in the door for a company like this.

And I think that some of the conspiracy theories that sprouted around this
relationship between the Bushes and the bin Ladens serves to undermine what's
really important about this story, which is the revolving door between
politics and business, a practice that has become generally accepted in this
country and entirely unregulated. That's, I think, the important story here,
not these connections between the shocking names of the folks in the Middle

GROSS: My guest is business journalist Dan Briody, author of a new book about
The Carlyle Group called "The Iron Triangle." We'll talk more after a break.
This is FRESH AIR.

(Soundbite of music)

GROSS: If you're just joining us, my guest is Dan Briody. He's the author of
the new book "The Iron Triangle: Inside the Secret World of The Carlyle

How did The Carlyle Group get started?

Mr. BRIODY: It got started back in 1987 as a leverage buyout firm, which was
the big thing to do back in the late '80s. Actually, their first deal was
something called the Great Eskimo Tax Scam. That's how it was known within
the office. Essentially what the company was doing was shuttling money
between Eskimo-owned companies who were losing money, selling those losses to
profitable companies in the United States as a tax shelter, and they were
brokering these transactions for a cut of the fee.

GROSS: So this was taking advantage of a tax loophole that's written for
Eskimo businesses?

Mr. BRIODY: That's right. They pushed billions of dollars through this tax
loophole. And ultimately it cost the federal government quite a big chunk of
change in tax money and also made themselves between 10 and $20 million in the

GROSS: Who founded the company?

Mr. BRIODY: The company was founded by two guys. One is David Rubenstein,
who was an aide in the Carter administration, a very young aide. He was 27
years old at the time, and at the time he was also known as one of the most
dedicated public servants around. The other guy was Stephen Norris, who was a
tax genius over at Marriott Corp. And the two of them got together literally
to do this tax loophole and make some money off of it. And after they found
that they were making so much money they decided to incorporate.

GROSS: Now you said that The Carlyle Group specialized in leverage buyouts
when they got started. Explain what a leverage buyout is.

Mr. BRIODY: Sure. A leverage buyout is essentially when a company borrows
money from wealthy individuals and takes that money and invests it for them in
the practice of buying out a company. So it works much in the same way that a
mutual fund works when you hand your money over to a mutual fund adviser and
then that adviser then goes and buys stocks on behalf of you. This works the
same way except they're buying entire companies, usually privately held
companies, instead of buying stocks with your money. And it's open to only
the very, very wealthiest of people. Most of these funds have a minimum of a
million dollars, usually much more, in order to even get in.

GROSS: And with a company like a Carlyle Group, sometimes after buying a
company, once the company becomes profitable, it'll sell the company.

Mr. BRIODY: That's right. So the idea is to turn the company around for a
profit. And you can do this a number of ways. One, you can break it up and
sell it off for parts, which is one of the nastier ways of doing business in
the LBO business. Or you can help that company to turn their business around
and then sell them two, three, five years later at a severe profit. And
that's what Carlyle specializes in.

GROSS: How did Carlyle start to buy up defense companies, defense-oriented

Mr. BRIODY: Well, in 1989 they hired a guy by the name of Frank Carlucci, who
was the secretary of Defense under Reagan. He was coming out of that
administration and he had spent most of his time as secretary of Defense
revamping the procurement process around the Pentagon. Now this came in handy
now that he was in the private sector and working for a financial institution
because he directed The Carlyle Group into the defense buyout business. So he
started identifying defense companies that were down on their luck, of which
there were many because the Cold War had just ended in 1989. So he was able
to direct the company into buying a lot of devalued defense properties, and
then spruce them up and turn them around. And by the time that the Gulf War
came about in the early '90s, those property values skyrocketed again and
Carlyle did very well.

GROSS: So some of those properties had lost money because of the end of the
Cold War when our country was demilitarizing, and then they became more
profitable during the Gulf War.

Mr. BRIODY: That's exactly right. These things work in cycles, so you have
to time it perfectly. And they did that in that case.

GROSS: What's one of the defense companies that The Carlyle Group bought that
turned into one of its most lucrative investments?

