Private Carlyle Group captures public spotlight

By Laurie Bennett
April 21, 2009 at 10:01am
Once again, the Carlyle Group is attracting unwanted attention.

The private equity firm is under scrutiny for its role in the pay-for-play scheme involving the New York State pension fund.

Unlike many other prominent investment companies, Carlyle used placement agents as go-betweens in arranging investments by the pension fund. One agent, Hank Morris, has been charged by both the state attorney general and the Securities and Exchange Commission, accused of taking kickbacks to arrange deals.

Morris, a top political adviser to former state comptroller Alan Hevesi, collected more than $15 million without providing many legitimate services, the SEC charges.

Carlyle paid Morris $12 million and received $1.3 billion in investments from the pension fund, reports the Financial Times.

In the wake of the investigation, Carlyle has decided to stop using such middlemen. The company has not been charged in the case.

Carlisle is known for the many high-profile political leaders who have joined its ranks after leaving government posts. George H.W. Bush was an adviser to the company. Former British Prime Minister John Major headed its European operations.

Former Defense Secretary Frank Carlucci served as chairman and former SEC Chairman Arthur Levitt Jr. was a senior adviser. Other Carlisle advisers have included former Time magazine editor Norman Pearlstine and former Freddie Mac CEO David M. Moffett.

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