Wednesday, October 31, 2007

Carlyle's Arthur Pontificates from the Roundtable

Former SEC Chair and Carlyle Group advisor Arthur Levitt, Jr. had much to say on the state of pension funds at a recent meeting. The New York Times lauded his father's saving the New York state pension fund when nearly bankrupt New York City wanted to get their hands on that money. Arthur's father saved the day. The son tried riding a similar horse on behalf of The Carlyle Group, but clearly got bucked from my viewpoint.

The SEC works to make security trading open and free of conflicts. The abuses of Arthur's days in office led to Enron and WorldCom. Yet the Bush administration works diligently to jettison those reforms, as Arthur lectured the pension world on transparency and accountability.

After Mr. Levitt's retirement, a non-public investment vehicle boomed, his current employer in the form of private equity. These firms have no public obligations. Recall Blackwater CEO Eric Prince's recent comments before a Congressional Committee when asked about profits from $1 billion in federal contracts.

"We're a private company, and there's a key word there -- private," Prince answered.

That's who Arthur Levitt works for, a private, private equity firm. But the ex-SEC Chief eloquently called for reform. He said New York’s pension woes were just the latest in a series of scandals at public funds all over the country. The New York fund is under an inquiry focusing on whether associates of New York State’s most recent former comptroller, Alan G. Hevesi, improperly benefited from his sole direction of the $156 billion fund, the nation’s second largest.

Let me hazard a guess? Was Mr. Hevesi paid based on performance? Incentive pay in bonuses and stock options provided the impetus for Enron's Ken Lay and WorldCom's Bernie Ebbers to fabricate revenues and profits. In their twelve year history stock options caused some 30% of executives at publicly traded companies to backdate those same options to maximize their compensation, most in violation of company policy. That's cheating under the SEC rules Mr. Levitt once enforced.

This is what gets my goat. Arthur Levitt speaks from a parallel system with less monitoring than public pension funds. The Carlyle Group wants access to those billions in pension investments. It would use the money to buy companies that do significant government business, then use their stellar connections of ex-government insiders to get milk greater profits from the federal tit.

Health care-26 companies including MultiPlan, LifeCare, ManorCare
Military & Aeropsace-21 companies including USIS, QineticQ, United Defense
Tech & Business Services-96 companies including Authentec, FRS Global and Wall Street Institute
Telecom & Media-33 companies including Nielsen Media
Energy & Power-34 companies including Kinder Morgan & Titan Specialties
Automotive & Transportation-16 companies including Hertz & Allison Transmissions

There's more as Carlyle started an infrastructure division ready to meet government's every need for transportation, water, even sewage.

Mr. Levitt noted in his talk, “We can’t begin to improve the fiscal standing of public pension funds until we can accurately assess their financial health.” The door swings both ways, Arthur. How can the public expect improvement of government services if contractors can't or won't accurately report their financial and operating positions?

Fun Facts about The Carlyle Group's Purchase of Manor Care

While the media and government regulators ignore Carlyle's history of abandoning long term acute care patients in times of disaster, other fun facts are coming to light. But before illuminating other interesting tidbits, I'll drive home the first point:

1) The Carlyle Group's LifeCare Hospitals had the largest number of patient deaths post-Katrina and George W. Bush didn't find this noteworthy enough to put in his Lessons Learned report. Regulators and elected officials mostly ignore this failure to acutely ill patients in a time of crisis. None have challenged LifeCare's defense which blames the federal government for up to 24 wrongful deaths occurring on their watch. One Florida official finally raised the question in his opinion piece in the St. Petersburg Times just yesterday.

2) Gail Wilensky, the ex-Medicare/Medicaid chief under George H.W. Bush, will pocket $790,000 in options and stock appreciation rights from the sale of Manor Care. Her 27,205 shares of owned stock at $67 per share bring her total take to $2.6 million. Her capital gains tax savings due to Bush Jr.'s tax cut could amount to $130,000. Note that over two thirds of Manor Care's 2006 revenue came from Medicare and Medicaid, Gail's prior responsibility. (Ms. Wilensky is also a director of Cephalon, Inc.; Gentiva Health Services, Inc.; Quest Diagnostics Incorporated; SRA International; and United HealthCare Corporation.)

3) Manor Care CEO Paul Ormond will gross $83.8 million in option and other stock compensation from the sale of his company. His direct stock holdings add another $245 million, bringing his total take to roughly $330 million. His Bush tax savings amount to over $16.5 million.

4) The nursing home company had a $167 million profit last year and paid Uncle Sam $97 million in income taxes. Interest expense amounted to $31.5 million.

5) Debt to finance the purchase includes $4.6 billion through a CMBS facility. Manor Care's debt rating dropped to "B" status. This translates to a higher interest rate, especially in this credit conscious environment.* The prospectus states a maximum 6%. Interest expense on $4.6 billion at 6% is $276 million. This alone wipes out Manor Care's annual profit and potentially eliminates its federal tax obligation.

6) Carlyle will invest $1.3 billion of their funds in equity financing. This is only obligated through the closing date and can be turned into debt afterwards, should the firm desire.

7) The private equity firm will also take out a $900 million in senior secured credit facilities. The prospectus states it will be at the same interest rate as the CMBS debt. This adds another $54 million in debt to the firm's income statement, bringing the total new interest expense to $330 million.

8) Using its 2006 income statement and the new $330 million in interest expense, Manor Care would need to cut expenses some $30 million company wide to break even. They would pay nothing in income taxes to the federal government despite getting two thirds of their revenue from that same source via Medicare and Medicaid.

9) The Carlyle Group plans to split the company in at least two parts and as many as 1,100 as it segregates operations from real estate in its 550 facilities. This is done to segregate assets for legal liability, like the wrongful death lawsuits LifeCare faces after Hurricane Katrina!

What goes around, comes around and this PEU has the distinct odor of fetid financial flood waters. Rising tides don't lift all beds, something Carlyle should know acutely.

*(From Investment Dealer's Digest: As a result of the widening in yield premiums, borrowers face higher costs. "What happens is the rate we charge borrowers is directly related to where we can clear bonds," says Pendergast. "Investment grade spreads are wider and the yield on the B piece required by buyers is much higher." While the B piece is a small part of a CMBS deal, finding a buyer for it is key to a transaction. The yield demanded by the buyer of the B piece will determine the cost effectiveness of the whole securitization process. "Overall, lenders are charging more to clear the new spreads charged by investors," says Michael Higgins, head of real estate finance at CIBC World Markets.)