Mr. BRIODY: Well, two companies really stand out in that regard. The first
is BDM, which is defense consultancy that is now owned by TRW, which is one of
our largest defense contractors here in the United States. BDM was a company
that The Carlyle Group bought early on and for a very, very cheap and deflated
price because it was in that fallow period between the end of the Cold War and
the beginning of the Gulf War. And they got a great price on it. Defense
values started to skyrocket again in the early '90s, and BDM, I think they
turned something like a 300 or 400 percent profit on that company.

The other company that stands out is United Defense, which we've talked about
already, and that's the company that makes the Bradley Fighting Vehicles and
the Paladin gun systems that we've seen on TV so much during the war in Iraq.
And this company made Carlyle hundreds of millions of dollars in a very short
amount of time after they were able to take it public after September 11th.

GROSS: Does Carlyle still own United Defense?

Mr. BRIODY: They own stock in United Defense. United Defense is now a public
company, so it's publicly held by shareholders.

GROSS: Are there companies that lost a lot of money for The Carlyle Group?

Mr. BRIODY: Yeah. They've had--especially in the beginning they had a lot of
flops. They were trying to get their feet on the ground and they weren't sure
what kind of business they were going to go into. And before Frank Carlucci
came on board and directed them towards defense, they tried to buy some
restaurant chains, they tried to buy some real estate companies, and many of
those were failures.

GROSS: Although The Carlyle Group has a much higher profile now than it did
before September 11th, and although there are even a lot of, like, conspiracy
theories floating around about The Carlyle Group, it seems to actually be
heading in a more mainstream direction now. I mean, maybe moving away from
the defense industry, moving away even from government connections. The new
chairman is the former head of IBM.

Mr. BRIODY: Yeah. The new chairman is Lou Gerstner, former CEO of IBM, and
Lou has pledged to give 20 percent of his time to Carlyle Group. I'm not sure
how he'll divvy that up, but that's what the press release says. And, yeah,
you're right, they have diversified extensively. They're into everything from
health care to telecommunications; they own bottling companies, they own media
properties, they own just about everything. But the defense and aerospace
business is still important to them, although they've been trying to downplay
that as of late, obviously for fear of bad publicity. But it is still a very
important business. It makes up a little less than 15 percent of their
business, and they're certainly not slowing down in that area. They've
recently closed on a deal to buy the UK's Ministry of Defense research agency,
a company called QinitiQ. This is akin to DARPA here in the United States.
And they've also recently closed on a deal to buy the defense and aerospace
assets of Fiat, which is an Italian company.

GROSS: Dan Briody is the author of "The Iron Triangle: Inside the Secret
World of The Carlyle Group." He'll be back in the second half of the show.

I'm Terry Gross, and this is FRESH AIR.


GROSS: Coming up, more on the revolving door between politics and the defense
industry. We continue our conversation with business journalist Dan Briody
about The Carlyle Group, and we talk with Chris Ullman, spokesperson for
The Carlyle Group.

(Soundbite of music)

GROSS: This is FRESH AIR. I'm Terry Gross, back with business journalist Dan
Briody, author of "The Iron Triangle: Inside the Secret World of The Carlyle
Group." The Carlyle Group is a private investment firm which is heavily
invested in the defense and aerospace industries. Its roster includes several
high-powered former government officials such as George Bush Sr., James Baker
and Frank Carlucci. Briody's book raises many questions about conflict of
interest and the revolving door between government and the defense industry.

Having done the research that you did into The Carlyle Group, where do you
think conflict of interest access, the revolving door, may have actually come
into play the most?

Mr. BRIODY: Well, I do think that the relationship between Frank Carlucci and
Don Rumsfeld is something that needs to be more closely looked at, and I do
think that the relationship obviously between George Bush Sr. and his son is
something that cannot stand. It is clearly a conflict of interest, and
conflicts of interests lead to potential corruption. And so that's why we try
to eliminate conflicts of interest in our political system, and that's why
Dick Cheney had to sell all of his stock in Halliburton; that's why, you know,
people need to divest themselves from certain companies. But, you know, these
are family ties; these are close friends. This is a way that America has done
business for a long time. We've just never seen the kind of setup that
Carlyle has in our history. It's entirely unique.

GROSS: Yeah, as you say, business has been conducted like this for a long
time. You could argue that most fields are really, when it comes to the
people at the top, a small world, and in most fields the people at the top,
they know each other and they're going to have special access to each other
because when you get to the top it's a small world.

