Policy Making PEU Billionaires

NYT reported:

Over the past 30 years, as the gap between wealthy and poor grew ever wider, total philanthropic giving almost tripled, In an age of widening partisanship and plummeting trust in government, this outpouring of philanthropy has produced a distinct breed of philanthropist: The policy-making billionaire.

The Times piece went on to mention Carlyle Group co-founder William Conway.  Private equity underwriter (PEU) Conway is a well know tax hater. 

William E. Conway Jr., a founder of the Carlyle Group investment company, is planning to give away $1 billion of his personal fortune, and is said to be considering how his money can aid in financing major infrastructure projects. 

Note:  Conway's PEU firm has a $1.15 billion infrastructure fund, itching to invest.

In keeping with the anti-government spirit of the times, the new philanthropists  share a disdain for established politics and an impatience with the slow churn of old-fashioned policy making.

Billionaires shed that disdain when they visited Capital Hill to keep their preferred status regarding "carried interest" taxation.  Carlyle's Conway leads a virtual nonprofit organization, paying a mere 1% in taxes on its $9 billion in net income over the last five years.

Also, PEU's saddle affiliates with dramatically increased interest expense and new management fees, often taking away tax liability for years.  It's a business model that "starves the beast." 

“As corporate citizens of the world, it is our responsibility — our duty — to serve the communities where we do business, by helping to improve, for example, the quality of citizens’ education, employment, health care, safety, and overall daily life, plus future prospects.” 

Conway announced his planned $1 billion donation in late September.  It came on the heels of Carlyle's strong arming of Brintons, a British carpet maker.  Carlyle dropped the pension fund, cut UK jobs and closed plants. Those moves dimmed the future prospects of many workers.  It also shifted retirement responsibility to a public, i.e. government entity.

Did Brintons employees get first dibs at Conway's $1 billion?  Hardly.

The very loftiness of (the above) ambitions raises a significant question: Can even the very wealthiest philanthropists finance public services on the scale necessary to achieve social change — that is, on the scale of government itself?

Instead of seeking to supplant what government does, philanthropists can finance advocacy to change it.

Kaching!  It's back to Carlyle's distinctive competency, influence peddling.  PEU money finances politicians.  It's used to lobby for preferred tax and regulatory status, as well as steer chunks of Uncle Sam's trillion dollar budget to affiliates.

Carlyle kaching is used to settle legal investigations and fund attorneys offering laughable defenses (in the case of LifeCare Hospitals' 25 patient deaths after Hurricane Katrina and SemGroup's bankruptcy).

The Times piece sprayed perfume over the PEU stench.

Future Suggests Government Gives & Gives

Chicago Tribune reported on proposed tax breaks for two large Illinois employers, Sears and the CME Group:

CME Group, parent of the Chicago Board of Trade and Chicago Mercantile Exchange, has threatened to leave the state in protest of a temporary increase to the state's corporate income tax rate. The proposal (new tax break) would tax income from just 27.54 percent of electronic transactions on local exchanges, costing the state an estimated $100 million a year.

Ironically, CME is looking at a government sponsored insurance system in the aftermath of MF Global's implosion.

Under discussion is the feasibility of a government-sponsored insurance fund modeled after the Securities Investors Protection Corporation (SIPC). Another option is an industry-sponsored bailout fund

The program would insure customer funds in the case of a broker default, but would not cover outright theft of customer money, as in the case of Jon Corzine's MF Global.

CME Group offered $250 million toward MF Global customer losses, then upped it to $550 million.  Their news release stated:

Our primary concerns are the protection of our customers at CME Clearing and the integrity of all futures markets.

Money is fungible and CME Group faces a crisis of existence, but I wonder how long government insurance programs can cover losses and not participate on the upside?

