A firm in position to profit: Carlyle Group invests in Nuclear
Terror By David Lazarus Mar
24, 2004, 10:58
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The war in Iraq is a year old, and the military-industrial complex is making out
like a bandit.
That at least was what protesters were telling me the other day outside the
Bechtel headquarters in downtown San Francisco, where people were chanting, the
names of slain soldiers were read aloud and signs said "Shut Down the War
"We're lining Bechtel's pockets at the expense of a number of people's lives,"
said Paul LaFarge, a New York artist who was in town for the demonstration.
But why Bechtel? The engineering giant, with about $3 billion in Iraq-
reconstruction contracts, has been accused of no wrongdoing (unlike, say,
Halliburton, which the Pentagon says received millions of dollars in kickbacks
from Mideast subcontractors and overcharged for services provided to U.S.
"They're all part and parcel of the same thing," explained Amy Trachtenberg, a
San Francisco artist, as she paused from reciting the names of the dead just
feet from where somber-faced Bechtel workers were slipping past a police
barricade and into their office building.
Yet Bechtel wasn't the only object of protesters' ire. Michael Daloisio, a San
Francisco teacher, lamented that U.S. schools are struggling for cash while a
variety of companies are "making billions off this illegal war."
Aside from Bechtel, he cited Halliburton, Lockheed-Martin, ChevronTexaco and the
Since the subject has come up, here's a little something about Carlyle that most
people don't know. I can say that with confidence because even a Carlyle
representative said he didn't know until I pointed it out to him.
The Washington investment firm, run by a who's who of Republican heavyweights,
including former Secretary of State James Baker and former Defense Secretary
Frank Carlucci, has put money into about 300 different companies and properties.
Those investments include United Defense Industries, a maker of combat vehicles,
naval guns and missile launchers; and Sippican, a maker of submarine systems and
countermeasures to protect warships.
They also include a New Jersey pharmaceutical firm called MedPointe, which just
so happens to be one of only three companies licensed by the U.S. Food and Drug
Administration to manufacture over-the-counter potassium iodide pills.
That's significant because potassium iodide can help protect against thyroid
cancer in the event of exposure to large amounts of radiation -- from a small,
easily transported nuclear weapon, say, or a terrorist attack on a nuclear power
And that's significant because, in June 2002, President Bush signed into law the
Public Health Security and Bioterrorism Preparedness and Response Act. It
requires state and local officials to "provide adequate protection" by
distributing potassium iodide to all public facilities within a few miles of a
nuclear power plant.
And that, in turn, is significant because if you're one of just a handful of
authorized makers of potassium iodide, you're in a position to profit handsomely
if the worst-case scenario should actually come to pass.
The Carlyle Group and another investment firm, the Cypress Group, spent more
than $400 million to acquire a controlling stake in MedPointe in May 2001.
Carlyle alone owns about 42 percent of the firm.
Chris Ullman, a Carlyle spokesman, said he had no idea that MedPointe produces a
potassium iodide pill called Thyro-Block. But when I explained what Thyro-Block
can be used for, he said this was something to feel good about.
"Carlyle is proud to own companies that make products that keep America safe,"
Ullman said, adding that MedPointe allows Carlyle "to participate in the
specialty pharmaceutical space."
The other two FDA-approved makers of potassium iodide are a small Florida outfit
called Anbex that, prior to the Sept. 11 attacks, sold its pill, Iosat,
primarily to doomsday-fearing survivalists; and a Swedish outfit called Recip
that brought its lower-dosage pill, ThyroSafe, to the U.S. market in 2002.
John Hawkins, a MedPointe spokesman, said the company has no current contracts
to supply Thyro-Block to any federal agency. He also said that sales of the drug
totaled less than $500,000 in 2003 (MedPointe expects sales of all products, led
by its allergy and respiratory medicines, to reach $400 million this year).
But Hawkins acknowledged that MedPointe has bid for government contracts in the
past. He also declined to elaborate on the company's intentions for Thyro-Block.
"Our plans for all of our commercial products are confidential," he said.
Asked whether production of Thyro-Block might be increased due to continuing
terrorism fears or whether government officials have spoken with MedPointe about
ensuring an adequate national supply of potassium iodide, Hawkins remained
"For competitive reasons, our production plans for the product and
communications with customers are confidential," he said.
This much at least is clear: If a "nuclear incident," as the bioterror law
quaintly puts it, should occur, MedPointe and the Carlyle Group would be
uniquely positioned to benefit from catastrophe. That's not danger-mongering.
That's a fact.
(For what it's worth, the New York Times reported Friday that government
officials have quietly revived a cold-war program for rapidly analyzing fallout
from a nuclear attack on U.S. soil. The program is intended to determine the
perpetrator of an attack and help coordinate a military response. )
Bechtel might make a convenient target for protesters seeking a high- profile
recipient of Iraq-reconstruction dollars. "It's all about capitalism," one
masked protester, a self-styled anarchist, told me outside the company's
But to find a company truly poised to profit from the unthinkable, he might want
to make his way next time to the Transamerica Pyramid. That's where Carlyle's
San Francisco office is located.
David Lazarus' column appears Wednesdays, Fridays and Sundays. He also can be
seen regularly on KTVU's "Mornings on 2." Send tips or feedback to email@example.com.
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