Monday, October 29, 2007

Is the Carlyle Group Pulling an Exxon on LifeCare?

The Supreme Court agreed to hear Exxon's appeal regarding punitive damages. The company claims no responsibility for actions of a drunk sea captain, even though they hired him, were aware of his alcohol treatment and his later falling off the wagon. Exxon also provided a ship with broken radar, a violation of at least the spirit of their agreement with Native Americans who sold them the land for the oil terminal for $1.

The Exxon case prompted me to find parallels to The Carlyle Group's defense of wrongful patient deaths in their LifeCare Hospital in New Orleans post Hurricane Katrina. Carlyle blamed rogue providers, doctors and nurses that euthanized patients in the horrific aftermath. When none of the clinicians got convicted on criminal charges that defense weakened considerably.

LifeCare changed directions under the radar of most news outlets. They claim their patients became wards of the federal government when FEMA set up evacuation teams in the New Orleans area. Therefore, the federal government was responsible for their care even though those teams might be miles away from their flooded facility in Memorial Hospital.

Just as the Exxon story is deeper than a captain on a bender, so is LifeCare's. As a hospital within a hospital, LifeCare had separate clinical staff, its own credentialed doctors, and administrative leadership. The supposed Joseph Hazelwood of New Orleans is Dr. Ana Pou, an ENT doctor specializing in cancer treatment. While her skills are advanced, they don't match up with patients in a long term acute care environment. If she had privileges at all, they were likely consulting.

If Dr. Pou served as the primary caregiver for LifeCare patients, she was filling in. The question is for whom? What LifeCare physicians had hurricane duty and bolted? Which contracted providers abandoned their patients in the time of need? If any did so, they share responsibility with Carlyle for what eventually happened to their patients.

If LifeCare docs hung around for hurricane duty, then Carlyle has a different problem. Their administrator gave a Memorial doctor and non-LifeCare nurses access to their patients. The company already sued Tenet Healthcare as a result of the aftermath. The two for-profit firms settled the case, dividing up liability in a now sealed, thus secret agreement.

All this speaks to the ethics of The Carlyle Group and their affiliate as the huge private equity firms closes in on its purchase of Manor Care with 550 nursing homes. LifeCare had a duty to their patients in a time of disaster and from my experience failed. I endured in a 725 river flooded teaching hospital in Virginia and evacuated a 165 bed facility on the Texas Gulf Coast before then record Hurricane Gilbert. Fortunately Gilbert never made the predicted turn, but I know the challenges getting patients transferred with several days notice of a potential landfall. Much worse is trying to provide services in a powerless hospital with six dark intensive care units. In no time the best hospital becomes unsafe for all. Toilets are unflushable, supplies dwindle and staffs tire while patients suffer. Hope returns when they can be transferred.

After sharing my concerns with the only reporter to note LifeCare's relationship to The Carlyle Group, I received this:

The 24 deaths that occurred there, while tragic, were the decisions of the people that were put in charge by LifeCare's previous owners, GTCR Golder Rauner. Also, I think most people feel that the circumstances surrounding the Katrina tragedy were chaotic, unique, and atypical of how private equity firms will run care facilities on a regular basis.

It's much easier to run facilities on a regular basis. A firm's mettle is tested in times of difficulty, of disasters. The Carlyle Group's failure during Katrina might be blamed on the previous owner, GTCR Golder Rauner, as suggested by the Toledo Blade reporter. However, Carlyle's had full reign to manage the aftermath and that reeks greatly. This deserves the attention of the news media and Congressional hearings. A look at the huge, politically connected private equity underwriter's mission statement is most telling:

The Carlyle Group: Our mission is to be the premier global private equity firm, leveraging the insight of Carlyle's team of investment professionals to generate extraordinary returns across a range of investment choices, while maintaining our good name and the good name of our investors.

Apparently a good name is more important to this PEU than owning up to their mistakes, to treating patients and their families fairly. The Exxon story couldn't have resurfaced at a better time...

Humana & SEIU Point to Death of Employer Sponsored Health Insurance

Huge health insurance provider, Humana just released their third quarter results. Compared to 2006, the current year has seen a decline in the number of people covered in the commercial group segment. The number with employer sponsored coverage declined 4.2%.

What happens if the country's experience reflects Humana's? How many more will drop from group health insurance into no coverage, individual plans, or the dreaded government sponsored programs? The answer is nearly 7.5 million Americans. Should 4.2% of the 177 million with employer sponsored insurance fall from the rolls, the question remains as to how many would purchase coverage or qualify for Medicaid or SCHIP.

Someone is waiting in the wings, salivating to deduct paychecks to pay for employee paid health coverage, unions. SEIU President Andy Stern said "employer health insurance is dead and not coming back." I thought it was sneaking out the door under the cover of Congress, the White House and America's Unions. Humana's results drive the point home

Exxon Key Test for Corporatism's Insidious Reach

The U.S. Supreme Court agreed to hear Exxon's appeal of the already reduced $2.5 billion punitive damage award against the company for the Valdez oil spill in Alaska. A federal appeals court already cut in half the 1994 $5 billion award. Exxon wants to pay as little as possible to the 33,000 victims still living. They may just get their wish according to the AP:

The justices said they would consider whether the company should have to pay any punitive damages at all. If the court decides some money is due, Exxon is arguing that $2.5 billion is excessive under laws governing shipping and prior high court decisions limiting punitive damages.

The company argued it should not be held responsible for the mistakes of the ship's captain, Captain Joseph Hazelwood, who violated clear company rules when the Exxon Valdez ran aground with 53 million gallons of crude oil in its hold on March 23, 1989.

How could Exxon be held responsible for the glitch of one of their employees? Didn't Blackwater CEO Eric Prince just tell Congress that "people do stupid things". Well, it turns out Exxon knew their captain had gone through alcohol rehab and kept him on the payroll.

The plaintiffs argue Exxon knew Hazelwood had sought treatment for drinking, but had begun drinking again. "Exxon placed a relapsed alcoholic, who it knew was drinking aboard its ships, in command of an enormous vessel carrying toxic cargo across treacherous and resource-rich waters."

While it may not have been illegal, Exxon broke its commitment to the Native Americans who sold the land for the oil terminal at Valdez to the oil giant for $1. One of their demands was the use of "state of the art" radar. According to Greg Palast "the tanker’s radar was left broken and disabled for more than a year before the disaster, and Exxon management knew it. It was just too expensive to fix and operate."

