The Carlyle Group yesterday said it was not part of a consortium that touted its political ties in an attempt to win business collecting and managing billions of dollars owed to Kuwait by Iraq.
The consortium, called International Strategy Group LLC, offered in January a proposal to help the government of Kuwait seek full repayment of Iraqi debt. The offer, which emphasized Carlyle's participation as manager of any funds recovered, came a month after Carlyle's senior counselor, James A. Baker III, was appointed by President Bush to persuade foreign governments and private lenders to forgive more than $200 billion in Iraqi debt.
Carlyle, in a letter sent to International Strategy yesterday after the consortium's offer was publicly reported, said it never consented to be a part of the consortium and "does not want to participate in any way, shape or form" with International Strategy Group's efforts.
A Carlyle spokesman said yesterday that the firm had considered managing funds recovered by the consortium but that deal was never finalized.
The organizers of International Strategy Group, including the law firm Coudert Brothers LLP and the consulting firm led by former secretary of state Madeleine K. Albright, either could not be reached for comment or declined to comment for the record about Carlyle's involvement in the venture.
The controversy involved a January proposal, reported yesterday on the Web site of the Nation magazine, to the Kuwaiti minister of foreign affairs. The proposal was signed by International Strategy chief executive Shahameen J. Sheikh, Albright and Los Angeles lawyer David Huebner, Coudert Brothers' chairman.
In the proposal, International Strategy described itself as a consortium of investment and political advisory firms that would lobby international governments and the United Nations on behalf of Kuwait. Kuwait has $27 billion in outstanding reparations and other claims against Iraq stemming from its 1990 invasion by Iraq.
The consortium's proposal, which was never acted on by Kuwait, offered the services of Carlyle to help manage up to $1 billion of the funds collected from the reparations and other claims. International Strategy offered to create an entity, initially funded by $2 billion in Kuwaiti government money, that would take control of any funds collected from Iraq. Carlyle, according to the proposal, would initially manage $1 billion of the funds to make private investments in the Middle East, including Iraq.
In the proposal, the consortium said it could use its influence to get the Kuwaiti government priority over other Iraqi creditors during negotiations over the final settlement of Iraq's foreign debt.
"We will distinguish Kuwait's claims -- legally and morally -- from the sovereign debt for which the United States is now seeking forgiveness," the proposal states. The proposal's cover letter was made available yesterday on the Web site of the London newspaper the Guardian.