Mr. BRIODY: That's right. And I think that that's OK. That's a way that
Americans have done business for a long time. But I do think that when you're
talking about some of the people involved being the president of the United
States, the secretary of Defense, the president of the United States' father,
then something needs to be done, whether it's a little more regulation,
possibly some legislation, but it would make me rest easier if something was
done about it.

GROSS: What kind of regulation has been proposed, if any, that would help
regulate that revolving door?

Mr. BRIODY: None that I'm aware of. We're starting to see a lot more
attention on this issue right now, especially with what's going on with the
bidding process for Iraq and Dick Cheney's ties to Halliburton. And I think
that's a very positive development. I think people are starting to become
aware of just how tight-knit this community has gotten and the access that
some of these folks are allowed and how much we've come to accept this way of
doing business. So I think the more focus we have on this the more change is
likely to come about.

GROSS: Did you come across a lot of Carlyle Group-related conspiracy theories
when you were researching the group?

Mr. BRIODY: Yeah, and some of them came from some surprising sources. There
was a congresswoman by the name of Cynthia McKinney with whom I'm sure many of
your listeners are familiar. She levied a claim that George W. Bush actually
allowed the events of September 11th to happen because of the advantages that
Carlyle Group would gain as a result. Now this kind of conspiracy theory is
irresponsible, it's reckless, and it really undermines what we're trying to
accomplish in bringing these conflicts of interest out. These conflicts of
interest, the revolving door, it's a much more subtle and insidious problem
than these conspiracy theorists would have you believe. You know, those are
outrageous claims and they tend to make the real issues here easily

GROSS: You know, when it comes to conflict of interest, it's easy to argue
that, well, you know, of course, people who serve in defense-oriented
positions within the United States government are going to be the people who
understand the defense industry the best; and likewise, people in the defense
industry are the people who are most likely to comprehend that industry and do
well serving in government in defense-related positions, and in that sense,
you know, the revolving door, you could argue, is, you know, almost a good
thing, because these are the people in the know who know about both sides of
that particular fence.

Mr. BRIORY: That's right. And I agree with that, which is why I think it's
important that we don't take this issue too far; we don't get into the
conspiracy theories and we stay away from that and keep our eye on the ball,
so to speak, in terms of making sure that there aren't direct financial
connections between decisions that are being made in office and the folks who
are benefiting from them in the private sector. Now there is certainly more
subtle legislation that has been written in the past for other kind of
situations like this. I don't think it would be difficult to do in this
particular area.

But your point is well-taken. In the case of Halliburton and Kellogg Brown &
Root putting out the oil-well fires in Iraq, it may very well be that that is
the best company to do that job. And just because Dick Cheney used to work
for that company does not mean we should not award that contract to Kellogg
Brown & Root. So we don't want to get into a situation where we're actually
making bad policy decisions because the conflicts of interest are there. We
just want try to mitigate and get rid of the conflicts of interest whenever

GROSS: Are you personally surprised--and this is just your personal
reaction--that George Bush Sr. has not stepped down and tried to end that
particular part of the controversy surrounding The Carlyle Group?

Mr. BRIODY: Yeah, I think that's the most troubling single thing about this
story for me. It seems to me like George Bush Sr. should have plenty of
opportunities in international finance without getting involved in a company
that's heavily invested in defense. And certainly it would seem that he would
want to resign or recuse himself from any position that threatened the
credibility of his son while he was making such an important political
decision. And the fact that he has not done that is very surprising to me
and, frankly, very confounding.

GROSS: Dan Briody, thank you very much for talking with us.

Mr. BRIODY: Thank you so much for having me.

GROSS: Dan Briody is the author of "The Iron Triangle: Inside the Secret
World of The Carlyle Group."

Coming up, Carlyle spokesperson Chris Ullman.

This is FRESH AIR.

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Interview: Christopher Ullman discusses The Carlyle Group's
connection to government

We just heard from Dan Briody, whose book "The Iron Triangle: Inside the
Secret World of The Carlyle Group" raises many questions about conflict of
interest and the revolving door between government and the defense industry.
Chris Ullman is the spokesperson for The Carlyle Group. The Carlyle Group is
the world's largest private equity investment company. It manages about $60
billion in assets. The Carlyle Group is heavily invested in the defense and
aerospace industries, but they've become more diversified in the past few

Would you estimate what percentage of Carlyle's holdings have to do with the
defense industry?