The court's last ruling on punitive damages, in February, set aside a nearly $80 million judgment against Altria Group Inc.'s Philip Morris USA. The money was awarded to the widow of a smoker in Oregon.

If anyone is counting on this Supreme Court to land on the side of the victims of corporate malfeasance, don't hold your breath. The case likely won't be heard until spring of 2008. How many billions more will Exxon have earned by then? Their bottom line totalled $90 billion the last three years, $150 billion since 2000. Cash flow from operations from 2004-2006 exceeded $155 billion, of which $54 billion was used to repurchase company stock.

Pay close attention to this case, common citizen. It will speak volumes about the power of the players in a "free market, democracy". It's not a good sign that Supreme Court Justice Sameul Alito owns between $100,000 and $250,000 in Exxon stock. While he recused himself, my guess is the 33,000 little guys and gals don't fare so well against the Exxon's and Philip Morris' of the world. But time will tell...

Friday, October 26, 2007

Carlyle Enters DynCorp's Niche with ARINC

The Carlyle Group recently closed on its purchase of ARINC. The debt it shouldered to finance the deal caused the company's debt to drop from 'BB' to a more speculative 'B' rating from Standard & Poors. That usually means the issuer must pay higher interest rates to move the offering. Those higher interest costs are then passed on to ARINC's customers, in this case the federal government.

While researching the company, I found a press release indicating ARINC was just awarded an indefinite delivery, indefinite quantity contract for the Department of Defense's Anti-Drug/Terrorism Program. Just hours before I read about DynCorp's doing similar work for the State Department. It turns out ARINC worked for that same State Department on drug interdiction from Central and South American since 2002. The release stated:

ARINC and four other prime contractors will compete for task orders on a wide range of deliverables such as anti-drug technologies and equipment, special-purpose vehicles and aircraft, advanced communications, security training, crew training, geographic information systems, and in-field support. About 80% of the work will be located outside the U.S. in theaters from Afghanistan to Colombia. Contractors will be expected to simultaneously provide services, critical equipment, and material.

Carlyle enters another profitable niche through another indefinite delivery, indefinite quantity government contract. However with ARINC's increased debt service the acquired company likely won't pay Uncle Sam any taxes on profits for a few years. Carlyle likes to milk the government but pay taxes in return? Not if Carlyle's Charles Rossotti can work his magic. He wants the firm to pay a mere 8% on any profits, roughly half of his investment managers tax on carried interest. Why does a $75 billion firm need a break when the average citizen pays 35% on similar income?

Update 8-15-13:  Carlyle finally sold ARINC for $1.39 billion to Rockwell-Collins, after selling a chunk of ARINC to Carlyle affiliate Booz-Allen-Hamilton for $154 million.   That's over $1.5 billion on a deal done in the days of highly leveraged PEU deals.  Add management fees and special dividends and Carlyle made what multiple on ARINC?

Army Looks for Contract Fraud in Abu Ghraib Fashion

The Army plans to focus on a Kuwaiti purchasing office rife with corruption. According to the AP:

A team of specially trained investigators will hunker down in an Army office north of Detroit on Monday to begin poring over hundreds of Iraq war contracts in search for rigged awards. This team of 10 auditors, criminal investigators and acquisition experts are starting with a sampling of the roughly 6,000 contracts worth $2.8 billion issued by an Army office in Kuwait that service officials have identified as a hub of corruption.

Based on what the team finds, the probe may expand and the number of Army military and civilian employees accused of accepting bribes and kickbacks could grow, U.S. officials told The Associated Press. Nearly two dozen have been charged so far.

Of course the little people should pay for their role, but someone greater created the system. Do you recall Abu Ghraib and the torture of prisoners there? Only the junior people paid the price. Might this be the ceremonial offering of little folks for all that Iraqi corruption? Paul Bremer's team scattered $8 billion in unaccounted for cash before waltzing out of the country. How does prosecuting 23 people for taking over $15 million in bribes compare to the greater corruption? The Army wants us to believe it took a few crafty insiders to swindle the government.

Deceiving the checks and balances in the federal procurement system takes careful planning, Frank Anderson, president of the Defense Acquisition University at Fort Belvoir, said in a separate interview.

"You had some smart bad apples," said Anderson, who leads the organization that trains the military's acquisition officials. "It had to be someone who understood the business well enough to figure out how to get around the system."

A quick look at one contractor's SEC filings reveals some interesting elements of the Pentagon purchasing system. DynCorp reported on its contracts with the federal government over the last 3 years. Over 56% were indefinite delivery, indefinite quantity contracts. Those get turned into one of three types of arrangements, fixed price, time and materials, and cost reimbursement. DynCorp has $3.3 billion worth of contracts as of March 2007 with the State Department alone. Most of that is for the Civilian Police Program while the remainder covers International Narcotics and Law Enforcement. A government auditor recently revealed there is little documentation of what the State Department got for its $1.2 billion from DynCorp, the company charged with training Iraqi police.

What of the companies paying the enterprising Army soldiers bribes and kickbacks? Will they be identified, charged with crimes and executives held accountable? The government's track record with domestic businesses in this regard is poor. Numerous stock option cheats walk free despite ripping off shareholders for millions. Chiquita Banana execs funded South American terrorists and walked away with a fine. And British Petroleum committed numerous criminal offenses while led by Lord John Browne. His penalty was a cush job with a Carlyle Group energy joint venture.

Something bigger has been going on than a dozen or two rip off artists in a Kuwaiti army purchasing office. I have a sense blame will be delegated to the little guys while the system allowing corruption goes on unabated. One only need look at political donations and voting patterns. We have the best democracy money can buy...

The Pound Stops Well Below BP's Lord Browne (now with Carlyle)

BBC News reported on a $373 million fine levied by the U.S. Justice Department on British Petroleum for committing criminal acts, including fraud. BP was fined $50 million for the Texas City Refinery explosion in 2005 that killed 15 workers and injured 170 more. The firm also will pay $303 million for a natural gas price manipulation scheme that ran from April 2003 to February 2004. Four lower level employees have been indicted.

So what happened to Lord John Browne, the CEO who oversaw the company's operations while these criminal acts occurred? The BBC piece only mentions his resigning after a personal scandal. It failed to say he's now a top dog in The Carlyle Group's Riverstone Holdings, an energy joint venture. That was after Carlyle's James Baker let him off the hook in an outside study of the Texas City explosion. The PEU boys do look after one another...

Thursday, October 25, 2007

Chuck Schumer Worried About Tax Shortfall?

