Is McKenna the right person? Former politician may be too cozy with corporate elite to represent broad, Canadian interest

Catholic New Times, Feb 13, 2005 by Stephen Staples

Prime Minister Paul Martin has offered the role of Canadian ambassador to the United States to lawyer, businessman and former premier of New Brunswick, Frank McKenna.

The office holds critical importance for properly handling the complex Canada-U.S. relationship. Paul Martin's choice sends a political message about his government's view of the future direction of the continental relationship.

In Canada today, every major decision made by the government involving trade, homeland security, defence and international relations re-ignites the debate over our relationship with the United States. Business organizations argue that Canada benefits from closer economic and military co-operation and integration with the United States, and advocate policies such as joining the U.S. missile defence program and integrating border policies.

But popular organizations and social groups, in line with Canadian public opinion, argue that Canada's future success lies in pursuing independent policies and keeping a vigilant eye on U.S. encroachment upon Canadian sovereignty. Canada's decision to not join the Iraq invasion is celebrated as a successful policy based on this premise.

McKenna is firmly planted in the "business" as distinct from the "social" wing of the Liberal Party. He supported free trade with the United States when federal Liberal policy was against the deal, and as premier of New Brunswick he brought in dramatic reductions in government social services under his deficit reduction plan, which foreshadowed Finance Minister Paul Martin's federal budgets of the 1990s.

The corporate man

After stepping down from the provincial legislature in 1997, Frank McKenna made an easy transition from legislature to boardroom. Today he serves on no fewer than nine corporate boards, including Noranda Inc., General Motors of Canada, Air Canada, Bank of Montreal, and CanWest Global Communications Corp.

Among the many boards upon which McKenna serves, one in particular deserves special mention: the Carlyle Group. Established in 1987 and headquartered in Washington, D.C., the Carlyle Group bills itself as "one of the world's largest private equity firms, with more than $18.9 billion under management." It was dubbed "the ex-presidents' club" by the Guardian newspaper because of the firm's success in recruiting an array of former politicians to senior management and directorships. Present members include John Major, James A. Baker III, George Bush Sr.'s former secretary of state; and Frank Carlucci, Ronald Reagan's former defence secretary and a former deputy director of the CIA. Former president George Bush Sr. served as well on the board.

The wealthy, well-connected investment group has also been a magnet for controversy because of the public perception of insider influence. The Carlyle Group has extensive holdings in industries in which government decisions and contracts create fortunes for well-positioned companies: aerospace, telecommunications, defence and homeland security. Its most high-profile company has been United Defense, a U.S. arms manufacturer that builds combat vehicles, artillery, naval guns, missile launchers and munitions bought by the U.S. Department of Defense and U.S. allies worldwide. United Defense derives 100 per cent of its revenue from military contracts, and its more than $2 billion in annual revenue makes it the 14th largest U.S. defence company.

Many observers speculate that the Carlyle Group's success has been a result of its privileged access to information and decision makers. When George Bush Sr. sat on the Carlyle Group's board, Washington budget watchdog Charles Lewis commented, "It's the first time the president of the United States' father is on the payroll of one of the largest U.S. defence contractors."

Link to bin Ladens

In addition to the perception of insider influence, the Carlyle Group has gained notoriety for its long-time financial relationship with the Saudi Bin laden Group, the $5 billion construction firm run by Osama bin Laden's estranged family. As documented in the Michael Moore film Fahrenheit 9/11, members of the bin Laden family were unexpectedly trapped in the United States while attending a Carlyle Group investors' meeting in Washington, D.C., when all North American flights were grounded on Sept. 11, 2001.

The Wall Street Journal revealed the extent of high-level connections between the Carlyle Group and the bin Ladens in September 2001. It reported that former president George Bush Sr., James A. Baker III, and Frank Carlucci have met with the bin Laden family in Saudi Arabia numerous times. The bin Laden family first became involved with Carlyle Group through an initial contribution of $2 million in 1995, but their financial involvement grew to a much larger sum, according to a family business associate.

The relationship between the Carlyle Group and the bin Laden family extends into Canada. Frank Carlucci, chairman of the Carlyle Group from 1993 to 2003, was a member of the board of Nortel as early as 1996 and served as chairman of Nortel in 2000-2001. Nortel had a business partnership with the Saudi Bin laden Group through its Baud Telecommunications Company, which resold Nortel-built telecommunications equipment in Saudi Arabia.