Enron, Carlyle and Energy Policy: Making Some Connections

Charles Jannuzi jannuzi at edu00.f-edu.fukui-u.ac.jp
Sat Feb 23 02:31:01 PST 2002


---------------------------------------- What the GAO wants ---------------------------------------- http://story.news.yahoo.com/news?tmpl=story&u=/nm/20020222/ts_nm/enron_bush_ dc_24&cid=578


>>GAO Takes W.House to Court Over Energy Task Force
Fri Feb 22, 5:32 PM ET By Susan Cornwell

WASHINGTON (Reuters) - The investigative arm of Congress filed an unprecedented lawsuit against the White House on Friday, demanding to learn the role that energy companies including Enron Corp. played in developing the Bush administration's energy policy.

The General Accounting Office filed the suit in U.S. District Court in Washington, setting up a legal and constitutional battle with the Republican administration of President Bush. The congressional agency is seeking records of an energy task force led by Vice President Dick Cheney that sought to draft a new national energy policy last year. It is pursuing the case at the request of Democratic lawmakers who say environmentalists were mostly excluded from the closed meetings of the task force, which produced a policy calling for more oil and gas drilling, as well as a revival of nuclear power.

[....Content truncated....]

The White House acknowledges Cheney or members of the task force met six times last year with representatives of Enron, a major political contributor to Bush and other politicians that collapsed into bankruptcy in December.

But that is only part of the information GAO Comptroller General David Walker seeks. He wants the names of everyone who met with any member of the task force and its staff to discuss energy policy, as well as the attendees at group meetings, names of task force staff, dates of meetings and the cost of the project. <<

------------------------------------------ What the NRDC wants -------------------------------------------

http://www.nrdc.org/media/pressReleases/020130.asp


>>NRDC Asks Court To Force Immediate Release Of Secret Energy Task Force
Details

Department of Energy Has Stonewalled for Nine Months WASHINGTON (January 30, 2002) -- The battle over Vice President Cheney's secret energy task force continued today when NRDC (Natural Resources Defense Council) asked a federal court to order the Energy Department to hand over requested documents within 10 days. NRDC had filed a Freedom of Information Act (FOIA) request nine months ago seeking the names of individuals, companies and groups that helped develop the administration's energy policy, but the Energy Department has not complied.

Today's motion was filed at the U.S. District Court for the District of Columbia.

"The vice president's task force proposed a policy that would benefit big energy companies while doing nothing to promote true energy independence," said Sharon Buccino, a senior attorney at NRDC. "Americans have a right to know who wrote this policy. Besides what we know about Enron's influence, we don't know the most basic information about the energy industry lobbyists who helped draft the task force recommendations." The task force, she added, proposed billions of dollars in taxpayer subsidies to oil, coal and nuclear industries, which contributed millions to the Bush presidential campaign.

NRDC filed its FOIA request in April 2001, but the Energy Department -- a lead federal agency working with the task force -- has ignored the request. After waiting eight months, NRDC filed a lawsuit in December to get the documents. On January 23, the agency denied it had refused to disclose names of task force participants, but declined to provide that very information.

NRDC is seeking the same information as the General Accounting Office (GAO), the investigative arm of Congress. The two suits, however, involve separate legal claims. NRDC sued under the Freedom of the Information Act; GAO is suing under its own statutory authority. In response to GAO's claim, the vice president has suggested that information about the task force's secret meetings is protected from congressional oversight by executive privilege. In rebuffing NRDC's suit, however, the Energy Department did not claim executive privilege. In fact, it provided no legal justification for withholding the information.

Last Sunday, Vice President Cheney appeared on talk shows to argue his case for keeping task force information confidential. On CNN he defended his right to meet secretly with outside advisers to make national energy policy.

"The vice president provided an impassioned defense of imperial government," said Buccino. "But America is a democracy. The public has a right to know who's responsible for an energy plan that reads like a wish list for corporate polluters, even if it is embarrassing to those in power. Today, NRDC asked a federal court to declare that the administration cannot ignore the law simply because it would prefer not to follow it."

NRDC is represented in this case by the Washington, D.C., law firm of Meyer and Glitzenstein.

