On June 6, Robert Jacobs - a Jewish American employee of Vinnell Corp, a defence contractor - was shot dead by terrorists in the Saudi capital Riyadh. Last year, seven Vinnell employees died when suicide bombers attacked an expatriate housing-compound. Why Vinnell?

Marian Wilkinson of the Sidney Morning Herald wrote: "... the bloody attacks in Riyadh are telling because of their targets, in particular the Vinnell Corporation...Al Qaeda has a particular hatred for Vinnel because the American company trains the Saudi Arabian National Guard, the country's internal security force and an integral part of the military forces..." There may be another reason Vinnell is so hated by the enemies of the current U.S. administration. Vinnell's mercenaries are working in Iraq too and the company was once closely associated with the 41st U.S. president George H. W. Bush.

Few know that in 1992 Vinnell was taken over by the Carlyle Group, whose former board members reads like a who's who of ex-presidents, politicians and international corporate heavyweights. Included in Carlyle's glittering line-up are: President George H. W. Bush, President George W. Bush, Frank Carlucci (President Ronald Reagan's Defence Secretary), James Baker (Bush Senior's Secretary of State), former British Prime Minister John Major, former Thai premier Anand Panyarachun, former President of the Philippines Fidel Ramos and Richard D. Darman, who held senior policy positions under four U.S. presidents.

Carlyle, described as a massive global private equity merchant bank, has long been a covert operation concerning itself with raising money from mega wealthy individuals to invest in companies, which it purchases for a fraction of what they are worth. These they turn around and manage themselves and because they are privately controlled are not subject to Securities and Exchange laws. Eventually the companies are sold off when Carlyle reaps huge profits. With its head office in Washington, it is today the premier investor in aerospace and defence companies and the 11th largest defence contractor in the world. Its aim is to realise very high returns for its investors while exerting a high degree of control over the companies it manages.

David Rubinstein, one of President Carter's younger aides, founded the secretive company in Washington in 1987 along with a tax genius called Stephen Norris. The latter had discovered a tax loophole whereby Alaskan companies in the red could be sold to profitable companies as 'tax shelters''. In the process they made themselves a fast 20 million U.S. dollars. Their serious entrée in to the defence industry began in 1989 when they hired Frank Carlucci, who during his time at the Pentagon had revamped its procurement processes.

After the end of the Cold War, most investors wouldn't have touched defence companies with a barge pole, but Carlucci and his coterie of former Pentagon and CIA employees knew exactly what they were doing and began buying them at a fraction of their real worth, including BDM and United Defence, the maker of Bradley vehicles. Two years later, during the Gulf War, their values shot up and Carlyle cleaned up. It was then that Carlyle's directors realised the advantage in hiring politicians. They set up the policies while in office, and then capitalised on those same policies while out. It became a revolving door. Nobody knows who works for Carlyle at any given time, or how much any of their directors, associates and advisers earns. It has been said that out-of-office Republicans join the team in a nebulous capacity and then quit when their party gains office once again, in the event they are given in a job in the new administration. Colin Powell did some consulting for Carlyle, for example, between Bush Senior's administration and his son's. His name never appeared on the group's website but neither did that of George H. Bush, who after years of being bombarded with conflict of interest accusations officially quit Carlyle at the end of 2003.

George H. W. Bush was basically a fundraiser and a public relations man. He would fly out to the Middle East or South East Asia where he gets the red carpet treatment and paves the way for Carlyle contracts. Few batted an eyelid at this, which is not illegal under U.S. law, until his son took office. Then the conflict of interest issue was glaring. While the son was the Commander-in-Chief of the U.S. military shaping defence policies the father was cashing in on those same policies on behalf of Carlyle. Obviously conflicts of interests can lead to corruption and it was for this reason that Vice-President Dick Cheney sold his interest in Halliburton, while Richard Perle quit as chief of the Defence Policy Board over his ties to Dyncorp. Both companies have been awarded huge contracts in Iraq without having to bid.

The current U.S. president George W. Bush was on the board of a company affiliated to Carlyle called Caterair in the 1990s. This wasn't a success story and Bush was criticised for his involvement. In 1992, Bush left Caterair and later became Governor of Texas when he was responsible for appointing members to a board responsible for investing teachers' pension funds. 'Coincidentally', some years later, the Bush-appointed board invested US$100 million of public money in ...wait for it...Carlyle.

Carlyle critics had problems with the close relationship between Frank Carlucci and Donald Rumsfeld too. The two had shared a room while at college, were in the same wrestling team and are still said to be good friends. Nobody knows just how much influence Carlucci has on Rumsfeld when it comes to approving Pentagon contracts. We do know that letters were sent from Carlucci to Rumsfeld lobbying for policy changes in the Pentagon, blurring the boundaries between Carlucci's shifting personas as a private citizen, a former politician, and Rumsfeld's old buddy.

Peter Eisner, the Managing Director of the non-profit-making Washington think-tank the Centre for Public Integrity said: "The problem comes when private business and public policy blend together. What hat is former president Bush wearing when he tells Crown Prince Abdullah not to worry about U.S. policy in the Middle East? What hat does he use when he deals with South Korea, and causes policy changes there? Or when James Baker helps argue the presidential election in the younger Bush's favour? It's a kitchen-cabinet situation, and the informality involved is precisely a mark of Carlyle's success".