As an aside, will Jon Corzine ever see time behind bars?  The normal course of events is a multimillion dollar settlement with no admission of guilt.  Those executing the move include Columbia/HCA's Rick Scott, now Florida Governor and Carlyle's co-founder threesome of Rubenstein, Conway and D'Aniello, PEU billionaires with ready access to Red or Blue politicians.

CME dramatically increased its lobbying in 2007 as the financial world darkened.  2008 brought the failure of Carlyle Capital Corporation, Bear Sterns, and Lehman Brothers:



CME's political donations seem to fund the winning team.

Don't forget Jackie Clegg-Dodd, wife of Senator Chris Dodd of Dodd-Frank fame, sits on CME's board.  Will $3 million a year in lobbying and political donations buy CME a government-sponsored insurance fund?  Stay tuned, more shit is on the way.

JP Morgan PEU Does Chinese JV

  
WSJ reported:

JP Morgan Asset Management, an arm of U.S. bank JP Morgan (JPM), has received permission from the Beijing city government to create a US$1 billion RMB fund under the new Qualified Foreign Limited Partner program

The fund will be named the JPM China Private Equity Fund.

The Private Equity Group is a bottom-up, opportunistic investor in all private equity investment types, stages of business development, industry sectors and geographical locations, and during all market environments.

JP Morgan joins other "bottom feeding" PEU funds in China, including The Carlyle Group, Blackstone, TPG Capital and the Infinity Group

JPM China is a joint venture with the Beijing city government.  This brings to mind a statement from an ex-Bloomberg reporter:

I can't tell if the PE guys are being insincere when they talk about China or they are actually stupid. There is no way that the Chinese govt would let American firms come in and strip cashout of Chinese companies the way they've been allowed to in the US! I imagine the Chinese welcome the PE guys because they see it as another way (through PE orchestrated mergers) to get hold of more American technology and companies and jobs.

A decade of US job shedding to China will continue courtesy of bankster and tax avoider JP Morgan.  Morgan joins Carlyle in helping America's greatest future enemy, at least that's the view of a Carlyle Group Managing Director :

"China does view financial power as an exercise of power in a way that the United States does not. The United States only exercises financial power through its corporations.”

I'll take that as an admission of America's Government-Corporate Monstrosity, Eisenhower's Military-Industrial Complex on steroids.

Update 12-19-20:  Chinese bank pairs up with PEUs.

Carlyle Affiliate's Tear Gas in Tahir Square

Ahramonline reported:

Egyptian security forces are digging deeper into their budget with each volley of increasingly fatal US-made tear gas they launch at demonstrators.

The human cost of the violent crackdown in central Cairo is increasingly clear -- among the 39 fatalities reported to date, several are said to have died of asphyxiation caused by tear gas.

The article cites Combined Systems Inc., an American tear gas provider financed by The Carlyle Group.  Carlyle provided debt financing for Point Lookout Capital Partners' purchase of CSI in 2005. 

CSI produces its ‘riot control devices’ under its law enforcement brand name, Combined Tactical Systems (CTS)

Uncle Sam provided $1.7 million in "toxicological agents" -- "including tear gases and riot control agents" -- to Egypt in 2010.  It's not clear how much came from CSI/CTS.

Gas manufacturer CTS has been linked with the 'non-lethal' weapons used by Israeli forces that have been unleashed on Palestinian protesters, reportedly causing several deaths due to asphyxiation.

I noted Carlyle's link to CSI during the 2009 G20 meeting in Pittsburgh, where U.S. authorities implemented new crowd control and dispersant measures.




Point Lookout might pay attention to Carlyle's back door takeovers of Mrs. Fields and Brintons.  Carlyle Group co-founder David Rubenstein does debtor repossession in addition to hostile takeovers.  30% annual returns must be made...

Update 1-30-12:  CSI's product line is being used by U.S. Homeland Security to clear Occupy camps across the U.S.   Flashbangs, smoke, tear gas and bean bags. It sounds like money to The Carlyle Group's Combined Systems Inc.

