TIME LINE Meet the Carlyle Group Timeline Cast of Characters February 1975—Vinnell Corp., a construction contractor and future Carlyle company, signs a $77 million contract to train the Saudi Arabian National Guard. The news touches off a controversy that would dog Vinnell, and then later Carlyle, to the present day, even after Carlyle sold off Vinnell to TRW in the mid-1990s. December 1986—Frank Carlucci is named national security advisor to President Ronald Reagan, succeeding John Poindexter, who resigned in disgrace following the Iran-Contra scandal. While waiting to assume his responsibilities as national security advisor, Carlucci is briefly embroiled in an arms scandal of his own, when the Washington Postreports that Sears World Trade was involved in clandestine international arms deals while Carlucci was chairman. September 1987—After making millions brokering deals that exploited an obscure tax loophole, Stephen Norris and David Rubenstein form the Carlyle Group, named after the posh Carlyle Hotel on New York’s Upper East Side. November 1987—Frank Carlucci is named secretary of defense by President Ronald Reagan. During his short tenure, Carlucci worked extensively on restructuring the Pentagon’s procurement system, a system he would later exploit as chairman of the Carlyle Group. July 1988—BDM, soon to be a Carlyle company, is accused by rivals of currying favor with the Navy officer in charge of procurement, Melvyn Paisley, by hiring his wife. Paisley would go on to become the highest profile conviction of Operation Ill Wind, the years-long investigation into corruption at the Pentagon. September 1988—Fred Malek resigns as chairman of the Republican National Committee after reports that while a Nixon aide, he compiled figures on the number of Jews working in the Bureau of Labor and Statistics. He immediately signs on with Carlyle. January 1989—Six days after his term as secretary of defense ended, Frank Carlucci joins the Carlyle Group. July 1989—Marriott Corp. sells its In-Flite Services catering business to Marriott’s upper management. Carlyle invests in the deal, renames the company Caterair, and loses millions when the airline catering business evaporates in the early 1990s. February 1990—George W. Bush joins Caterair board at the behest of Fred Malek, a good friend of his father’s. Bush would later drop his disastrous experience with Caterair from his resume when he runs for governor of Texas in 1994. September 1990—Carlyle Group buys BDM Consulting, one of the largest and most successful defense consultancies in the world. Carlyle would use the $130 million purchase to evaluate future buyouts in the defense industry. January 1991—After months of contentious negotiations, Carlyle snags a board seat at Harsco, a maker of military vehicles. The seat would eventually help Carlyle to obtain Harsco’s defense business, later known as United Defense. February 1991—Prince Alwaleed of Saudi Arabia buys $590 million of stock in Citicorp, America’s largest bank. Carlyle brokers the deal and gains a reputation as the merchant bank of choice for wealthy Saudis. March 1992—BDM, a Carlyle company, buys Vinnell, a privatized military training company that does extensive work with the Saudi Arabian National Guard. August 1992—Carlyle wins a year-long struggle over control of LTV Corp.’s defense and aerospace division, paying $475 million in conjunction with Loral Corp. and Northrop Corp. The deal instantly legitimizes Carlyle as a serious player in defense buyouts. September 1992—George Soros, a future Carlyle investor, brings the British economy to its knees by speculating on the demise of the British pound. When the value of the pound cratered on Black Wednesday, September 16, 1992, Soros pocketed a cool billion. February 1993—A month after the Bush administration cleans out its desks at the White House, Richard Darman, the outgoing director of the Office of Management and Budget, joins the Carlyle Group in a package deal with James Baker III. March 1993—After spending 12 straight years in the White House in various capacities under Reagan and Bush, James Baker IIItakes his considerable talents to the Carlyle Group, lending the firm instant international recognition and credibility. September 1993—Carlyle snags its highest profile investor to date when George Soros invests $100 million in Carlyle Partners II, a fund that would go on to become the biggest and most successful of all Carlyle’s funds. December 1994—A Washington Postarticle exposes a secret arms deal conducted by BDM, a Carlyle company. In the deal, BDM used the same arms broker from the Iran-Contra scandal to arrange the transfer of Russian military equipment to the United States. January 1995—Co-founder Stephen Norris is forced out of the company, accused by his colleagues of erratic behavior and fiscal irresponsibility. Norris faults his former colleagues for waging a smear campaign against him, spreading rumors and undermining his credibility to the financial community. March 1995—University of Texas Investment Management Company, UTIMCO, weeks after George W. Bush became governor of Texas, places a $10 million