LONDON, 16 October 2004 — The Carlyle Group, a large investment firm linked to US and British politicians, has pulled out of a scheme to recover billions of dollars from Iraq, following the publication in the London-based Guardian newspaper this week of documents detailing the secret proposals of a consortium with which it was involved. Carlyle published a withdrawal letter Thursday sent to other members of its consortium.
The consortium offered a confidential deal to use its political influence to collect a $27 billion debt owed by Iraq to Kuwait, despite US pleas for debt forgiveness from other countries. A Carlyle partner, former US Secretary of State James Baker, has been accused of a conflict of interest, because he has been touring the world demanding debt relief on behalf of President Bush, while his firm had a private interest in doing a special deal with Kuwait.
Carlyle’s letter, signed by its general counsel Jeffrey R. Ferguson and dated Oct. 13, says: “Carlyle does not want to participate in the consortium’s work in any way, shape or form and will not invest any money raised by the consortium’s efforts.” The letter also claims that at the time Baker was appointed the president’s debt envoy that “Mr. Baker understood that Carlyle would have no involvement with the consortium.”
Carlyle admits it was involved in the original scheme by a consortium of financiers and lobbyists, who lobbied Kuwait at a London meeting on July 16, 2003. The scheme had two parts. The first was to turn over Kuwait’s $27 billion war reparations debt to a foundation set up by the consortium, which would then use its political influence to ensure Iraq was made to pay up.