The Natural Resources Defense Council is a national, non-profit organization of scientists, lawyers and environmental specialists dedicated to protecting public health and the environment. Founded in 1970, NRDC has more than 500,000 members nationwide, served from offices in New York, Washington, Los Angeles and San Francisco.

------------------------------------------- Enron-Carlyle Connections: Robert Grady -------------------------------------------

For one thing, I believe if we find out who advised the Cheney energy task force it will help make the connections between Enron (a publicly traded company with many aspects that avoided this status) and Carlyle Group (a closely held private company that holds publicly traded companies). (BTW, Cheney was also head of a task force on anti-terrorism policies and measures, and the chief think tank working away at that would have to be Rand, which overlaps with just about any defense or intelligence related company you can think of).

One of the key figures if you want to understand the relationships is Robert Grady, a very successful revolving doors figure. Here is his bio:

http://www.env.duke.edu/forum/speakers.html


>>Robert Grady, Managing Director in Venture Capital, The Carlyle Group

Bob Grady is a Managing Director in Venture Capital at The Carlyle Group, a global private equity firm. Before joining Carlyle in 2000, Mr. Grady was Managing Director and a member of the Management Committee at Robertson Stephens, the San Francisco-based technology investment bank. At Robertson Stephens, Mr. Grady directed the eCommerce Investment Banking Group, and previously had directed the Business Services and Applied Technology Group and the Financial Sponsors Group. Mr. Grady was deeply involved in the sale of Robertson Stephens to Bank America Corporation in 1997 and the subsequent sale of BancAmerica Robertson Stephens to Bank Boston Corporation in 1998.

During the last seven years, Mr. Grady has also served on the faculty of The Stanford Graduate School of Business, where he has taught a course entitled "Strategic Decisions in a Regulated World." Prior to joining Robertson Stephens, Mr. Grady served in the White House as Deputy Assistant to President George H. W. Bush and as Executive Associate Director of the Office of Management and Budget (OMB). He had previously served as Chief Speechwriter and Senior Advisor for the successful 1988 Bush/Quayle Presidential Campaign, Director of Communications for New Jersey Governor Thomas H. Kean, and Chief of Staff to U.S. Congresswoman Millicent Fenwick.

Mr. Grady is a member of the Board of Directors of BlackBoard, Inc., Cidera, Inc., DevelopOnline Corp., InfoRocket and USBX, Inc., and is a member of the Advisory Board of Enron Corporation. He serves as a Trustee of Environmental Defense, is Vice Chairman of the Board of Resources for the Future, is a Director of the Technology Network ("TechNet") in Silicon Valley and is a member of the Harvard University Committee on the Environment. Mr. Grady is a graduate of Harvard College and the Stanford Graduate School of Business. <<

-------------------------------------- Grady and Enron, Enron and Grady, Enron and Resources For the Future (RRF), Lay and RFF --------------------------------------

Grady is a member of Enron's advisory board, but he is also vice-chair of the think tank, RFF. Surprise, surprise, who is on the board of this think tank? Kenneth Lay.

www.rff.orgwww.weathervane.rff.org


>>Page 3
iiiResources for the Future (RFF) is an independent, nonprofit organization engagedin research and public education regarding issues concerning natural resourcesand the environment. Established in 1952, RFF provides knowledge that will helppeople to make better decisions about the conservation and use of such resourcesand the preservation of environmental quality.RFF has pioneered the extension and sharpening of methods of economicanalysis to meet the special needs of the fields of natural resources and the envi-ronment. Its scholars analyze issues involving forests, water, energy, minerals,transportation, sustainable development, and air pollution. They also examine,from the perspective of economics and other disciplines, such topics as govern-ment regulation, risk, ecosystems and biodiversity, climate, Superfund, technol-ogy, and outer space.Through the work of its scholars, RFF provides independent analysis to deci-sionmakers and the public. It publishes the findings of its research as books inother formats, and communicates its work through conferences, seminars, work-shops, and briefings. In serving as a source of new ideas and as an honest brokeron matters of policy and governance, RFF is committed to elevating the publicdebate about natural resources and the environment.WeathervaneWeathervaneis an online forum designed to provide the news media, legislators,opinion leaders, and the interested public with analysis and commentary on U.S.and global policy initiatives related to climate change. Launched in July 1997,Weathervane provides timely and useful information bearing on the ongoingAboutResources for the Future http://www.rff.org/about_rff/board.htm<<

----------------------------------- Grady's, Lay's RFF Influence on NEPD? -----------------------------------

So Grady is vice-chair of this influential think thank and Lay helps manage it by being on its board. Question: what is the relationship between RFF and the advisers to Cheney on energy policy?