Does anyone else find it ironic that New York Senator Chuck Schumer is worried about tax shortfalls due to declining home values? This is the man who encouraged the Senate to not tax "carried interest" earned by private equity managers as regular income until just recently. The AP reported on Chuck's current concerns:

In a new report released Thursday, the congressional Joint Economic Committee estimated that 2 million subprime mortgages could go into foreclosure over the next 18 months as initially low introductory rates reset at much higher levels. The JEC report said that states will lose $917 million in property tax revenue as housing values are depressed by the wave of foreclosures.

"State by state, the economic costs from the subprime debacle are shockingly high," Sen. Charles Schumer, chairman of the JEC said in a statement. "From New York to California, we are headed for billions in lost wealth, property values and tax revenues." Schumer called on the Bush administration to more more aggressively to help families find ways to avoid going into default on their home loans.

What are the economic costs of letting highly paid private equity managers pay lower taxes than the average citizen? It looks like they'll get another year of preferred treatment. That is if Chuck's bill makes it out of committee. Senator Harry Reid hasn't made it a priority to date. With falling tax revenues elsewhere, the PEU boys may need to step up and pay their fair share.

Karen Bechtel Needs to Testify Under Oath on Carlyle's Purchase of Manor Care

Disturbing questions remain regarding The Carlyle Group's planned purchase of huge nursing home operator Manor Care. The head of Carlyle's health care team highlighted her firm's pledge to put "Patients First". Unfortunately, the private equity firm has one glaring failure in this regard with its 24 patient deaths in a LifeCare unit post Hurricane Katrina. This negates Karen's statement to the media:

"We are confident, because we have been doing this for 20 years, that we can provide quality products and services to people that is completely compatible with providing a return to investors."

Karen should answer a few questions under oath before the Justice Department approves the acquisition.

1) Why did the White House Lessons Learned report make not one mention of LifeCare Hospitals and their 24 patients deaths? Did Carlyle request that information be left out?

2) Why is Carlyle blaming the federal government for those same deaths? Why is LifeCare claiming patients became wards of the federal government as soon as FEMA set up evacuation teams in the New Orleans area?

3) Why did HCA charter helicopters to fly patients out of their dead hospitals in New Orleans and LifeCare not?

Karen said the following, which doesn't quite jive with the firm's plans:

"Our business plan categorically does not call for us to lay off people. It would not be in our interest in any way to have patient care suffer. It is fundamental to our investment thesis that we continue to improve and enhance patient care because that will attract even more patients and make this a better investment. This is logical and simple. If we didn't provide good care, we wouldn't have good patients."

4) If Manor Care plans on providing the highest quality nursing home care to patients why go to the trouble and expense of incorporating each facility separately and taking the additional step of having operations and real estate in different companies? With 550 sites, that translates into a potential 1,100 corporate subs. It's main purpose seems to be to isolate assets from lawsuits. If Carlyle plans on providing outstanding care, why the machinations to reduce liability exposure?

5) If Carlyle failed patients in one of twenty one long term acute care facilities and later blamed others, why shouldn't people be worried about their ability to do so again in 550 new sites?

Carlyle failed long term acute care hospital patients in the not so distant past. This got very little press and continues to stay below the radar, which enables them to make their ridiculous statements. Someone needs to shine the light on behalf of the vulnerable. Carlyle failed them before and could well do so again, this time on a much larger scale.

Wednesday, October 24, 2007

Carlyle to Turn Manor Care into 550 Little Pockets

Poorly treated patients in Manor Care's nursing homes will no longer have a deep pocket to sue once The Carlyle Group takes over the firm. News reports indicate the reorganized company will be a series of individual corporations, one per facility. They also plan to separate operations from real estate, further protecting their capital assets. The private equity firm's attorneys must really want to protect Carlyle's $75 billion in investments given their actions.

Manor Care won't be Carlyle's first health care purchase. They closed on LifeCare Hospitals last August, just weeks before Hurricane Katrina's landfall. After 24 patient deaths in the New Orleans LifeCare unit, Carlyle's attorneys argue the feds are responsible! Patients became "wards of the federal government"as soon as FEMA evacuation teams set up in New Orleans.

Funny, health care giant HCA chartered helicopters to remove patients from their dead facilities. It seems the crackerjack management team on Pennsylvania Avenue didn't know how or didn't want to spend the money. In no case, have I ever seen a hospital disaster plan state the organization's obligation to care for patients ends when FEMA teams arrive in the general area. Then again I haven't seen health care facilities with multiple sites splinter into many corporations to minimize patient liability exposure. I'm used to providing excellent care to avoid lawsuits, not unleashing an army of attorneys and issuing lofty but meaningless pledges...

Carlyle's "Patients First" Pledge is Laughable Given Track Record

The Carlyle Group issued a "Patients First" pledge in response to criticism and studies showing declining quality once private equity firm's buy nursing home companies. To stem concerns about its planned purchase of Manor Care, Carlyle made the following commitment.

Patients First Pledge
1. We will continue to provide quality health care services for our patients and residents.
2. We will continue to provide the education and training to help ensure our professional staff and frontline caregivers have the tools to meet the needs of our patients and residents.
3. We will maintain our primary focus on providing care for patients who require complex medical care and intensive rehabilitation, those whom other providers must often turn away.
4. We will continue to staff based on our patients’ clinical needs, many of whom are higher-acuity, while striving to exceed all federal and state requirements.
5. We will provide the capital investment that helps ensure Manor Care’s facilities continue to be well-maintained, attractive structures, as well as state-of-the-art in their rehabilitation capabilities, clinical technology and record keeping.

Carlyle has a track record in the bolded areas with LifeCare Hospitals, a long term acute care company. They closed on the LifeCare deal in August 2005, just weeks before Hurricane Katrina sideswiped New Orleans. Their unit in Memorial Hospital had the largest number of patient deaths in the horrific aftermath of the storm. While giant hospital company HCA rented helicopters to transport patients from their dead facilities, LifeCare patients suffered.

None of this made the White House Lessons Learned report. There is no mention of LifeCare and its 24 patient deaths in the whole tome. I'm sure Carlyle appreciates going into those wrongful death lawsuits with the feds silent on their handling of patients post landfall.

But it gets better! Carlyle's defense attorneys actually blame the feds for the deaths. They argue LifeCare patients became wards of the federal government as soon as FEMA set up evacuation teams in New Orleans. I've never seen a hospital disaster plan that comes close to Carlyle's assertions. The private equity firm has a clear track record of failing patients in a time of crisis and later not accepting responsibility. Why should they get a crack at over 500 nursing homes when they couldn't safely handle one of twenty one LTAC's?

