PEU Peter Pace Packs Punch in Proxy Pugilism

Proxy materials from SM&A indicate retired General and Board candidate Peter Pace knows how to take sides in their proxy fight. The letter from Board Chair Dwight Hanger states:

Likewise, two of our most valuable assets—Cathy McCarthy and retired General Peter Pace—have also expressed to me in no uncertain terms that they will not work for a company in which Steven Myers (the enemy) exerts influence or control. A year ago at this time, General Pace was the nation’s highest ranking military officer, serving as chairman of the Joint Chiefs of Staff as part of a long, distinguished career of service to our nation. When he agreed to join us upon his retirement, he made it clear that the reason he chose SM&A was because of the quality of your board, the first-rate management team that took over last year and a sharply focused strategic plan that he can help us execute using his extraordinary depth of knowledge and contacts. We accordingly refined our strategic plan with a pivotal role for General Pace as President and CEO of SM&A Strategic Advisors. As he has told many of you directly, he will not be willing to stay on if Myers were to return or successfully place his slate of directors on the board.

We would hate to lose any of these managers and executives who are such valuable contributors to the new SM&A that is emerging from its past. But if there is a change in the composition of our board, it will trigger another round of management and board change at a time when your company is finally beginning to distance itself from its tumultuous past.

Dwight clearly told us where Peter sits. Apparently General Pace is willing to walk away from his first year compensation of $560,000. In addition to his part time work for SM&A, Peter Pace landed a job with Berman Capital, a private equity underwriter (PEU), and a spot on the Neohapsis board.

I found the description of SM&A interesting in light of the strategic shift and tumultuous past mentioned in Chairman Hanger's proxy letter:

SM&A is the world’s foremost management consulting firm providing leadership and mentoring solutions...

It seems they've encountered their share of leadership problems for the "world's foremost consulting firm." But now they have a fighting man on their side.

Carlyle Buys Majority Interest in ITS Technologies & Logistics

The Carlyle Group's news section of its website ran the headline above. Unfortunately the link to the press release wasn't operating. A web search of the deal produced very little. One might expect a technology company to have a major web presence, but little information was available.

ITS Technologies & Logistics did show up as a contractor for the Defense Logistics Agency. Other than that, I'll have to wait for Carlyle to share more information, but it looks like the government industrial monstrosity has yet another nipple available for their Pennsylvania Avenue cohort.

Update: ITS is an intermodal facilities operator. It lifts containers from rail to truck and truck to rail and performs rail switching, terminal administration and equipment maintenance. It has 52 operations in the U.S. and 3 in Mexico. Can Carlyle pull a double in a year and a half, like they did with CSX Lines, later renamed Horizon Lines? Ex. Treasury Chief John Snow sold CSX Lines to Carlyle for a song. He now heads another private equity underwriter, Cerebus Capital Management. Meanwhile, CSX works Congress for protection from potential hedge fund acquirers. One thing leads to another.

Carlyle to Bank Your Gas Money!

Super rich Middle East sovereign wealth funds continue scouring the landscape for places to invest their hundreds of billions in oil profits. It looks like the infamous Carlyle Group may entice them to pour more of their overflowing coffers into their vault. Carlyle could soon sell additional shares to Gulf investors. Last year they sold 7.5% of their private equity underwriter (PEU) to a United Arab Emirates government fund for $1.35 billion.

Recall Congress explored the topic of U.S. asset sales to Middle Eastern SWF's not long ago. Front and center stood Senator Evan Bayh, D-Indiana, one of the point men for Hillary Clinton's Presidential run. Evan saw few problems with corporate sales to foreign government owned corporations. Did that have anything to do with Carlyle being one of his biggest lifetime campaign donors, number seven on his list?

Never mind the other coincidences. Two members of the Clinton White House occupy key positions in Carlyle, Mack McLarty and David Marchick. David recently testified before Congress on the benefits of selling chunks of American corporations to Middle East government companies. David failed to note how Carlyle sneaked in the sale of fifty U.S. airport operations to Dubai Aerospace last August.

Hillary spoke on April 12th at an Allison Transmission plant in Indiana, a Carlyle affiliate since August 2007. By her side was the aforementioned Senator Evan Bayh. Numerous journalists failed to note the ownership change, referring to the plant as GM's. Several months earlier Mrs. Clinton toured another Allison plant in Maryland. On February 11th, she promoted her green power jobs from a "GM" plant. Her remarks never mentioned Allison's real owner, The Carlyle Group. How could the media miss all The Carlyle Connections? This leads us back to the former board member of CaterAir, a past member of the Carlyle corporate fold, our current President.

President Bush called rising gas prices "like a tax on the working people", and part of those rising prices include rising profits. So your tax money is going to foreign government investment funds, which may soon share another huge chunk with The Carlyle Group, just down Pennsylvania Avenue from the White House. It looks like another screwing from the boys in power in Washington, D.C. Welcome to the government industrial monstrosity. Carlyle grew from $13 billion to over $81.1 billion during Bush's term in office. What new benchmark will it hit before George W. leaves office in January 2009?

