Wednesday, April 30, 2008

Carlyle Number One at Numerous Things

Private Equite International Magazine rated The Carlyle Group number one in funds raised last year. The politically connected private equity underwriter (PEU) raised $52 billion for investment purposes. It beat out Goldman Sachs, TPG, and KKR for the top spot. While Carlyle is good at raising funds and earning stellar returns, it has another skill. The Pennsylvania Avenue PEU can shut the media out like no other firm. Consider the following:

1. Boeing canned Carlyle's Vought Aircraft Industries from a joint venture as it was the sticking point for Dreamliner 787 production. Despite Vought's paying Carlyle $2 million a year for management services, the JV had liquidity problems which prevented it from ramping up production. That came from the mouth of Vought's CEO. How did Carlyle sell Boeing's yanking their share of the joint venture? Vought spokeswoman Lynne Warne said “This was purely a financial transaction.” Hogwash! (As for value from that multimillion dollar management fee, Vought just agreed to pay $1.5 million for employment discrimination. Its screening process discriminated against women, black men, and Asian men.)

2. Carlyle sold Landmark Aviation and Standard Aero to Dubai Aerospace with virtually no media coverage. Some fifty domestic airport operations went to a Middle Eastern sovereign wealth fund with barely a peep from the business media. This deal was sandwiched between the Dubai Ports World brouha and the contentious Nasdaq sale to a Dubai firm. It closed around the time President Bush signed a new law "strengthening the oversight of acquisitions of U.S. companies by foreign firms." It seems that law facilitated investment more than anything else.

3. Carlyle's LifeCare affiliate lost 24 patients after Hurricane Katrina. Their attorneys blamed rogue clinicians first. When that strategy failed, they pointed their finger at the feds. Carlyle claims their long term acute patients became wards of the federal government as soon as FEMA evacuation teams set up in New Orleans. After failing patients in one of twenty on LTAC's, the PEU purchased ManorCare with over 500 facilities, mostly nursing homes. None of the this came up in the media during coverage of the purchase. Given their track record of failure, no Congressional committees asked how Carlyle planned to protect patients in future disasters. It must help to have a Pennsylvania Avenue address!