LifeCare clinicians and executives should be testifying on Capital Hill about Carlyle's actions during Katrina for insight into how they may deal with Manor Care. But just as they are ghosts in the George Bush's Lessons Learned report, the Carlyle media management machine will ensure no such testimony occurs.

Bush Protects Uncle Bucky from Sick Kids

President George W. Bush vetoed the expansion of children's health insurance because be believes in "private insurance". I'd imagine the Bush family does, given William H.T. Bush's position on the WellPoint board of directors. George's Uncle Bucky made a hefty sum for those nine meetings in 2006 according to SEC documents. He also attended 16 committee meetings which may or may not have coincided with the full board meetings. For that Uncle Bucky received $426,716 in compensation, $104,369 in cash and the remainder in stock awards.

William H.T. beneficially owns 97,168 shares in WellPoint, 74,800 of which are exercisable stock options. Susan Bayh, wife of the esteemed Democratic Senator Evan Bayh of Indiana, flipped most of her options the last few years for a roughly 50% gain, netting $1.2 million. Should Uncle Bucky do likewise, his stock profits would be approximately $4.4 million. His savings from his nephew's capital gains tax cut amount to $220,000. How many kids could be covered by having the super rich pay the old capital gains rate of 20%? Under this administration we'll never find out...

Friday, October 19, 2007

Where's Justice Department Ryan on Carlyle/Manor Care Deal?

After a previous complaint to the Justice Department about the merger of two San Angelo hospitals, a staffer named Ryan called. The parties had just called off their plans to create one huge for-profit hospital. However, my current beef is over the acquisition of Manor Care by The Carlyle Group and has been met by the usual government silence. On October 17th Manor Care shareholders approved the deal by a whopping margin. Will Ryan or his counterpart call soon? I doubt it. My concern relates to a tangential issue regarding the new owner, the death of long term acute care hospital patients in post Katrina New Orleans.

The Carlyle Group, a huge private equity underwriter (PEU), just closed on its purchase of LifeCare Hospitals when Katrina side swiped New Orleans. LifeCare had the largest number of patient deaths in the storm's aftermath. Yet this fact never made President Bush's Lessons Learned report, despite video footage that showed him querying Mike Brown over how hospital patients fared. What some might see as incompetence, looks more like cronyism. Carlyle has to appreciate going into court for those wrongful death civil lawsuits with a federal whitewash.

Unfortunately, that didn't make the PEU boys on Pennsylvania Avenue happy. They morphed Bush's silence into complicity, claiming LifeCare patients became wards of the federal government once FEMA teams set up in New Orleans. With over twenty years in health care, including time as a Disaster Chair in a Texas Gulf Coast hospital, I've never seen such wording in any hospital disaster plans. Not only did LifeCare fail their patients in a time of extreme difficulty, they want the feds to take the hit. How will they do any better with Manor Care's 550 facilities in time of disaster? They botched LifeCare with only 21 facilities. The Times-Picayune reported:

In court papers, LifeCare argues that once the Federal Emergency Management Agency and the U.S. Coast Guard assumed control of evacuations and other emergency procedures in New Orleans during the flood, it was no longer responsible for the patients at Memorial. The patients essentially became wards of the federal government, not LifeCare, the company's attorneys argue.

There is a clear record for the Justice Department to see in this regard. So pick up the phone Ryan and call me? My concerns to date have been met with 18 months of government silence, despite repeated letters to elected leaders and various investigating agencies.

As for the SEIU protesting the sale, I can't say I have much resonance. The union's President, Andy Stern already called employer sponsored health insurance dead. That means one of two groups will pick up the tab, the government or the employee. George Bush's knuckle dragging on S-CHIP shows the feds won't step up. Why should I listen to a union that wants to take benefits away from their employees, or make them pay? The corporate/union fix is in on health care. From my view, unions aren't much different than the Carlyle Group. Each wants huge pots of money to manage. PEU vs. VEBA's, they all have a distinct odor...

Thursday, October 18, 2007

Carlyle Lights Up Ten Bagger in China

China Daily reported a Carlyle affiliate may soon offer shares on the Shanghai exchange. China Pacific Life received an influx of cash in late 2005 for a 25% share of the company. Less than two years later, Carlyle's $410 million looks to be worth some $4 billion at the prices mentioned in the public offering.

A tenfold return in less than two years? Now that's impressive. That must be why David Rubenstein said there is nothing more important to his private equity firm than China...

Update 1-11-13:  Carlyle cashed out completely, taking in proceeds of $5.2 billion on China Pacitic.

Bush's Community Banker Does Deal with Carlyle

Robert L. Johnson posed with President Bush nearly a year ago as a small business owner and community banker. The Washington Post noted his deal with the politically connected private equity firm, the Carlyle Group. Billionaire Bob Johnson espoused his vision of having the largest black owned, asset management firm. The first phase of the fund will come in at 125 to 150 million dollars. It will then grow to $300 million. RLJ Equity expects to announce its first acquisition in the near future.

How much of a small business owner is Mr. Johnson? According to the Post, he's not one at all.

Johnson has been on a tear since he became a billionaire when he sold his interest in BET to Viacom in 2001. He bought the National Basketball Association's Charlotte Bobcats for $300 million, started a bank called Urban Trust that caters to minorities and has started private funds for real estate and buyouts. His real estate arm owns more than $3 billion worth of hotels and expects to close a $1.3 billion fund by the end of October.

He recently teamed with Thomas F. "Mack" McLarty, former chief of staff to President Bill Clinton, in an automobile dealership venture that would create several minority-owned dealerships centered in the southeastern United States. McLarty's family has decades of experience in automobile dealerships. Johnson and McLarty hope to grow a $400 million dealership business to more than $1 billion in revenue in the next three to five years.

I have a model that is the best practices model for minority businesses to compete in the business economy," Johnson said in an interview. "The trait that runs through all my businesses is that I attract superior minority talent, give them access to capital and bring strategic partners like Carlyle . . . to contribute to the business plan. It's not driven by color, it's driven by talent, access to capital and the right strategic partner."

It appears to be driven by high dollar funders with insider political connections from both sides of the aisle. How much extra business will RLJ subs get for having a minority owner? You'd better believe Carlyle has done that math. Mr. Bob Johnson is not a small business owner and Carlyle doesn't get in bed with anyone without expectations of high returns. They're expecting the community banker to add to those 25% annual returns.

