There were other ways that Carlyle was capitalizing on both the airplane attacks and the anthrax letters: security. Deep inthe belly of a mountain in Boyers, Pennsylvania, exists an under-ground facility carved into rock that holds one of Carlyle's most important investments, U.S. Investigations Services. USIS, as it is known, is a classic example of privatization, and a classic Carlyle investment. Once known as the U.S. Civil Service Commission, then the U.S. Office of Personnel Management (OPM), and finally the Office of Federal Investigations (OFI), the organization was a staple of the U.S. government's ability to gather information on any individual applying for a job with the government. Its charter, as it had been from the beginning, was to investigate the backgrounds of government employees, and pro-vide them with varying levels of national security clearance. USIS's cave-like work environment is something that only James Bond could love. Rock walls, tight security, no open-toed shoes, and no open flames—employees have steamed lunches brought into the facility every day. The former mine is also home to the personnel files of thousands of government officials. It is top secret stuff.
The company's history, like most of the companies in Carlyle Partners II, is highly controversial. Since going private in 1996, USIS has been incredibly successful. But getting private wasn't so easy. Employees of the government-run Office of Federal Investigations fought the privatization the whole way, fearing layoffs and salary cuts. They hired lawyers, testified at congres-sional hearings, and protested the decision to take it private, which was made by the Clinton administration. To quiet them down, the government offered the investigators an employee stock ownership plan (ESOP) and promised them the same or better salaries in the newly formed private enterprise. After years of acrimonious battles, the Office of Federal Investiga-tions became USIS in July 1996. Employees retired from OFI and started work the next day at USIS.
As life under the ESOP went on, some employees felt they had been duped. One former USIS employee says that USIS executives harassed older investigators, encouraging them to leave the company so they could hire younger employees, who wouldn't vest in the stock plan for five years. That left more of the equity pie to the high-level executives, should the company ever go public or sell itself. Before USIS had gone private though, the only investigators allowed to work on national security investigations had to have five years experience. That meant that the company would have to rely on less experienced investigators for some of the most important jobs in the country. Many of the older investigators then left in disgust. The result was a watering down of the talent at USIS, and many blamed Carlyle for the changes.
The company was growing profits and acquiring smaller firms by the turn of the century. But nothing would compare to the explosion of business after September 11. "Since 9/11, USIS's acquisition of contracts has exploded," said one employee that declined to be identified. "All the new FAA, Department of Transportation, Transportation Security Administration, INS, Customs, ... all of those employees being hired are being investigated by USIS. They also have contracts with all the major airlines, and the contract companies who provide airport security. I do not exaggerate whenI say that Carlyle is taking over the world in government contract work, particularly defense work. Carlyle is a one-world shadow government."
USIS is just one more example of how Carlyle was in a frighteningly good position to reap the benefits of September 11. There are more examples, like EG&G, a company Carlyle bought in the summer of 1999, which makes, among other things, the X-ray scanners that are used in airports. Whether the company is a "shadow government," is for conspiracy theorists to debate. But the company's uncanny ability to be in the right place at the right time sure doesn't help to dissuade the cynics.
