It’s a tale of big guns and a big gun. It’s a Bush family melodrama, a story of personal connections, possible backstabbing and multiple intrigues, a Washington soap opera. And it’s all about an 80-ton mobile artillery system dubbed the Crusader.
Last week, Defense Secretary Donald Rumsfeld, in something of a sneak attack, announced he wanted to cancel the $11 billion program. This was major news. The Pentagon almost never deep-sixes a major weapons program. The Army, whose baby this is, was understandably shocked. The Crusader was eight years in development. The Pentagon had decided last year to keep the program going, even though some critics–in and out of the military–had complained the heavy gun, which fires a 155 mm shell, was a Cold War relic of not much use in contemporary warfare.
Immediately after Rumsfeld targeted the Crusader, the Army initiated a rearguard operation against Rumsfeld by lobbying members of Congress to save the Crusader. The SecDef was not pleased. “I have a minimum of high regard for that kind of behavior,” he growled. He ordered the Army inspector general to investigate–and caught in the crosshairs was Thomas White, the already-beleaguered secretary of the Army. White had been quoted by an ally, Senator James Inhofe, a Republican from Oklahoma (where the Crusader would be built), as saying he was “in a fight to save [the] Crusader within the building,” meaning the Pentagon.
This was not a good time for White to be on the wrong side of Rumsfeld. In earlier installments of As the Pentagon Turns, we learned that White, a former Enron executive, was responsible for one of the bankrupt company’s most problematic (financially and ethically) divisions, failed to divest his Enron stock in a timely manner and misled members of Congress about it, and reportedly used official aircraft for non-official business. [See the previous “Capital Games” column: “W’s Biggest Enron Liability: The Case Against Thomas White”.] White seems to have survived the flaps over his travel and his less-than-truthful statements to Congress, but the Justice Department supposedly is still investigating White for insider trading concerning his Enron holdings. He is on the ledge–and he just pissed off the guy who can pull him in.
White also had the bad sense–and bad manners–to win the latest tussle on the Crusader. During a late night mark-up on May 1, the House Armed Services Committee–which was reviewing the $52 billion budget hike for the Pentagon–added a provision to the military authorization bill to preserve $475 million in funding for the Crusader. It undid Rumsfeld’s proposed cancellation. This was not a shocker. Members of Congress, mindful of the jobs produced by arms contracts, are often more reluctant to cut weapons than the Pentagonists. The civilian in charge of the Pentagon–that would be Rumsfeld–was bested by the Army and Congress. Then on May 6, a senior Pentagon official, speaking for Rumsfeld, reiterated Rumsfeld’s position: “The Crusader is dead.” And the next day, Rumsfeld voiced his support for White: “He’s doing a good job. He has my confidence.”
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Yet there are more budget rounds on Capital Hill ahead for the Crusader. Will White and Rumsfeld remain at odds? In past confrontations of this sort, Congress has sided with the individual service and succeeded in forcing the Pentagon to buy weapons it did not desire.
The Rumsfeld-White pas de deux was only one delicious plot-line at work. Consider the manufacturer of the Crusader: United Defense Industries. It is the Army’s fifth-largest contractor, and it is controlled by the Carlyle Group, an investment firm that is practically surgically attached to the House of Bush. Daddy Bush is a senior adviser to the Carlyle Group, making lots of money by giving speeches and opening doors overseas for Carlyle. James Baker, Bush I’s former secretary of state, is a top Carlyle executive. He also masterminded W’s legal team during the Florida recount mess. Moreover, Frank Carlucci, the Reagan-Bush secretary of defense who is chairman of Carlyle, is a close pal of Rumsfeld. The two were on the wrestling team at Princeton.
These connections have caused good-government advocates and conspiracy theorists to wonder if Bush II has been motivated to render policy decisions which would benefit Carlyle. Which would also benefit his father and W’s own family, assuming Daddy Bush doesn’t leave his multimillion-dollar estate only to son Neil. On the web and elsewhere, you can find suggestions (or outright assertions) that, in the aftermath of 9/11, Bush is waging the war on terrorism and expanding the Pentagon budget to fatten the Carlyle Group–which was already doing very nicely, averaging more than 34 percent on its $12.5 billion in investments. In fact, last year it did look as if Carlyle had cashed in on September 11 and its Bush contacts.
Two weeks after the attacks on the World Trade Towers and the Pentagon, United Defense–which had revised the Crusader design and had waged a lobbying campaign on the Hill, oiled with hundreds of thousands of dollars in campaign contributions–signed a deal with the Army for a $665 million contract to complete development of the Crusader, now weighing in at a more slender 40 tons. On December 13, Congress fully funded the program. The next day Carlyle took United Defense Industries public. Its stock offering had listed the Crusader contract and the 9/11 attacks as selling points. The IPO was a whopping success, and the Carlyle Group earned $237 million in this deal.
Pentagon decisions certainly had helped Carlyle, for the Crusader system was a critical part of the turnaround Carlyle had achieved at United Defense. Carlyle rejected suggestions that its ties to prominent Bushies had anything to do with its good fortune. Spokesman Chris Ullman told The Los Angeles Times, “I can assure you [Frank Carlucci] doesn’t lobby. That’s the last thing he’d do. You’d have to know Carlucci to know he’d never do that, and you’d have to know Rumsfeld to know it wouldn’t matter.”
Might that have been truth, not spin? By spitting into the eye of the Crusader recently, Rumsfeld sent the stock of United Defense Industries tumbling 15 percent. That couldn’t have made Carlucci, his old mat-mate, or Daddy Bush, Baker, and anyone else at Carlyle happy. So does that mean the Carlyle Group, with its behind-the-scenes clout, does not have the Bush II Administration fully in its pocket?
Cynics can still find reasons to be suspicious. Rumsfeld, after all, did not strike at the Crusader until after United Defense Industries went public. And when he did move to smother this program, he certainly had reason to expect that legislators on the Hill would cram the money back in–whether or not they were egged on by his less-than-loyal secretary of the Army. But after suggesting last week that the Army had thirty days to consider alternative designs for the Crusader, Rumsfeld then pulled the plug. That demonstrated his seriousness about ridding the Pentagon of unnecessary weapons (that is, unnecessary in Rumsfeld’s book). What remains to be seen is the seriousness of the inquiry into White’s end-run (not Enron) on the Crusader front.
This saga is not over. In coming installments of the Crusader mini-series, look for the roles (cameo or otherwise) played by George W. Bush and his Office of Management and Budget, as members of Congress rally behind the Crusader. Will the President and OMB back up Rumsfeld? Or will they overrule him? Perhaps Bush should recuse himself. This is a financially significant matter for the company that enriches both his father and the man who engineered his crucial triumph in the Florida post-election battle.
As of now, there are no signs from the Bush White House. But it is clear no matter what direction this story takes, it can only end one way: Thomas White getting a job at the Carlyle Group.
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