BILLIONAIRES HAVE IMPORTANT FRIENDS

“In September of that year [1987], [David] Rubenstein founded the Carlyle Group, with [Stephen] Norris; Dan D’Aniello, of Marriott; and William Conway, of the telecom giant M.C.I. The firm was named for the New York hotel, to evoke old-money grandeur. The partners soon brought in Frank Carlucci, Ronald Reagan’s final Secretary of Defense. Fred Malek, the former deputy chairman of the Republican National Committee, did consulting work for the firm.

“Carlyle struggled in its first several years, making an unsuccessful venture into airline food, with Caterair, and losing a bid for the restaurant chain Chi-Chi’s. In 1990, though, the focus on Washington paid off. Thanks mainly to Carlucci, Carlyle was able to buy B.D.M., Ford Aerospace’s defense consultancy, which was the first of many military-industrial investments. (Seven years later, having expanded B.D.M.’s operations into Saudi Arabia, Carlyle sold the consultancy, making a six-hundred-and-fifty-per-cent profit.)

“Two members of the George H. W. Bush Administration, Richard Darman, the budget director, and James Baker III, the Secretary of State, joined Carlyle when they left the government. In the late nineteen-nineties, the ex-President [George H. W. Bush] himself came on board and helped position the firm to win a bidding war for one of South Korea’s top banks. The firm branched out into new industries, buying ownership stakes in Dunkin’ Donuts and Hertz, among many others.”

Alec MacGillis, “The Billionaires’ Loophole,” New Yorker, March 14, 2016, pp: 64-73.