Mr. CHRISTOPHER ULLMAN (The Carlyle Group Spokesman): Interestingly, only
around 6 percent. In our early days, back in the late '80s and early to
mid-'90s, that figure was higher. But as Carlyle has diversified both in
terms of the geographies we serve, because we have offices in Asia and Europe
also, as well as the type of investing we do--buyout; venture capital; real
estate, for example--that percentage has gone way down to only around 6
percent for outright defense and around another 7 percent for aerospace, which
is, for the most part, commercial aerospace.

GROSS: So when the defense holdings were at their highest, what percentage of
the holdings was it?

Mr. ULLMAN: It was probably closer to 40, 50, 60 percent, depending on the

GROSS: Mm-hmm. Do you have any concerns about the revolving door between
government and the defense industry?

Mr. ULLMAN: That's an interesting catchphrase. But I think what people need
to consider are the specifics of every situation. So take Frank Carlucci, for
example. He's a former secretary of Defense, and he joined The Carlyle Group
in 1989. So for the past 14 years he has been out of public service and in
the private sector. And Mr. Carlucci makes a point of not discussing Carlyle
activities with former colleagues of his at the Department of Defense, and he
goes out of his way, even though it would be acceptable to do that, because
the law says you have to refrain from engaging in any kind of lobbying or
solicitation for a year after you leave office. So he's been out of office
for 14 years, so he actually holds himself to a higher standard by not
lobbying or soliciting any kind of business from former colleagues at the
Department of Defense.

And I think if you look at someone like Mr. Carlucci or some of the other
former senior government officials here at Carlyle such as James Baker or
Arthur Levitt or even former President Bush, they spent, in some cases,
decades serving their country, and they have impeccable reputations. And one
of the reasons they even joined us in the first place is because we have such
a good reputation. And just as we were honored to be associated with them,
they were pleased to be associated with us.

GROSS: There are kind of two sides to the question of the revolving door
between government and the defense industry. On one side, the people who had
been in government and are in the defense industry have the potential of
getting better access to people in government for better deals for their
companies. On the other hand, the people who are in government could
conceivably be making decisions that would be favorable to industry in the
hopes that when they get out of government they will be rewarded with a
lucrative consulting contract or a lucrative position in the defense industry.
So those are just two of the concerns about the revolving door.

Because there are so many people who have been involved with government, such
as former President Bush, former Secretary of State James Baker, Frank
Carlucci, who also used to be a deputy director of the CIA, Carlyle Group has
been a real focus of that concern of the revolving door. So, I mean, talk a
little bit more about whether you see those concerns as being relevant to The
Carlyle Group.

Mr. ULLMAN: Mm-hmm. Well, a little background here, Terry. Carlyle has 500
employees around the globe, 300 of whom focus on actually doing the
investments. So if you look at the number of former senior government
officials, it's less than 10. So in perspective there really aren't that
many; nonetheless, they are notable people. But I always like to be able to
put that in perspective for people. The people who actually do all the work
here have MBAs from Harvard and Stanford and Wharton and are experts in

Now in terms of, you know, some of the specifics you brought up about the
so-called revolving door, once again, I think it's very important to look at
the facts of each situation. So take United Defense. United Defense is a
defense contractor that's based in Arlington, Virginia, that Carlyle used to
own all of it. The company went public. Now we own a little less than half
of it. That company used to have a contract with the government to produce a
very large gun called the Crusader. In fact, there was an $11 billion
contract with the Department of the Army to produce this gun over the next
several years. And interestingly, that gun was funded for eight consecutive
Clinton budgets. And soon after coming into office, President Bush canceled
the contract.

GROSS: But was United Defense given a new contract after the Crusader was

Mr. ULLMAN: An $11 billion contract was canceled and a much, much, much
smaller, you know, contract was granted. The goal was to capture some of the
technology and intellectual property that had been created over the previous
nine years that taxpayers had paid for so that that could be captured and used
for next-generation artillery. And we are pleased to get that contract and we
feel that the defense needs of the country will be well served. And, if
anything, it's a good way to ensure that taxpayer money wasn't wasted after
all the development was put into that project.

