Carlyle denies Iraq consortium link

Carlyle Group, the US-based global private equity firm, has denied giving any indication that it would join a consortium seeking to help Kuwait repatriate $57bn of debt owed by Iraq.

The Carlyle Group said today it never agreed to become part of a consortium that is giving assistance to Kuwait in its efforts to retrieve $57 billion (€46 billion) in state debt owed by Iraq.

Any involvement of Carlyle would have created a conflict of interest for former US secretary of state James Baker, who is a senior counsel to Carlyle as well as a shareholder in the firm. He is also the US special envoy appointed to negotiate Iraqi debt relief.

Members of the consortium include Fidelity Investments, Coudert Brothers and the Albright Group, an entity controlled by Madeleine Albright, who has also served as US secretary of state.

Carlyle spokesman Chris Ullman told PrivateEquityOnline today: “We did hold discussions with the consortium but declined to join it. They have portrayed us as having at one point been part of the consortium, which was not the case.”      

A report in today’s Financial Times says that the consortium named Carlyle as a member in a letter sent to the Kuwaiti government on January 20, six weeks after Baker was appointed special envoy.

Carlyle is cited in the newspaper as saying it had by that stage already informed the consortium orally of its withdrawal and had not authorised the letter.

Carlyle’s comments came after an article in yesterday’s Guardian newspaper put the spotlight on Baker’s involvement with the consortium. It quoted Washington University law professor Kathleen Clark as saying that Baker’s position constituted “a classic conflict of interest”.
The Guardian article, written by globalisation critic Naomi Klein, said that, as part of the deal, Carlyle would receive $1 billion to invest from the debts retrieved by the Kuwaiti government. In the Financial Times today, Carlyle was quoted as saying that it was indeed prepared to invest proceeds from the consortium’s activities, adding that it had already invested money on behalf of Kuwait in the past. 

Baker joined Carlyle in 1993 and, as a part-owner of the firm’s management company, participates in the profits it generates.