Update 6-3-15:  Carlyle, Hillary Clinton and Bill Clinton intersected in Egypt according to an IBT Times investigation.

Update 6-6-20:  Streetwear retailer Supreme is under fire for its connections to The Carlyle Group, given Carlyle's history in war making and oppressing peaceful protesters.  The article stated "including ownership of Combined Tactical Systems, a company that “specializes in the manufacture of military and police equipment such as tear gas canisters, flash grenades, breaching munitions (rubber bullets), and handcuffs.”

Carlyle to Offer Saudi IPO

Reuters reported:

Private equity investor Carlyle Group plans to sell its its investment in Saudi Arabia's General Lighting Co through an initial public share offer in Riyadh in 2013 and is now close to doing its second deal in the kingdom, sources familiar with the matter said.

Carlyle bought 30% of General Lighting in March 2010, making it an 18 month hold before leaking IPO plans.  It's the age of monetization for private equity underwriters (PEUs).

Carlyle Group is "on the cusp of acquiring a 42-percent stake in a family-owned Saudi food products company within the next two weeks."  That would beat their "end of the year" promise.

Update 3-18-14:  The 2013 IPO for General Lighting turned into a 2014 sale to Philips.

Does WSJ Know the Half of It?

WSJ discounted the impact of Olivier Sarkozy on global financial markets.  Olivier warned of a Eurozone collapse within three months.  When traders thought the message came from half-brother Nicholas Sarkozy, the French President, markets panicked.

Olivier Sarkozy works for the Carlyle Group, by the way. So I suppose his opinions do matter, at least more than, say, if Bill Clinton’s loose-cannon half brother, Roger, had been quoted, last-name-only, making drastic predictions in the 1990s.

The Carlyle Group is infamous for their political connections, Red and Blue.  Olivier's access to the global power structure, the very group that attends Bill's Clinton Global Initiative every year, is a huge bonus for Carlyle.  Implying he is a mere cut above doltish Roger Clinton is ignorance or a script.  The WSJ would have to say which characterization fits, because the Roger label is laughable.  Does the journal really know the half of it?

Carlyle Lobbyist Does Land Deal with British PM

Channel Four News reported on a land deal between lobbyist Lord Charlington and British Prime Minister David Cameron.

Intriguing details have emerged about this transaction that raise questions over how much the public should know about the financial dealings of the prime minister.

In 2001, Mr Cameron paid £650,000 for his constituency home - a purchase aided by around £150,000 in parliamentary expenses. When Mr Cameron bought this home, he also acquired a patch of land up the lane. This was separated from the main house by a driveway and garages belonging to a cottage opposite.

From inspection of Land Registry documents, Channel 4 News found that in November last year, Conservative peer and Tory donor Lord Chadlington, who owns a large manor house nearby, bought the cottage for £715,000, thereby taking ownership of the driveway and garages which ran across the prime minister's land.


Eight months later, in July this year, Lord Chadlington sold the prime minister the driveway and garages together with a large field which he owned at the back of Mr Cameron's constituency home for £137,500.

Charlington lobbies on behalf of the London Stock Exchange, Associated British Foods and The Carlyle Group.  Sir Alistair Graham, former chairman of the Committee of Standards in Public Life, offered:

"I would've thought he would've wanted to have done that as quickly as possible, particularly given his public comments about lobbying…If you’re doing a private deal affecting your personal interests with one of the head of the largest lobbying firms in this country then of course you should register that in your MP’s list of interests as quickly as possible."

Public comments are for mass consumption, not an ethical guide.  Take fellow private equity underwriter Mitt Romney, formerly of Bain Capital.  This week he talked tough on China stealing American jobs.  How many jobs did Bain affiliates send to China, both under Mitt and afterwards?  The Carlyle Group sent many.

The Government-Corporate Monstrosity is Eisenhower's Military-Industrial Complex on steroids. Elitist insiders work all sides of the triangle, lobbying, government appointments and corporations with ample funding.