GROSS: The Carlyle Group represents the first time that a former president,
George H.W. Bush, has gone to work for the defense industry; plus, his son is
the current president, and President George W. Bush used to be on the board of
one of the companies owned by The Carlyle Group. There is the possibility
that the Bush family will profit from the war in Iraq. Whether they will
profit or not, I have no idea. But the point is that that relationship exists
and it's bound to raise certain questions. So how does The Carlyle Group deal
with those questions that are obviously going to be raised?

Mr. ULLMAN: Well, a couple of things. First, former President Bush is an
adviser to Carlyle. His exclusive role is to give speeches at Carlyle events.
Contrary to what some think, he does not work for the defense industry.
Carlyle is an investment firm. Six percent of our investments are in the
defense sector. We are an investment firm; we are not a defense industry. So
that's an important distinction.

And one of the beautiful things about America is that after public service
people return to the private sector and they are just everyday citizens. They
are subject to the same laws as everyone else. And it's completely within the
prerogative of a former government official to, you know, engage in, you know,
business activities that are of interest to that person. And former President
Bush chooses to be affiliated with us; something we're very proud of. He has
decades of public service, commitment to his country. We are proud to have
him affiliated with us. And, you know, I don't know what else to say.

GROSS: Well, you know, as you say, it's perfectly legal. And one of the
points that Dan Briody makes in his book about The Carlyle Group...

Mr. ULLMAN: It's not what's illegal.

GROSS: Well, exactly. He says that the scandal here isn't that something's
illegal; the scandal is what is legal, and how legal that revolving door is.

Mr. ULLMAN: But--well, I have a question for you? What--you know, I
definitely have to say this on the record.

GROSS: Go ahead.

Mr. ULLMAN: Well, this is all on the record. But I have to say this.

GROSS: Go ahead.

Mr. ULLMAN: For the past decade, Carlyle has been poked and prodded and
people have peered beneath the hood, and for 10 years people have made these
types of accusations and for 10 years they have come up with nothing other
than hot air about the hint of the hint of the hint of impropriety. You know
what? It's about time that people either put up or shut up regarding this
issue, because people like George Bush, Frank Carlucci, James Baker have
served their countries well; they are wonderful public servants for decades.
I mean, if you put it all together cumulatively it would be probably close to
40, 50, 60 years they've served this country, and they have stellar

And you know, sadly none of them seems to be given in today's climate any
benefit of the doubt, that in Briody's book he implies that the current and
the former president would sell out their country to benefit Carlyle. That is
offensive, unsubstantiated and the mark of an irresponsible journalist.

GROSS: The question that we've been raising on the show today is about the
revolving door, and it's a question that isn't just about The Carlyle Group;
it's a question in general about the potential or the reality of conflict of
interest, and it's a question that a lot of professions face. Even
journalists face the question of conflict of interest on a lot of stories,
too, and anguish about it all the time.

I want to ask you about another thing that has been the subject of a lot of
speculation in The Carlyle Group, and this is something very specific to The
Carlyle Group, and that's the question of--after September 11th, a lot of
people learned that the bin Laden family was very heavily invested in The
Carlyle Group. So, you know, here's a company which former President Bush,
father of the current president, is involved with The Carlyle Group and then
Osama bin Laden's family--and the family says that they had already
disassociated with them by then--but Osama bin Laden's family is associated
with the same group. And, you know, what it means I don't know. But you look
at it and go like, `Wow, that's really unusual, isn't it?' You came on to
handle public relations for Carlyle shortly after September 11th. What are
some of the things you heard speculationwise about what that might mean, you
know, the bin Laden family and George Bush Sr. being involved with the same
company? And how did you go about trying to respond to it?

Mr. ULLMAN: It was challenging at a minimum, because, unfortunately, as Vince
Foster said in his diary, destroying people is sport in this city. So too
often people shoot before they ask questions; they assume the worst before
they find out the facts. So my goal on behalf of Carlyle has been to get
people to slow down, take a deep breath and find out the facts. A journalist
calls me up and says, `What's the situation with Bush and bin Laden and
Carlyle?' In the past we probably would have put our head in the sand. Now
we tell people what the situation is.

GROSS: Which is?