Carlyle to Down Booz in $2.54 Billion Shot

Reuters reported The Carlyle Group is buying a majority stake in the government business of Booz, Allen & Hamilton. Carlyle, the politically connected private equity underwriter (PEU), will pick up controlling ownership of the BAH's huge consulting and intelligence division. It looks like a win/win from here as our federal government continues spending dollars out the wazoo on spying. In addition, Carlyle already has many of its over 1,000 affiliates doing work for the feds.

The new Booz Government Division can have its consultants recommend products or services from fellow Carlyle corporations. BAH's press release mentioned telecommunications, healthcare and defense. It just happens The Carlyle Group organized its portfolio companies in similar fashion.

Their newest affiliate can use its intelligence to gain competitive advantage, as even more work is jettisoned to the private sector in bi-partisan like fashion. Carlyle co-founder William Conway hates a level playing field. The Booz acquisition should tilt government contracts even further in Carlyle's favor. (At least they're starting out with a $12.2 billion indefinite quantity, indefinite delivery contract from Uncle Sam under the military's ENCORE II program.)

Other recent news had Norman Pearlstine joining Bloomberg as Chief Content Officer. With the move, how will Carlyle ensure their good name? Does buying a major contractor in the feds spying arm help? There's much dirt to bury, or should I say mud.

Carlyle just got fired by Boeing from a joint venture for holding up production of the 787 Dreamliner. They also failed 24 patients in their LifeCare hospital in New Orleans post Hurricane Katrina. During Norman's term as media man, neither story got much, if any play in the news. With Booz on board, can Carlyle stuff its next management debacle? Highly likely.

Stop the Flashbacks!

Two and a half years ago President Bush asked his Homeland Security Adviser Fran Townsend to conduct a "robust" investigation into the White House's response to Hurricane Katrina. Down Pennsylania Avenue, The Carlyle Group struggled mightily to keep their good name. Their LifeCare affiliate lost 24 patients in the aftermath of the storm.

Norman Pearlstine, the ex-Time Inc. chief did a remarkable job keeping the Carlyle connection quiet. No media groups asked why America's preeminent private equity firm couldn't manage a rescue of stranded patients. Was it Carlyle's influence or just sheer luck that Fran omitted any mention of the hospital with the highest death toll in her Lessons Learned report?

Fast forward to this week's news, and I'm not talking about the parallels between Burma's go it alone, foot dragging military junta and George Bush. Do you recall the footage of our President telling a few Mississippi citizens to go to the local Salvation Army for help? "But sir, it's gone," came the reply. Offers of international aid poured in, while Condi Rice purchased expensive shoes in a New York City buying spree.

But this morning's flashbacks came courtesy of Fran and Norman. Both made career moves. Norman left The Carlyle Group to join Bloomberg LP as Chief Content Officer. Funny, in my blogging, Bloomberg is the only site that came close to rattling Carlyle's chains. Reporter Jason Kelly recently reported on a few of Carlyle's stumbles. I wonder if similar stories will make it past Bloomberg's new Chief Content Officer? Doubtful, if he left the firm on good terms.

And Fran, who so kindly omitted Carlyle's newest affiliate from her Katrina Lessons Learned report, what came of her? President Bush appointed her to his Presidential Intelligence Advisory Board. Then rumors flew of her hiring at CNN, but her commenter role was officially confirmed only yesterday. Over the weekend, the U.S. Chamber of Commerce announced her new advisory position to their CEO. What kind of "intelligence" does it take to land these plum positions? Apparently, just the kind that makes your boss or employer look good.

Speaking of intelligence, President Bush just rued the flawed Iraq WMD data that led to the invasion in 2003. BBC News reported the U.S. Chief Executive's perspective:

He said intelligence communities across the world had shared the same assessment. "And so I was disappointed to see how flawed our intelligence was."

I certainly can related to Bush's disappointment. I was shocked to read the White House Lessons Learned report and find no mention of LifeCare's 24 patient deaths. Some people might accuse George of having Fran create a whitewash report, but the President doesn't care what citizens think.

"Popularity is fleeting... principles are forever," Mr Bush said. Yes, Mr. President, the world continues to see arrogant, self centered leaders who use violence to solve problems, cannot admit mistakes, nor ask for help. Let's hope it doesn't go on forever.

Fran Townsend Lands Advisory Role with U.S. Chamber

It's been an exciting week for ex-White House Homeland Security Advisor Frances Townsend. It began with Politico reporting Fran would become a commenter on CNN and ended with an announcement that Mrs. Townsend had been hired to advise and consult with U.S. Chamber of Commerce CEO Tom Donahue.

