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Carlyle Group To Pay $20 Million, Submit To Cuomo’s “Code Of Conduct”

In what New York AG Andrew Cuomo is hailing as a “revolutionary” agreement, Carlyle Group agreed to pay a $20 million settlement to “resolve its involvement” in former New York state comptroller adviser Hank Morris’s alleged scheme to collect bribes from hedge funds and private equity firms in exchange for state pension fund investments. As part of the deal Carlyle will agree to Cuomo’s new code of conduct banning the use of “placement agents” like Morris, who allegedly collected $13 million in sham fees from Carlyle for steering $730 million in state pension fund investments to the firm.

Carlyle admitted no wrongdoing and announced it was suing Morris and the firm he worked for, Searle & Co., for $15 million. The code of conduct could indeed prove pretty revolutionary in the industry if Cuomo succeeds in making similar settlements with other money managers, which he said was his intention. Whether it marks a considerable change at Carlyle is another matter; after all, if you can name one politically-connected private equity firm it is probably the Carlyle Group.

But that’s the the thing that never ceases to impress us about Morris and the pension scammers: as car czar Steve Rattner can attest his connections were the envy of the well-connected. Today the New York Times reported that even Jimmy Cayne, the inimitable former Bear Stearns CEO who wasn’t afraid to call Tim Geithner a “clerk” who “thinks he’s got a big dick” (and worse) was sufficiently awed by Morris that he went out of his way to hire Morris’ graphic design firm to produce the Bear Stearns annual reports.

Carlyle and Bear Stearns have, of course, both proven willing to pay off connected insiders to land business before: most notably with the Republican lobbyist and Karl Rove friend Bob Kjellander, who collected $809,000 from Bear and several million dollars from Carlyle earlier this decade for securing the companies lucrative Chicago business.


You know how that one ended — with the impeachment of the state’s Democrat governor, who was charged last month, along with his fundraiser Tony Rezko, with (among many othre things) sharing a cut of Kjellander’s Bear Stearns fee. (And you thought Obama was post-partisan!)

But the Chicago probe didn’t win payouts from either financial firm — perhaps because the Blago scheme was, by all appearances, a great deal more convoluted. But today Cuomo called the agreement with Carlyle “revolutionary” and said he expects to collect millions more in agreements like it from money managers implicated in the pension probe.

Andrew Cuomo, Bear Stearns, Carlyle Group, Hank Morris

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