In late 2012, a Sunday Times reporter in the UK sat down for a candid conversation with an honored and decorated war hero.
Sir John Preston Kiszley started his career in 1968 as a second lieutenant in the Scots Guards. Over time, he served as platoon commander, company commander, and commanding officer in Great Britain, Northern Ireland, Germany, Cyprus, and the Falkland Islands.
He rose to the rank of lieutenant general, became a knight commander of the Order of Bath, and received the Military Cross for his actions as a major on the left flank during the pivotal Battle of Mount Tumbledown. As the Argentine defenses broke, Kiszley was the first man in to breach the Argentine lines, personally shooting two Argentinian conscripts and bayoneting a third as his bayonet broke in two.
Unfortunately for the war hero, the Sunday Times reporter was undercover, working to expose ex-generals for selling their influence and camaraderie to the highest bidder…
Sir John allegedly boasted he could speak with David Cameron at next month’s remembrance service when he was a guest of the Royal British Legion. He also allegedly claimed they previously lobbied on deals while they were in their own two-year “purdah” period, where ex-officers are explicitly barred from using the influence of their former positions as lobbyists.
I wish I could say the Sunday Times managed to uncover the small handful of bad apples in the UK, and that the practice wasn’t widespread or didn’t happen across the pond. In reality, it’d be hard for things to get much worse…
Just over a month later, the Citizens for Responsibility and Ethics in Washington used Freedom of Information Act requests to uncover how bad the revolving door has become in the United States: 76 of the 108 three- or four-star generals that retired between 2009 and 2001 took jobs with defense contractors or consultants.
The 70% participation rate for the military-private sector revolving door actually marks a 10% drop from figures tabulated by a 2010 Boston Globe investigation covering 2004 to 2008. Some of the retired generals work directly for defense sector companies while working as Pentagon advisors, setting up obvious conflicts of interest.
Now there are two more to add to the list…
The Ousted Commander
David Petraeus spent his entire adult life — up until last year — in military or civilian intelligence.
After his ouster in late 2012, it didn’t take him long to find high-level positions outside of the military or government — along with a handful of honorary degrees from prestigious universities.
He joined several nonprofit organizations dedicated to helping veterans find work and transition into civilian life. And just last week he was picked up for a lucrative job in the private sector by the infamous private equity firm that took over RJR Nabisco in the 1980s.
KKR & Co. L.P is a multinational private equity firm with over $400 billion in transactions. The firm picked up Petraeus to serve as the chairman of the newly formed KKR Global Institute. The Institute will deal with macro-economic issues, such as the role of central banks in the world since the crisis, changes in public policy, and other areas where KKR has interests like environmental and social issues that would influence its investment decisions.
Take a look at Petraeus’ biography… On the surface, he has nothing to bring to the table in the financial sector, let alone the cutthroat and risky private equity world.
But he does have extensive information on worldwide developments and risks that could make foreign acquisitions risky. Undoubtedly, this is information that no one who hasn’t served at the highest ranks in the military and intelligence agencies could ever hope to access.
Clearly KKR is betting on these by giving him the highest position within the new division. And with its past success, there is little doubt it will pay off.
The Old British Spy
Sir Jonathan Evans joined the UK Security Service at the age of 22, fresh out of Bristol University. He bounced from counter espionage to protective security. For more than a decade, he was involved with domestic counter-terrorism efforts during the Troubles in Ireland. He moved on to international terrorism and became an expert on al-Qaeda, eventually becoming the Director-General of MI5…
HSBC just recruited Sir Evans as a non-executive director on its corporate board. Once again, here is a man with no private sector experience, let alone experience in the financial sector.
Instead of providing inside connections to HSBC, Evans will serve as a member of the Financial System Vulnerabilities Committee, a panel of experts assembled by HSBC to help the bank identify areas where it could be exposed to financial crime.
The bank pointed to Sir Jonathan’s experience in international and domestic counter-terrorism, but you have to wonder exactly how much help HSBC truly needs… after all, we’re talking about an institution that accepted $7 billion from Mexican drug cartels, conducted 25,000 Iranian transactions totaling over $19 billion in just one week, and helped Saudi banks with terror financing for groups like al-Qaeda.
HSBC’s own employees exploited the very same “vulnerabilities” to make billions while directly assisting terrorism and bloodshed across the globe. All HSBC needs to do is look at its own records and ledger to see how the system can be exploited.
Instead of connections, we’re looking at a whitewashing public relations move: HSBC is simply buying an insider as a public face to serve as a campaign that will attempt to sweep illegal activities spanning years under the rug.
Entry-Level Jobs in… the Board Room?
David Petraeus and Sir Evans aren’t anything like Jack Lew, who received millions in benefits through an exception in his “guaranteed incentive and retention award” that wouldn’t be paid if he quit his job unless he left Citigroup “as a result of [his] acceptance of a full-time high level position with the United States government or regulatory body… prior to the payment of any incentive and retention award for performance year 2008 or thereafter.”
These guys didn’t require any experience at all for their new jobs.
It’s all about who they know and what they represent.
The revolving door between the private sector, the military, and the government runs deep — along with the corrupting cancer of cronyism that facilitates it.
That old saying, “You have to pay to play,” is more true now than ever. You just have to do it in a roundabout way, hidden behind board room and corner office doors where only an undercover reporter could possibly see what’s afoot.
For the rest of us on the outside, we have to continue finding our own path — off the easy inside track that money, privilege, influence, and winks and nods provide.
I hope you’ll stand with all of us at the Outsider Club. If you’re anything like our editors, the challenges we uncover and those we face will only help to galvanize our resolve to forge our own fate… instead of being herded like sheep to slaughter.
Adam English for Outsider Club