If anyone paid attention to Fran's work around Hurricane Katrina, they might question both offers of employment. Sure, Mrs. Townsend had to do what her boss ordered, but flying to Saudi Arabia when thousands of people were stranded in New Orleans hospitals? That ranks up there with Condoleezza Rice's shoe buying while offers of aid poured in from governments around the world (in Burmese like fashion). What are Fran's Saudi friends doing for us today? They have the capacity to pump another 1.5 to 2 million barrels a day, but ignore Mrs. Townsend's old boss and his pleas for a price break.

The U.S. Chamber of Commerce ditched their local jobs multiplier several years back. It estimated the number of times a dollar circulated through the community as the result of new employment. While jobs went overseas, it shifted to promoting a cheap goods multiplier. It implied access to inexpensive products made things more affordable and thus people better off. With commodity inflation and record oil prices, that twin edged blade now slices the other way. Fran's advice will be needed as the Chamber is on the bad end of both of its historic multipliers, jobs and prices.

Unfortunately, Fran's record on "robust" reports doesn't always include the "ro." After returning from Saudi Arabia, President Bush tapped Mrs. Townsend to do the White House Lessons Learned report on its Hurricane Katrina response. It omitted any mention of the hospital with the largest number of patient deaths post landfall. Despite news footage the morning Katrina struck showing George W. Bush ask Micheal Brown about hospital and nursing home patients, sick and disabled patients were left in dead facilities for up to five days. While Fran handed King Abdullah a letter regarding America's support against terrorism, the last patient was removed from Tenet's Memorial Hospital, also the landlord for LifeCare Hospital of New Orleans.

LifeCare's twenty four patients deaths warranted not one citation in Fran's report. Just weeks before Katrina sideswiped New Orleans, The Carlyle Group closed on its purchase of LifeCare. The private equity underwriter (PEU) shares a Pennsylvania Avenue address with the White House. I'm sure Carlyle appreciated the omission, as it faces twenty four wrongful death civil lawsuits.

The Chamber of Commerce hates product liability lawsuits and so does the Bush administration. The irony is Carlyle blames Bush's FEMA as part of their innovative defense from those wrongful death lawsuits. LifeCare contends patients became wards of the federal government as soon as evacuation teams set up in New Orleans. This claim is laughable. LifeCare had a duty to care for patients until they were transferred to another caregiver. Claiming acutely ill patients, sitting in LifeCare hospital beds, were under the care of nonclinical people miles away is ludicrous.

Why would the Chamber hire Frances, in light of the fact that she submitted a whitewash on the White House's response to an "unprecendented disaster"? They obviously employed her for her political connections. The U.S. Chamber of Commerce knows our government is for sale. They invested for their share.

Whether she intentionally covered for Carlyle or simply wrote a sorry report, the politically connected PEU owns over 1,000 companies and continues to gobble up more. This past week, they announced the purchase of a Greek chemical company, a Japanese LCD maker, and a Canadian mining software company. How many of Carlyle's affiliates are U.S. Chamber members? It looks like Fran's consulting gig with the Chamber is a good hire all around!

Double Shot of Carlyle

While viewing a story on the Carlyle Group's establishing a Quality Committee for huge long term care provider, ManorCare, an annoying pop up invited me to complete a short survey on the use of the website. It came from Nielsen, another Carlyle affiliate.

After declining their invitation, I found one of the three member committee overseeing quality is Gail Wilenskey, a former board member of ManorCare and head of Medicare/Medicaid under Bush 41. Her vote was necessary for Carlyle to close the transaction. Given the political heat generated by the sale, Gail's influence likely facilitated the current Bush administration's pre-Christmas approval of the deal.

Gail also made out like a bandit from the sale. Her ManorCare stock holdings comprised 27,205 shares and her gross proceeds from Carlye were $1.4 million dollars. This hardly makes Ms. Wilensky the impartial quality assessor needed by long term care patients and their families.

For a list of Gail's other holdings, UnitedHealth Group, Gentiva, Cephalon, SRA International and Quest Diagnostics, check out the SEC's Edgar website. On December 12th, Gail flipped her UnitedHealth stock options for a huge gain. Her 25,000 shares cost an average of $11 a share. She sold them for $57.40, grossing $1,165,000.

Carlyle's check came on December 26th, making the holiday season a banner financial one for Gail. In two weeks time, she garnered $2.565 million. That won't make the news, much less a Nielsen survey in today's world. But ManorCare does have a quality committee.

Don't you feel better knowing the private equity underwriter (PEU)that couldn't rescue hospital patients from one of its twenty one LifeCare facilities in the Katrina disaster, now owns five hundred long term care facilities? Was Gail aware of this fact when she voted for buyout or when she agreed to serve on HCR ManorCare's Independent Advisory Committee on Quality, a three-person panel convened to provide recommendations and advice to the ManorCare Board of Directors?

Update 11-25-18:  WaPo nailed Carlyle's role in sinking ManorCare.  There was no mention of Mrs. Wilensky or the Board Quality Committee.