Jim Baker, Lining his Pockets in the name of Dubya

As usual from a British Paper, thanks NY Times and Washington Post for your vigilence.

President Bush's special envoy, James Baker, who has been trying to persuade the world to forgive Iraq's crushing debts, is simultaneously working for a commercial concern that is trying to recover money from Iraq, according to confidential documents.

Mr Baker's Carlyle Group is in a consortium secretly proposing to try to collect $27bn (£15bn) on behalf of Kuwait, one of Iraq's biggest creditors, by using high-level political influence. It claims Mr Baker will not benefit personally, but the consortium could make millions in fees, retainers and commission as a result.

Other countries, including Britain, have been urged by Mr Baker to relieve the new Iraq regime of its $200bn debt burden. Iraq owes Britain approximately $1bn.

One international lawyer described the consortium's scheme as "influence peddling of the crassest kind".

Jerome Levinson, an expert on political and corporate ethics at American University in Washington, told the Guardian: "The consortium is saying to the Kuwaiti government, 'Through us you have the only chance to realize a substantial part of the debt. Why? Because of who we are and who we know'."

When George Bush appointed Mr Baker, a former secretary of state, as his unpaid envoy on December 5 2003, he called Mr Baker's job "a noble mission". But Mr Baker is also a senior counsellor and an equity partner with a reported $180m stake in the merchant bank and defence contractor the Carlyle Group.

A confidential 65-page Proposal to Assist the Government of Kuwait in Protecting and Realising Claims Against Iraq was sent in January from the consortium to Kuwait's foreign ministry, according to documents obtained by the Nation magazine in New York, which are published today on the Guardian website.

In a letter dated August 6 2004, the consortium informs Kuwait's foreign ministry that the country's unpaid debts from Iraq "are in imminent jeopardy".

World opinion is turning in favor of debt forgiveness, another letter warns, as evidenced by "President Bush's appointment of former secretary of state James Baker as his envoy to negotiate Iraqi debt relief."

The consortium's proposal spells out the threat: not only is Kuwait unlikely to see any of its $30bn from Iraq in sovereign debt, but the $27bn in war reparations that Iraq owes to Kuwait from Saddam Hussein's 1990 invasion "may well be a casualty of this US [debt relief] effort".

In the face of this threat, the consortium offers its services. Its roster of former high-level US and European politicians have "personal rapport with the stakeholders in the anticipated negotiations" and are able to "reach key decision-makers in the UN and in key capitals".

Kathleen Clark, a law professor at Washington University and a leading expert on government ethics and regulations, said this meant that Mr Baker was in a "classic conflict of interest".

"Baker is on two sides of this transaction: he is supposed to be representing the interests of the US, but he is also a senior counsellor at Carlyle, and Carlyle wants to get paid to help Kuwait recover its debts from Iraq."

She added: "Carlyle and the other companies are exploiting Baker's current position to try to land a deal with Kuwait that would undermine the interests of the US government."

Last night, a Carlyle spokesman said the company had scaled down its involvement after the Baker appointment: "Neither the Carlyle Group nor James Baker wrote, edited or authorised this proposal to the Kuwait government. When James Baker was named special envoy, which was before the proposal was produced and sent, Carlyle explicitly restricted its role to only investing assets on behalf of Kuwait, an activity that James Baker would play no role in nor benefit from."

According to the documents, Carlyle is seeking to secure as part of the deal an extraordinary $1bn investment from the Kuwaiti government.

The main proposal would transfer ownership of $57bn in unpaid Iraqi debts. The debts would be assigned to a foundation created and controlled by a consortium in which the key players are the Carlyle Group, the Albright Group (headed by another former secretary of state, Madeleine Albright) and several other well-connected firms.

The obvious manner of getting the Iraqi government on its feet would be global tax forgiveness, and we would have no more control over a government agreeing to such an arrangement than Kuwait.

But rather then doing that, Baker using two hats is exerting pressure on Kuwait to let his group capitalize on obtaining the money.

Outrageous, but what else can you expect from this bunch.