Oct. 16, 2004 – Leaked documents obtained by journalist Naomi Klein and published in the London Guardian and The Nation provide evidence that while the US government was requesting the world community forgive Iraq’s debt, a politically connected consortium of American companies was making a backdoor deal with Kuwait to ensure that country received money owed to it by Iraq.
The documents additionally reveal that a partner at one of the investment firms involved in the scheme was also serving as special envoy on Iraq’s debt relief for President George Bush at the same time the consortium was boasting to Kuwait about its ability to politically influence the outcome of Iraq’s debt.
At the center of this latest controversy -- which broke on October 12 when articles by Klein were published on the Guardian and Nation websites -- is special envoy James Baker and the investment firm Carlyle Group, of which Baker is an equity partner.
International lawyer Jerome Levinson, who reviewed the leaked documents for The Nation called the plan "one of the greatest cons of all time." He explained, "The consortium is saying to the Kuwaiti government, ‘Through us, you have the only chance to realize a substantial part of the debt. Why? Because of who we are and who we know.’ It's influence peddling of the crassest kind."
Spokespeople for Carlyle Group have offered a range of statements about the exact nature of the firm’s involvement in the consortium, telling the Guardian one day that Carlyle’s role in the consortium was a "restricted" one, but the next day denying it had ever been involved at all.
The company’s most recent response to the charges came in the form of a public letter to other consortium members in which it officially distanced itself from the consortium, claiming Carlyle was "never a member," reports the Guardian.
Before the story broke, however, a Carlyle vice president told Klein his company was aware that the consortium had made a proposal to the Kuwaiti government for a plan which, if successful, would earn his firm $1 billion in private equity.