investment into the Carlyle Group, which up until 1994, employed the young Bush. September 1995—Onex Food Services buys Caterair from Carlyle for $500 million, nearly $150 million less than Carlyle had originally paid for the company. November 1995—A car bomb attack on Americans living in Saudi Arabia puts a spotlight on Vinnell, BDM, and the presence of the Carlyle Group in Saudi Arabia. Three spouses of BDM workers are injured in the attack. September 1996—Carlyle closes Carlyle Partners II at a total of $1.33 billion, more than twice its original target for the fund, and 13 times as much as the company had ever raised for a single fund. The defense-oriented fund would go on to produce returns of better than 35 percent. September 1997—Carlyle buys United Defense for $850 million, one of the company’s largest buyouts ever. United Defense has plans to build the Army a 60-ton mobile howitzer called Crusader. March 1998—John Major, former prime minister of the United Kingdom, joins Carlyle as European advisor. He would later become chairman of Carlyle Europe in May 2001. April 1998—Carlyle closes another $1.1 billion fund, called Carlyle European Capital Partners, at double its initial target. The company was able to raise the money in just under a year. May 1999—Former President George Herbert Walker Bush visits South Korea on behalf of Carlyle, cultivating business and political ties that result in Carlyle’s investing more than $1 billion in South Korea’s struggling economy. July 1999—Former Connecticut State Treasurer Paul Silvester is forced to resign his new position at Park Strategies after the FBI begins an investigation into a series of investments he made with Connecticut State Pension funds before he left office. Among the investments is a $50 million placement with Carlyle Asia. September 1999—Silvester pleads guilty to corruption. Court documents are sealed, and the identities of the private equity firms involved are kept secret by the state, awaiting Silvester’s sentencing, which is ongoing. January 2001—SBC Communications, a Carlyle client, wins FCC approval to offer long-distance phone service in Texas, Oklahoma, and Kansas, after the Justice Department had rejected the company’s request. The approval is given on the last day of FCC Chairman William Kennard’s tenure. Three months later, Kennard is given a job at Carlyle. February 2001—George W. Bush, a month into his presidency, reverses America’s policy of diplomacy toward North Korea, angering North and South Koreans alike, and threatening Carlyle’s extensive investments in the region. June 2001—Former President George H. W. Bush urges his son to reconsider his stance on North Korea, reminding him, among other things, of the U.S. business interests in the Korean peninsula. George W. Bush subsequently reverses his policy toward North Korea. July 2001—Former President George H. W. Bush personally calls Crown Prince Abdullah of Saudi Arabia, reassuring the heir to Saudi Arabia that his son is “going to do the right thing” and “his heart is in the right place.” The call is in response to George W. Bush upsetting the Saudi prince with his policy toward the Israeli-Palestinian conflict. It also helps protect Carlyle’s extensive business in the region. September 11, 2001—America sustains a highly organized attack by terrorists, leveling the World Trade Center towers, and ripping a gash in the Pentagon building. The attacks would lead to a massive increase in defense spending. A week after the attacks, Anthraxlaced letters are found throughout the East Coast, leading to heightened fears, and unexpected new contracts for Carlyle companies. October 2001—Carlyle is forced to liquidate its holdings from the bin Laden family as news reports of the company’s association with terrorist Osama bin Laden’s estranged family overwhelm the press. December 2001—Carlyle takes United Defense public after newly approved defense spending temporarily secures the Crusader’s future. The company earns $237 million in one day on the sale of shares, and on paper made more than $800 million. April 2002—Cynthia McKinney, a Democratic congresswoman from Georgia calls for an investigation into the September 11 attacks, pointing out the President’s extensive ties with the Carlyle Group, a company that stands to make millions from the aftermath of September 11. May 2002—The Army is forced to investigate whether its own officials illegally lobbied Congress in support of the Crusader in the face of the program’s cancellation. August 2002—United Defense issues an official press release announcing the cancellation of the Crusader program. The same press release announces the awarding of a new contract for United Defense to build another gun for the Army, effectively replacing Crusader. November 2002—Lou Gerstner, the man who engineered IBM’s stunning turnaround during the 1990s, is hired as Carlyle’s chairman. The move is characterized by many in the media to change Carlyle’s image from a defense oriented buyout firm to a more traditional private equity company. Frank Carlucci stays on as Chairman Emeritus.
Posted on: Tue, 26 Nov 2013 10:51:06 +0000