Mr. ULLMAN: Which is that prior to September 11th the bin Laden family
through an investment arm called Saudi bin Laden Group, which is--and this is
another fact that's important--a completely reputable and respected family in
Saudi Arabia, which actually did work for the US government on a number of
occasions in the Middle East from a construction standpoint. That family
through that organization was invested in a fund--Carlyle has 23 funds--that
had defense investments. So we mutually agreed after September 11th to buy
them out of that fund, and so we just started telling people that.

GROSS: My guest is Chris Ullman, spokesperson for The Carlyle Group. We'll
talk more after a break. This is FRESH AIR.

(Soundbite of music)

GROSS: My guest is Chris Ullman, spokesperson for The Carlyle Group, a
private equity company which is heavily invested in the defense and aerospace
industries and has several high-powered former government officials on its
roster, including former President George Bush.

Getting back to the issue of conflict of interest, in some situations people
go out of their way to avoid the appearance of conflict of interest so that
the question is never raised. And in that respect, a lot of people have
wondered why George Bush Sr. hasn't resigned from his position on The Carlyle
Group; not because there necessarily has been a conflict, but to avoid the
possible appearance of a conflict.

Mr. ULLMAN: You're going to have to ask President Bush about that. I cannot
speak on his behalf.

GROSS: Is that issue discussed within Carlyle?

Mr. ULLMAN: I will not speak on his behalf. I will try to address the issue
in principle.

GROSS: Right. I'm wondering if it's an issue that ever comes up.

Mr. ULLMAN: I mean, the larger principle is this, and I will try to then get
down to the smaller principle...

GROSS: Sure.

Mr. ULLMAN: But the larger principle is this: is that there once was a time
when impropriety was the measure of impropriety. Now it's the hint of the
hint of the hint of impropriety by someone like Dan Briody who has an agenda
or someone like--you know, some of these self-appointed do-gooder
organizations like the Center on Public Integrity where the facts that they
know are facts they read in the newspaper. They don't call here asking for
facts because they're not interested in the truth. They have an agenda. And
it is wrong to impugn the integrity of a committed former public servant just
because of the hint of the hint of the hint of impropriety.

GROSS: But again, I'm not trying to impugn President Bush, but just to rather
raise the question about avoiding the appearance of a possible conflict of
interest in the same way that a judge would recuse himself or herself from
hearing a case that had to do with one of his or her special interests or
attachments, in the same way that a journalist wouldn't cover a story that
they had a personal investment in. Again, to avoid the possible appearance of
conflict of interest.

Mr. ULLMAN: To imply that there's even the hint of a possible conflict here,
I'm at a loss to see it to be totally honest, because--I mean, can you explain
it to me? See, this is what people don't do. They say, `All right, what is
the'--and I'm asking this with a total straight face. `What is the hint of
impropriety?' That George Bush is giving advice to his son on a
macrogeopolitical issue that could somehow benefit him. Is that it?

GROSS: Well, you know, if you look at the possibilities, and I'm not saying
this has happened, but, again, the appearance of a possible conflict, there's
the possibility that the president would even have in the back of his mind,
`If I do this in North Korea or if I do this in Saudi Arabia, it might have a
bad affect on the company my father works with.' Again, I'm not saying that
that's happening. But again, getting to the idea that sometimes people recuse
themselves to prevent the appearance of a possible conflict of interest.

Mr. ULLMAN: What this line of thinking includes is if, if, if, if, if, and
what it leaves out is the integrity of the people we're dealing with. I mean,
one of the great things about the American political system is that we have
laws and we have regulations and we have the letter of the law and we have the
spirit of the law, but in the end you have to rely on the integrity of the
people you're dealing with. And to my knowledge no one has ever questioned
the integrity of former President Bush. And I think it's a little late to
start questioning it now after 30-plus years of public service.

GROSS: Chris Ullman, thank you very much for talking with us.

Mr. ULLMAN: Terry, it was a pleasure. Thank you.

GROSS: Chris Ullman is spokesperson for The Carlyle Group.

Earlier we heard from Dan Briody, author of "The Iron Triangle: Inside the
Secret World of The Carlyle Group."


GROSS: I'm Terry Gross.
Transcripts are created on a rush deadline, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of Fresh Air interviews and reviews are the audio recordings of each segment.

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