Bain, Call Carlyle for CIFUS Advice

Consider the international corporate deals and the amount of media attention:

Sale of Six U.S. Port Operations to Dubai Ports World-Huge media and political focus

Sales of Two Companies with Operations at Fifty U.S. Airports to Dubai Aerospace-Zero media and political attention prior to closing Since then Dubai Aerospace purchased Ohio based TSS Aviation through its Landmark/Standard Aero holding.

A Dubai company's owning 20% percent of the NASDAQ market site-Major media and political focus

Sale of high tech giant 3Com, whereby 10% would be owned by a Chinese firm-Growing media and political focus.

"We are deeply troubled by the national security implications of the sale," Arizona Senator Jon Kyl says in a draft letter, obtained by Fortune and addressed to Treasury Secretary Henry Paulson on the Bain Capital deal for 3Com.

Where was Arizona Senator Kyl when the Carlyle Group sold Tempe based Landmark Aviation and Standard Aero to Dubai Aerospace? Historically, Jon is the number 3 benefactor from transportation campaign donors. No data exists for 2007 but Carlyle spread around $400,000 to lobbyists to ensure a quiet sale. Note, the Yahoo article on lobbying came out after the deal closed.

Did they make any donations to ensure silence? Who did they give to and why? Keep your eyes open Bain Capital and you can be schooled. It helps to have your own media insider. Thanks Norman! As for future threats to America, what might come our way via a "corporate office in the sky"?

Update 1-31-19:  Carlyle co-founder David Rubenstein mentioned Dubai Ports World to CNBC hosts at Davos, Switzerland last week.

Monday, October 15, 2007

Sorry State of Leadership

American business professionals are both uninspired and uninspiring. Only 10% of employees look forward to going to work and most point to a lack of leadership as the reason why, according to a recent Maritz Research poll.

Top down, heavy handed, target obsessed, people insensitive, cost cutting, greedy Machiavellian types wear on the worker's psyche. Shifting production to China fueled the first wave of profit growth. Shifting the health insurance benefit to the employee will stoke the second profit push. By then nobody will look forward to going to work...

Top Down Targets/Outcomes

The predictible response to hard targets or decreed outcomes is at least twofold. One, the group works hard to reach the target and is successful or not. If unsuccessful, people may cheat to avoid the heavy hand of punishment. Consider the case of Nortel, which fraudulently reported earnings over a multi-year period. An AP article had this to say:

"Nortel's culture had long been extremely target-driven," the SEC said. "It was understood across the company that either missing or exceeding a financial target reflected a failure to manage the company's business properly."

It added: "In that environment, accounting did not serve to measure Nortel's performance; instead, Nortel's executives and finance managers treated their books as tools to meet the company's financial objectives."

For another example look at the Bush White House, which clearly states its bias for outcomes. Recent reports on corruption in Iraq have been classified. The group also dropped critical measures that failed to improve over time. And anyone who read their Lessons Learned report after Hurricane Katrina got treated to a white wash.

These are the consequences of heavy handed, "perform or else" management perspectives. Greed intices people to cheat, while fear of losing their job and a steady paycheck does likewise. As Dr. Deming said "Will they ever learn?" He taught a system of knowledge for leaders. It's badly needed in today's world.

Gorging at Campaign Money Trough

The media reported campaign spending could break $3 billion in 2008, nearly double that of 2004. That 76% increase in election spending might just outpace rises in college tuition and health care costs.

It certainly says much about our countries priorities. It says even more about who gets to run. Will the millionaire candidates please step forward? How about the billionaires?

Candidates beware the indigestion that can arise from gorging too long or fast at the campaign money trough. Mitt, you're looking a little peaked...

Jack Cafferty's 4 pm Question

Q: Is now the time for Speaker Nancy Pelosi and the House of Representatives to be taking up the Armenian genocide resolution?

A: It gives Congress the perfect excuse to keep private equity underwriters' preferred tax status in place. Harry Reid already said it wouldn't happen this year. The PEU boys will likely show their appreciation by slopping generous helpings into the campaign money trough. Sooooowweeee! I smell an election coming...

Fox Business Network Kicks Off

Fox Business Network kicked off today. The football sailed high an long, back to the two yard line. There the returner garnered the ball and sprinted up the field, their long golden hair flapping behind them. After getting to midfield, the player jumped up and down in celebration.

The camera close up revealed, a woman? That looks like Hillary Clinton! Little did I know she was a heavy hitter in the business fund raising and influence selling world of American politics.

Normally Fox likes to revile the Clinton's, but Rupert must have checked out Hillary's donor list. Those firms do like to buy ads on business channels. Welcome to Under the Looking Glass, where down is up and up is down....

Sunday, October 14, 2007

Murdoch to Close on Neil Cavuto's Research Department in 4th Quarter, but TV Starts Up

Tomorrow Fox Business Network makes its debut. Rupert Murdoch knows where the big money is, in big business. His TV station launch combined with his purchase of Dow Jones Inc., owner of the Wall Street Journal, positions the media tycoon for more high dollar ad revenue. Legally, Fox Business Channel's main competitor has an exclusive agreement with the WSJ until 2012, but Rupert already has a team of lawyers going through the contract. Rumors are he wants to buy out the deal.

Two directors resigned from the Dow Jones board because of the sellout of the prominent financial journal, approved the end of July and expected to close in the fourth quarter. Leslie Hill said this in her resignation letter:

The short term financial benefit is difficult to deny. In my opinion, however, it not enough to outweigh the potential ramifications of the loss of an independent global news organization with unmatched credibility and integrity. Although I respect the diligent efforts made to preserve the Journal’s editorial independence, in the end, I do not believe that a special committee could ever be a match for true independence

As a family member as well as a director, I am proud of the Journal’s long history and the fact that as a family we have contributed to the creation of two of the most powerful brands in the world.

Mr. Dieter von Holtzbrinck resigned prior to Ms. Hill. He stated in his resignation:

I’m very worried that Dow Jones unique journalistic values will long-term strongly suffer after the proposed sale.

I cannot prove that my worries are right. I can only refer to News Corp. business practices in the past, can only refer to Jim Ottaway’s article in the Journal, etc. I do not believe that the “Special Committee” can finally prevent Murdoch from doing what he wants to do, from acting his way.

Hang on Neil Cavuto! Rupert's working to get you that Wall Street Journal brand, the one Leslie Hill bragged about in her letter. When that happens, think how far Fox Business Network can go. Get those softball questions ready for the Bush team. Fox Business reporters surely can hold their "that's it?" comments when George W. Bush says something irrelevant to the question asked. Will that keep the gold coming for Fox Business Network?