It would seem that the output of the RFF provides much of the rationale for the US under Bush to follow the recommendations of last year's Cheney Report on NEPD (specifically, Report of the National Energy Policy Development Group authored by Dick Cheney, Colin Powell, Paul O'Neill, Gale Norton, and others in April 2001). Its recommendations included rejecting the Kyoto Treaty (after the Senate rejected it already of course). The RFF provides much of the content for Bush's alternatives to the Kyoto Treaty put forward recently. RFF also recommended pursuing more construction of Combined Heat and Power (CHP) plants, lucrative investments for global energy investors (though apparently not lucrative enough for Enron).

We might expect Lay's and Fastow's Enron to be in on all this, but what about the Carlyle Group?

Carlyle Group is not just a defense contractor holding company. It is a major player in energy markets (and nuclear energy, one of the emphases of the Cheney NEPD Report, overlaps with Carlyle's defense/national security interests):

http://www.thecarlylegroup.com/funds.htm#riverstone


>>Carlyle/Riverstone Global Energy and Power Fund I, L.P.
In 2000, Carlyle formed a joint venture to pursue global energy private equity opportunities. Riverstone Holdings, a newly formed private equity firm focused on the energy and power industry, is led by some of the most well-known and successful individuals in the energy investment banking world, including David M. Leuschen, former Managing Director and head of the Global Energy and Power Group of Goldman Sachs; Pierre F. Lapeyre, Jr., former Managing Director in Goldman Sach’s Global Energy and Power Group; and Jim H. Derryberry, former Managing Director of J.P. Morgan and head of its Natural Resources and Power Group. Carlyle/Riverstone Global Energy and Power Fund I, L.P. closed at $222 million in commitments as the first step toward positioning Carlyle and Riverstone as the leading global private equity sponsors in the energy and power sector. The Fund will seek long-term capital appreciation through privately negotiated equity and equity-related investments throughout the global energy and power industry.

The fundamental changes under way in the energy and power sector have created tremendous opportunities for a private equity firm. These fundamental shifts include the stabilization of commodity prices at higher levels; the widespread global trend toward deregulation, consolidation and privatization in the energy sector; and the tremendous need for and growth in energy-related technology companies.

Carlyle/Riverstone Global Energy and Power Fund I, L.P.

Managing Directors David M. Leuschen Pierre F. Lapeyre, Jr. Jim H. Derryberry

Additional Investment Professionals: 6

Summary Data (as of September 30, 2001) The Carlyle/Riverstone Global Energy and Power Fund I, L.P. is a $222 million fund focused on long-term capital appreciation through privately negotiated equity and equity-related investments throughout the global energy and power industry.

As of September 30, 2001, the Fund has invested $25 million in one transaction.

Transactions $ in Millions Committed Funds $ 222 Invested Capital 1 25

[note: more about this investment further down] Uninvested Commitments 197 <<

--------------------------------------- Headhunting, Univested Commitments, Investors ---------------------------------------

This is a fund that did a lot of headhunting to become a top energy player. This is also a fund with a lot of univested commitments. Do you think there are some investors who lined up for this fund in anticipation of Bush-Cheney's energy policy? I wonder if there is any ex-Enron money now parked here?

And just where did that 25 million dollars they did invest go? Apparently to a Norwegian ship-based drilling company aiming for Caspian Sea drilling contracts. They apparently now hold 36% of the company. Is this a controlling interest under Norwegian law? (It would be in Japan) :

Finansieringen i boks av Henrik Anders Skottvoll Forst publisert: 03.07.2001 09:05

Frontier Drilling har fatt pa plass finansieringen i forbindelse med selskapets investeringsprogram.