President Dwight Eisenhower often warned about an 'Iron Triangle' - the confluence of military, politics and big business when businesses built around defence are so large and powerful they influence the politics of war. Many believe that the Carlyle Group personifies this euphemism more closely than anything else.
Nevertheless, Carlyle might have carried on merrily but for the attacks on the U.S. on September 11, 2001 when it attracted an unwelcome media spotlight. On that day the Group was holding an investor meeting at the Ritz Carlton Hotel in Washington. Carlucci and Baker were its masters of ceremony and George H. Bush made a brief appearance. One of the 500 Carlyle investors, who wore his name on a badge, was Osama bin Laden's brother Shafiq. That same year Carlyle severed relations with the Bin Ladens, even though the family protested it had long been estranged from its notorious cave-dwelling relative. But the harm to the clandestine nature of much of Carlyle's business was already done.

Carlyle's Vice-President for Communication Christopher Ullmann said: "We're accused of every wrong, but no one has ever brought proof of any kind of misappropriation. No legal proceeding has ever been brought against us. We're a handy target for whoever wants to take shots at the American government and the president."

Most American politicians stay clear of criticising Carlyle. They know doing so would be the kiss of death for their careers. The old boys on the Hill don't take kindly to those who cast aspersions on either incumbent or former presidents, as one who dared to do so found out to her cost.

Democratic rep. Cynthia McKinney said about Bush's 'War on Terror': "Persons close to this Administration are poised to make huge profits off America's new war. Former President Bush sits on the board of the Carlyle Group. The Los Angeles times reports that on a single day last month, Carlyle earned US$237 million selling shares in United Defence Industries, the Army's fifth largest contractor. The stock offering was well timed: Carlyle officials say they decided to take the company public only after the September 11 attacks. The stock sale cashed in on increased Congressional support for hefty defence spending, including one of United Defence's [a Carlyle-owned company] cornerstone weapons programmes."

McKinney was referring to the 'Crusader', a type of howitzer manufactured by United Defence. Although in 1998 a Pentagon panel had determined that it was too big and slow for modern day warfare it was budgeted for when George W. Bush asked Congress to increase the Defence budget by US$48.1 billion. When it was time to vote on the Defence Authorisation Bill, McKinney voted 'no' and publicised her conclusions. She said: "I learned that the Crusader was manufactured by United Defence Industries and that company was owned by the Carlyle Group. Further, the President's father was on the payroll of the Carlyle Group and I said to myself that from all of the ethics briefings we had in Congress in know this is something we are supposed to stay away from in our own personal conduct."

Thanks to McKinney came a wave of antipathy towards the Crusader prompting Carlyle to wield its influence and begin heavy lobbying. Its executives knew the game was up but managed to keep their project on the boil just long enough to launch United Defence as a public company when it made a whopping US$237 million dollars. Soon afterwards Donald Rumsfeld abandoned the Crusader in an exceptionally public fashion.

McKinney did not come out of the affair unscathed. She was vilified by many of her fellow politicians and labelled unpatriotic. Furthermore, the Republicans blocked her re-election by getting a black Republican woman to run alongside McKinney as a Democrat during the primaries. Then a strange thing happened. Some 47,000 Republicans crossed over and voted for McKinney's former Republican competitor, which ensured her ouster. It didn't help her case when she accused President Bush of allowing September 11 to happen so as to fatten Carlyle's bank balances.

Today, Carlyle has gone to ground. It considered Vinnell with its mercenary connections, too hot to handle and sold it in 1997. Vinnell is currently owned by Northrop Gumman, whose former Chairman and CEO joined Carlyle as a Senior Advisor to its aerospace and defence group in October last year. Carlyle's new chairman is the respected Louis V. Gerstner, Junior, formerly Chairman of IBM and under his watch, it has diversified its operations and attempted to be more transparent. It now asserts that defence and aeronautics represent a mere 15 per cent of its investments and is increasing its portfolio in Europe.

We do know that it took over Fiat Avio, an aeronautic supplier to Arianespace, which enables the Group to be a member of the European Rocket Council; in September 2001 it bought a controlling interest in Bofors the Swedish weapons manufacturer, while in December 2002 it bought one third of Qinetic, a private subsidiary of the British Military's Research and Development Centre and one which wields influence with the British government.

Is Carlyle truly becoming more open in its dealings or even more covert? Does it wield less power on the international political stage or more? Has the Bush family severed links or merely appeared to do so? Does it still control Vinnell via one of its convenience companies set up in fiscal havens? We may never know. Like the mafia families, which guard their secrets, so do the ex-presidents and their sycophants in this most singular of warmongering clubs with a British-sounding old-money name. That shouldn't stop us guessing though. As the company wrote in its brochure: "We invest in the opportunities created in industries strongly affected by changes in government policy". Precisely so! The question is: Just who is setting those policies - the U.S. government or Carlyle?