Friday, October 12, 2007

Bush's "Zero" Response to Backdating Stock Options

If anyone thought President Bush was right on for his statement on people taking food and water after Hurricane Katrina, they're in for a shock. His "zero tolerance" for wrongdoing flies out the window as income levels rise dramatically. Nearly one third of CEO's benefited from backdating stock options according to studies, in violation of their own corporate policies and SEC rules. A Wall Street Journal interview shared the President's response to a question on this practice of illicit personal enrichment at the expense of shareholders.

WSJ: Do you include backdating of stock options as one of the things you're worried about or that you've seen that troubles you?

PRESIDENT BUSH: There's a variety of reasons why stocks go down and people benefit. And I'm sure that's one of them, but as I understand it, the SEC is looking into that quite vigorously.

WSJ: When did you have that communication?

PRESIDENT BUSH: I can't remember, John. I've felt that way for quite a while.

WSJ: So you think this inquiry has been going on for a while now?

PRESIDENT BUSH: I can't tell you exactly how long the inquiry has been going on, but I can tell you that I've expressed my opinion. And as a matter of fact did it -- if I'm not mistaken, did it in New York City, was it a year ago?


PRESIDENT BUSH: January. Publicly.

WSJ: I'm curious, though, if you see --

PRESIDENT BUSH: Once again, you didn't hear a word I've said.

WSJ: I wrote the story about that speech.

PRESIDENT BUSH: Well, thank you. (Laughter.) Just teasing. (Laughter.)

Earlier in the talk, George talked about shareholder's holding corporate boards accountable on CEO compensation and he couldn't intelligently talk about backdating, a practice that robs individual stockholders? Give me a break! Where is the President's "zero tolerance" for corporate theivery outside natural disasters? If there was any doubt our Chief Executive is an idiot insider, it's now gone from my mind...

Bush Chides CEO Compensation, but Only in Publicly Traded Companies

In a Wall Street Journal interview, President Bush came out swinging on publicly traded companies handling of CEO pay. Meanwhile, privately owned firms got a free lunch from the nation's Chief Executive. George said:

"Do I think some of the salaries are excessive at the top? I do, I don't think it's the role of government to regulate salary. But I do believe it's a role of boards of directors to be very transparent with shareholders about these different packages, the employment packages that these executives get."

Excessive executive compensation "just sends a signal of unfairness, and people in America want...fairness."

Transparency, fairness? People I know want a fair wage for hard work. They want to be treated decently by their employers. They hate being canned for no legitimate reason.

They don't like seeing one third of executives cheat on their incentive stock option compensation, with little to no legal accountability under the Bush administration. They hate seeing their friends jobs sent overseas and their benefits cut. Yet both happened in spades under this Chief Executive.

If George W. Bush truly believed in transparency and fairness, his statements would apply to all companies, publicly traded or not. Part of the run to private equity, from my viewpoint, is to get CEO pay and Board compensation out of the public eye. Behind closed doors, they can let their hair hang down, which leads me back to another sore subject. Will fair and open George Bush finally release documents on the attorney general firings? That resonates with more people than our President realizes. There's a bully and slippery snitch in just about every workplace.

Will Asia Times Piece on Petraeus Get "Rathered"?

A thought provoking piece in the Asia Times showed General Petraeus as a man controlled by Eisenhower's military/industrial complex and determined to feed the voracious beast with Iranian targets. It made many insightful comments, but one could cause the powers behind the curtain to discredit the whole for a small error in part. The story said under the "Show Me the Money"section:

"And it's not only Blackwater. There are Lebanese Christians, South African white supremacists, former soldiers under the Pinochet dictatorship in Chile, the British from Aegis. There's Vinel Corp and BDM International - both affiliated with the US Carlyle Group. There are the Israelis from Interop and Colosseum training Iraqi Kurd militias. From Peruvians making US$1,000 a month to Americans making US$1,000 a day, all these mercenaries are ultimately financed by American taxpayers - the whole net subcontracted by Petraeus' former boss, Donald Rumsfeld. Petraeus is just a general caught in a (mercenary) labyrinth."

After writing the author for confirmation, I did a little rooting through SEC files. I've come to believe private equity firms like not having such information open to the public and available online. But until every public company goes private or the Bush cabal changes the laws, such information exists. Here's what I found:

According to SEC reports, BDM was acquired by Carlyle in 1990. In March 1992 it purchased Vinnell, a company that provides training and logistics services largely in the Middle East. The Carlyle Group clearly stood in control with Frank Carlucci and William Conway comprising two of the three members of the Board Executive Committee. BDM also paid Carlyle over $500,000 a year for the investment firms advice.

As private equity underwriters (PEU's) do, they like to flip companies. Carlyle firm sold its remaining 26% of the company in late 1997. The sale was termed a watershed event. Carlyle's cut of the billion dollar deal was $260 million. Their initial investment was $24 million, making it more than a ten bagger. At $29.50 per share, Mr. Carlucci's 75,560 shares brought in $2.2 million and Mr. Conway's 83,618 shares equated to nearly $2.5 million. Not only did Carlyle make huge money, so did their key executives.

In December 1997 TRW purchased the firm from the Pennsylvania Avenue PEU. TRW was acquired in 2002 by Northrop Grumman Corporation, which kept the Vinnell brand name.

In the summer of 2003 Vinnell Corporation was awarded a $48 million contract to train the nucleus of a new Iraqi Army. Vinnell and its subcontractors began working at various locations in Iraq July 1 under the one-year contract. The cost-plus-fixed-fee contract was awarded by the U.S. Army Contracting Agency Southern Region Contracting Center. Vinnell's subcontractors are MPRI, Alexandria, Va.; SAIC, San Diego; Eagle Group International, Inc., Atlanta; Omega Training Group, Columbus, Ga.; and Worldwide Language Resources, Inc., Rumford, Maine.

The rest is history. Will one error, hurt Mr. Pepe Escobar's assessment? Will the spin machine chew him up for a dated relationship, similar to Dan Rather's font and ink problem on the true story of George Bush's kid glove treatment in the Texas Air National Guard? Is it a coincidence Vinnell trains the Saudi National Guard? What Prince got George-like treatment in the Saudi Guard and awaits his chance to sit on the throne and throw temper tantrums? The suspense is torturing, at least for somebody. Let's hope it's not deadly...