Se ogsa: Charts: [FDR] Relaterte artikler: Frontier Drilling pa investeringstokt

Frontier Drilling ASA (Frontier) er et uavhengig og spesialisert bore-entreprenorselskap med markedsmessig fokus pa Sor-Asia.

Frontier Drilling ASA har inngatt endelig avtale med Carlyle/Riverstone Global Energy and Power Fund - I,L.P. og CSFB Private Equity om finansiering av selskapets omfattende investeringsprogram som har medfort at selskapet har kjopt boreskipene "Peregrine II" og "Discoverer 511", som begge vil bli overtatt i juli maned.

Avtalen innebarer at selskapet opptar et konvertibelt ansvarlig lan pa USD 30 mill. samt utvider egenkapitalen med USD 20 mill.i henhold til de beslutninger som ble foretatt i selskapets ekstraordinare generalforsamling 15 mai 2001. Innbetalingen av det konvertible ansvarlige lanet ble foretatt 2 juli 2001, mens innbetalingen av aksjekapitalen vil bli gjennomfort innen utgangen av juli 2001.

Les mer om kapitalutvidelsen her:

Frontier Drilling pa investeringstokt I tillegg til de gjennomforte kapitaltiltakene vil selskapet ogsa gjennomfore emisjon i det norske markedet i lopet av juli.<<

And anyone following the Enron stories knows that Credit Suisse/First Boston (including Credit Suisse First Boston's DLJ Merchant Banking Group (DLJMB)), was a BIG underwriter for Enron equity offerings (though CSFB initially claimed their Enron losses were only going to be around 100 million USD, see the Guardian article: http://www.guardian.co.uk/recession/story/0,7369,642462,00.html ; it would seem they have a billion in losses to account for actually).

------------------------------------ Francis Schor at Counterpunch.org on Carlyle ------------------------------------ http://www.counterpunch.org/schorcarlucci.html


>>Certainly, Carlucci's tenure at the Carlyle Group has resulted in an
expanded portfolio of defense industries. Among the defense industries that Carlyle holds is United Defense, a maker of missile launch systems for the US Navy. However, Carlyle's reach under Carlucci has expanded into a variety of new technologies in defense and non-defense industries, such as global communications.

For example, Carlyle is keen on cleaning up hazardous materials at military bases and nuclear waste. Buying firms not yet publicly traded that deal with such services, such as Duratek and EG&G, allows Carlyle to position these firms for government contracts and then cash in when they are publicly traded. Such influence-peddling is certainly not new to former government officials who use their ties to past and present administrations for private benefit.

Carlucci, of course, insists that he does not importune or lobby his old buddy Don Rumsfeld. Nonetheless, the money trail from Carlyle's portfolio to Rumsfeld's office at the Pentagon is pretty evident. In one major decision by Rumsfeld, revealed by New York Times columnist Paul Krugman, United Defense's 70-ton Crusader artillery system was saved from a potential budget cut. Surely, the proposed massive increase in spending for the Pentagon by the Bush Administration will benefit the Carlyle Group.

What has seemed most egregious to inquiring journalists and public interest groups has been Carlyle's consultants, like former President Bush, whose ties to ruling elites in Saudi Arabia (including the Bin Laden family) and South Korea have resulted in lucrative holdings and investments in these countries for Carlyle. As noted by the executive director of the Center for Public Integrity: "(Former President) George Bush is getting money from private interests that have business before the government...And, in a really peculiar way, George W. Bush could, some day, benefit financially from his own administration's decisions, through his father's investments." In fact, George W. benefited in the past from Carlyle by being put on the board of a Carlyle investment, Caterair, an airline-catering company during his Texas business career days.

Similar to the Enron situation, the Bush family and others have enriched their careers and political fortunes with their ties to the Carlyle Group. However, this is a scandal that still hasn't gained the attention and measures necessary to prevent its scandalous continuance.

Carlyle's cozy relationship with DoD insiders and other power-brokers is part of Carlucci's effective management of Carlyle. The global reach of Carlyle, while often hidden behind the veil of private investments, moreover is indicative of Carlucci's own experience with US imperial and military policies.<<

Compiled, commented on and posted by Charles Jannuzi



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