Private Equity and the Business of War
What do the following activities have in common? Engineering Space Force systems, investigating military personnel who are looking to obtain security clearances, and storing and maintaining matériel in the Middle East. They’re carried out by corporations owned by private equity firms.
Private equity firms pool rich people’s money and use that money to buy corporations, which they aim to later sell at a profit. Recent years have seen private equity firms acquiring corporations at a record pace, including those profiting from such human needs as healthcare, housing, and food. Private equity also acquires corporations in the business of war (“military contractors”).
The Carlyle Group pioneered this acquisition of military contractors, as Dutch public broadcasting reported in 2009. Numerous private equity firms now regularly buy and sell such corporations. Big players include Arlington Capital Partners, D.C. Capital Partners, and Veritas Capital.
Worldwide Operations
What does this look like on the ground?
Veritas Capital owns APTIM, Cubic, and Peraton. Among many military activities, APTIM maintains fossil fuel infrastructure (1, 2, 3), Cubic develops logistics software, and Peraton acquires components for nuclear weapons.
Arlington Capital Partners owns J&J Worldwide, Tyto Athene, and Systems Planning & Analysis. Among many activities, J&J (with JLL) is running U.S. bases in the Philippines, Tyto Athene is operating in cyberspace for Space Force, and Systems Planning & Analysis is improving “policy development, decision making, management, administration, and system operations” for the U.S. Air Force in Europe and Africa.
A single firm, we see, can impact military operations around the world.
Big Business
Private equity firms often cut jobs in the newly acquired corporations and squeeze the remaining workers to increase productivity. How might that affect military operations? Arlington Capital Partners, Carlyle Group, D.C. Capital Partners, and Veritas Capital did not reply to inquiries regarding the extent of their government contracting, job figures at the contractors they own, and private equity’s entrance into military contracting.
A former Marine officer who later served with the State Department, Matthew Hoh, described to me what private equity might see in such contracting: “Profits are nearly guaranteed… through the form of contracts utilized by the Department of Defense, the annual gargantuan increases to the Pentagon budget, and the unquestioning and uncritical bipartisan support for military spending in Congress.”
Though some firms that own military contractors, such as Lindsay Goldberg and Veritas Capital, are headquartered in the traditional center of international finance, New York City, others have set up shop closer to federal authority. Arlington Capital Partners and D.C. Capital Partners are headquartered in the greater Washington metropolitan area, while Carlyle is a stone’s throw east of the White House. Locating one’s firm in or around the nation’s capital is advantageous for networking and recruiting, in addition to influencing politics (financing campaigns, lobbying, using nonprofits to flood the system with dark money, and rotating the titans of industry through the halls of authority).
Top U.S. military officers oversee warfare when in uniform and then typically profit from warfare in retirement. Retired generals Ellen Pawlikowski at RTX (the corporation formerly known as Raytheon Technologies), Mark Welsh at Northrop Grumman, and Peter Chiarelli at L3Harris exemplify such financial reward. Starker examples include David Petraeus at the financial giant KKR and David Goldfein at Blackstone. Private equity, too, courts prominent brass. The advisory board of D.C. Capital Partners, for example, is mostly retired top officers. These hires can be valuable in predicting investment trends and government behavior, and, as the Dutch public broadcaster noted when covering The Carlyle Group, even sway federal policy.
The Undersecretary of Defense for Acquisition and Sustainment did not respond to questions regarding government regulation, retired officers working at private equity firms, and how private equity’s profit motive might hinder contractor performance.
Nurturing Greed
In the wake of World War II, the U.S. ruling class entrenched the military-industrial complex via the 1947 National Security Act and the 1947 Labor Management Relations Act. The National Security Act created the National Security Council and the Central Intelligence Agency and established the Air Force as a distinct military branch, while the Labor Management Relations Act banned the most effective tools that the U.S. working class could use to organize and change the system, including certain strikes, pickets, and boycotts.
In the wake of the class consciousness that developed during the Vietnam War, the U.S. Supreme Court ruled that limits on election spending were unconstitutional, kicking off the enhancement of corporate authority that continues to this day. Courtesy of a series of Supreme Court decisions, corporations now have a First Amendment right to put money toward ballot initiatives; influence politics by utilizing nonprofits; and spend unlimited amounts on political contributions, without limit on the total number of such contributions over a two-year period.
Accordingly, corporations have perfected the profiting off human needs (e.g., water, healthcare, housing) and government function (e.g., war).
Private equity exemplifies the brutality of the economic system. By laying off workers and stripping companies of their assets under the guise of “efficiency,” private equity hurts the working class. By acquiring media (e.g., Regent Equity Partners owning Sightline Media Group, Apollo Global owning Yahoo), private equity affects how the public learns about current events, including war. By lobbying government, private equity ensures favorable legislation, such as the annual National Defense Authorization Act, the sections of which foster current and future conflict. And by dodging taxes, private equity refuses to contribute to the common good.
Rise
To begin improving our collective lot and healing as a society is to rescind all pertinent legislation, starting with the National Security Act and Labor Management Relations Act and working forward. The Supreme Court decisions conferring political clout to corporations also must also be rescinded. Military and industry, however, are unlikely to undercut themselves by supporting such necessary reforms.
Historians offer a different way forward—one outside of the halls of authority.
Worker unionization and organizing is crucial. Big business dreads a united working class, as professor Howard Zinn demonstrated in A People’s History of the United States, because a united working class can use superior numbers to push back against the profit-over-people economic system known as capitalism. An assertive, united working class could redirect tax dollars away from the business of war and into programs of social uplift, even going as far as converting the business of war into industries that actually benefit humanity.
A complementary component, historian William Astore recently suggested, is ridding ourselves of fear: “Fear paralyzes the mind and inhibits action.”
Given the intertwined mass extinction and climate crises in which we are living, it would be wise to follow the advice of these historians. And the sooner the better.
Christian Sorensen is an author and researcher focused on the business of war. His research is available at www.warindustrymuster.com. This newsletter – thebusinessofwar.substack.com – features original reporting and monthly explanations of military contracting announcements.