Thursday, October 11, 2007

SEIU Protests Carlyle Group, Next Stop Andy Stern's Office

The Service Employees International Union paraded wheelbarrows of cash from the I.R.S. office across the street to Carlyle's corporate offices on Pennsylvania Avenue. The union protested the low taxes private equity underwriters (PEU's) pay on "carried interest". The protest came complete with a Fat Cat, only the SEIU has one of its own, union President Andy Stern.

Guess who wants businesses to dump their pesky health insurance benefits in voluntary employee benefit trusts or VEBA's? No, it's not David Rubenstein or any of the other two Carlyle founders. The cheerleader for shedding that valuable employee benefit is none other than Andy Stern. He wants those wheelbarrows of health insurance premium money to manage.

So pack up your fat cat, SEIU, and take him back to your union headquarters. Quit pretending unions are out for the little guy. Behind the scenes the Andy's and David's of the world plan to shaft the American worker yet again. Cut the front stage theater and pull the blue curtain. That way people can see what's really going on...

Wednesday, October 10, 2007

Fair Taxing of PEU Managers Dies in Congress

Private equity underwriters get to keep their preferred taxation on "carried interest" as Congress is too busy to bring a bill to the floor. Those millionaires can breath a sigh of relief and refocus on growing their huge bank accounts, thanks to K Street and the Capital.

Senate Majority Leader Harry Reid, D-Nevada, told numerous folks the issue was dead for 2007. However, according to the Washington Post his official stance is:

"Given the difficulty in getting any legislation through the Senate and the little time left this year for moving other issues important to the American public, it is unclear whether there is sufficient time to address the appropriate tax treatment of private equity firms."

Apparently the appropriate treatment involves hiring lots of lobbyists and funneling campaign cash to the right people. Chuck Schumer, D-New York already showed his Chucky side. Hold your nose folks, something reeks and it's coming from both sides of the aisle...

Tuesday, October 9, 2007

SEIU Won't Come to the Rescue

Not only did the Service Employees International Union not back a Democratic candidate, they can't back their own workers' right to employer provided health insurance. On the political side, the union is allowing each local to support the Democratic candidate of their choice. The AP report stated:

"Given the importance of this election, we are encouraging members and leaders to act on their passion for the candidates and get involved on a statewide basis," SEIU President Andy Stern said.

Instead of spending its money in a primary campaign, the international union will devote its funds to national issues until the Democrats have picked a candidate.

"We will continue to work on issues like health care, the war in Iraq and other issues while our locals decide whether they want to endorse a candidate in the Democratic primary," SEIU spokeswoman Stephanie Mueller said.

That same Andy Stern not long ago said "We have to recognize that employer-based health care is ending. It's dying. It will not return." The union can't back a candidate, while their president opens the door for employers to shed that pesky health insurance benefit. Unions want to be the giant group purchaser for health care coverage.

The problem is one group of thugs already skims 15-20% for marketing and administrative expenses. What happens when we add another layer? It could look like the Bush reconstruction of New Orleans, with layers of contractors, each with their profit motive. The average worker may look like a poor person in the Ninth Ward, shell shocked and financially overwhelmed. Better get used to it, because the individual employee is on their own.

Just hope you don't end up in the hospital under your self paid premium as another strong hurricane approaches. As those co-pays accumulate, your finances go underwater. With no one to help, the sick will need skills in self rescue. We saw the Bush response once, and it's predictive. The question is how many hospitals will remain open to provide care in this perfect storm.

Monday, October 8, 2007

How Private is Carlyle?

During the Bush administration, many well known companies left the public arena. They now reside behind secure walls, sheltered from view by huge private equity firms. They invest in a range of industries, defense, health care providers, electrical power, pharmaceuticals, technology, media, fast food, automobiles, car rentals, consumer goods, and even green products.

The infamous Carlyle Group stands out as both the most politically connected, and one of the most profitable private equity underwriters or PEU's. Their foray into media ranges from internet marketing services to the set top box monitoring your television viewing habits. The later firm will hold its first media and money conference, alongside Rupert Murdoch's new Dow Jones and Company.

The event will be held November 7-8th in New York. Speakers include Michael Eisner, formerly of Disney fame and Norman Pearlstine, former board chair of Time Warner but now a Senior Advisor to Carlyle. Norman will speak about "his switch from the publishing industry to the investment industry during his own keynote interview. In addition, he will impart his view of private equity and its possibilities in the media space, and where he sees newspapers and magazines heading in the coming years."

Will he speak of Carlyle's record stuffing negative stories? Will Norman talk of their bad luck in closing the purchase of LifeCare Hospitals just weeks before Hurricane Katrina made landfall? Will he discuss their record patient deaths post-Katrina? Will Mr. Pearlstine share how he kept their New Orleans hospital out of the White House Lessons Learned report? Not one mention, now that's outstanding work!

But it gets better. Will Norman talk about the unique defense the company is using against wrongful death civil suits? Carlyle's blaming the federal government. They say as soon as FEMA evacuation teams landed in New Orleans, their patients became wards of the federal government. They did so badly in saving their patients, they now want the Justice Department to look the other way as they buy a much larger nursing home company, ManorCare.

Norman's been a busy man, working hard to squelch the odor of his PEU. I'm impressed he had time to write the speech. For a more subtle hint at the nature of private equity, read the Nielsen Company description at the bottom of the news release on the media and money conference:

The Nielsen Company is a global information and media company with leading market positions and recognized brands in marketing information (ACNielsen), media information (Nielsen Media Research), business publications (Billboard, The Hollywood Reporter, Adweek) and trade shows. The privately held company is active in more than 100 countries, with headquarters in Haarlem, the Netherlands, and New York, USA.

Carlyle can't even say, it's ours...

Friday, October 5, 2007

Carlyle Chief Extols China as the New America, Only with Asian Consumers

The land of opportunity that sprouted The Carlyle Group will soon be downright Un-American compared to China, according to Carlyle founder David Rubenstein.

"I expect our presence in China will increase dramatically over the next couple of years, there is nothing more important to Carlyle than China." With its 1.2 billion people and ultra-fast economic growth over the past decade, he said "the growth and opportunities in China are unmatched anywhere else in the world."

The new land of opportunity is China, despite Carlyle's U.S. Buyouts fund being the most profitable to date. But like an aged trophy wife, the U.S. economy is ripe for shunning in favor of the fast maturing Asian model. Now that sounds like Washington, DC behavior. It's a good thing Carlyle's office is just down the street from the President.