Is James Baker Too Near Pie to Ask Nations to Forgive Slices?
Published on Wednesday, December 24, 2003 by Knight-Ridder
Is James Baker Too Near Pie to Ask Nations to Forgive Slices?
by Maria Recio

WASHINGTON - When President Bush tapped longtime family adviser James A. Baker III to try to persuade U.S. allies to forgive Iraq's crushing $127 billion foreign debt, he summoned one of the country's most well-connected former officials for a difficult task.

Now those same connections - a web of contacts that extends from his Houston law firm to the worlds of Washington insiders and financiers - are raising questions about potential conflicts of interest.

The key issue: Can Baker, a former secretary of state whose business interests run far and wide, avoid benefiting his friends and business associates as he labors to help President Bush?

Baker will meet leaders in Tokyo and Seoul, South Korea, on Saturday and in Beijing on Sunday to seek debt concessions. The trip follows a successful tour of Europe last week. Britain, France, Germany, Italy and Russia pledged to reduce the $40 billion that Iraq owes them.

Baker won concessions even from countries that opposed the war and face being shut out of primary rebuilding contracts. He's expected to follow his Asia trip with visits to Iraq lenders in the Middle East.

"Jim Baker is a man of high integrity," President Bush said recently. "And it makes sense for him to serve our country on an important mission, and that mission is to encourage countries to forgive debt so the Iraqi people can more easily grow a nation that is prosperous and peaceful."

Baker is a volunteer envoy for the president. He also is a partner in his family's law firm, Baker Botts, and a senior counselor with the Carlyle Group, a Washington-based merchant bank.

Judicial Watch President Tom Fitton thinks Baker's global business ventures should preclude him from a part-time envoy job because the contacts would benefit his business.

"If I were picking someone to negotiate on the U.S. behalf, I would not be picking someone with this kind of baggage," said Fitton, whose conservative watchdog group also has harshly criticized former President Bush, the current president's father, for working for the Carlyle Group.

"This administration is oblivious to the appearance problems this appointment represents," Fitton said.

But Loren Thompson of the Lexington Institute, a defense policy research group, said, "Baker's success is traceable to an extraordinary skill at networking. In defense, it's even more critical because there's only one customer: the government. Overseas, it's one customer. He knows people at both ends.

"If you chose to impose a stark ban, you would eliminate most of the people qualified to do the job. You have to accept that well-connected people are likely to benefit from their government business."

Baker Botts has an extensive presence in the Middle East, with an office in Riyadh, Saudi Arabia, and a business alliance with a firm in the United Arab Emirates. On its Web site, the firm touts the "perspective and experience of James A. Baker III, 61st U.S. secretary of state" as someone "who offers the firm's clients an additional resource on which to rely regarding their activities in the region."

Baker Botts also represents Halliburton Co., the Texas oil-services giant once headed by Vice President Dick Cheney. Pentagon officials recently alleged that Halliburton overcharged the U.S. government by $61 million for gasoline in Iraq. Halliburton has said that a Kuwaiti company, the only approved supplier, charged a high price for the gas.

The Carlyle Group, with $17.5 billion in assets, has included other high-profile former leaders besides Baker and the former President Bush - who retired in October - such as former Defense Secretary Frank Carlucci. Carlyle largely does defense-related work in 12 countries. It has offices around the world, including Seoul and Tokyo, the capitals Baker will visit next.

Efforts to obtain comment from Baker about potential conflicts of interest were referred by both Baker Botts and the Carlyle Group to spokesmen for him at the investment bank and in the Bush administration.

Chris Ullman, a spokesman for the investment group, said Baker "helps provide credibility to Carlyle." Will Baker's new role help Carlyle? "It will have no impact on Carlyle whatsoever," he said.

State Department spokesman Frederick Jones said Baker was appointed so that he could "use his special talents and expertise to serve in temporary special capacities without having to sever all ties to the private sector."

"Secretary Baker will comply with all applicable ethics laws and rules," Jones said. Baker filed a financial disclosure form, but it isn't publicly available. Baker Botts spokeswoman Gale Smith said Baker "has renounced his partnership shares of fees with any client matters that might constitute a conflict."

"The problem," said Judicial Watch's Fitton, "is that a year and a half from now, James Baker goes back and can use these contacts for Carlyle's benefit."

(c) 2003, Knight Ridder/Tribune Information Services