R. James Woolsey, Godfather of Post-9/11 National Security Capitalism

The following story is co-published with Tim Shorrock’s Substack newsletter, Empire Blues .

When the flamboyant neoconservative R. James Woolsey passed away last week at the age of 84, The Washington Post and its fellow travelers in corporate media mourned him as the whiny, hapless CIA director during the “troubled” years of President Bill Clinton, who disdained intelligence and was far more interested in neoliberal economics and trade than the grubby craft of spying. But Woolsey’s subsequent career as America’s chief profiteer from 9/11 and the “war on terror” was forgotten, leaving Americans in the dark about the true nature of a man who spent the better part of his career as an Islamophobe who routinely threatened North Korea , Iran and other countries with total destruction.

Woolsey and his many business ventures are the clearest distillations of the national security capitalism that emerged in America after the attacks of 2001. Through every iteration of the global war on terror, whether at home or abroad, the hawk from Tulsa managed to be both cheerleader and money maker. On every issue that he staked a position — Iraq, Israel, critical infrastructure, the anthrax scare, you name it — Woolsey found a way to make a financial killing.

The story of how he raised the fusion of patriotism and profits into an art form begins on the morning of Sept. 11, 2001, when two veteran intelligence operatives, both close friends of Woolsey’s, were on their way to Washington, D.C.’s National Airport to catch a flight to New York.

On every issue that he staked a position … Woolsey found a way to make a financial killing.

One was retired Air Force Lt. Gen. Kenneth Minihan , a tall and gangly man who made a name for himself as director of the Defense Intelligence Agency and the National Security Agency (NSA) by sounding the alarm about the vulnerability of Pentagon computer systems to what he called “cyberterrorism.” The other was Alf Andreassen , a soft-spoken physicist who once served as the chief science adviser to then-Vice President George H.W. Bush. He was now a free agent after directing the U.S. Navy’s top-secret anti-submarine warfare unit for 20 years and then working for the classified intelligence units of Bell Labs and AT&T.

In recent months, they had rekindled their relationships with Woolsey, who was in the process of reinventing himself, post-CIA, as a rising neoconservative star and Fox News regular. The three were exploring the idea of forming a business that would advance their mutual interest in harnessing America’s technological might in America’s post-Cold War quest to maintain global military dominance. This was particularly near and dear to Woolsey, a flamboyant Islamaphobe and counterterror expert with extensive ties to the intelligence and defense-contracting industries.

When Minihan and Andreassen reached the airport, they saw the news. The images were particularly shocking to Minihan, who had warned in 1995 that the Twin Towers were a likely target for a terrorist attack. Shaken, they headed back to the parking garage to retrieve their cars — only to watch in horror as an American Airlines jet screeched across the sky and flew straight into the Pentagon, four miles away. Minihan, who died in 2025, later learned that his son Mike, a retired Air Force general , was working on the side of the Pentagon that was hit. Woolsey’s son, meanwhile, was working in the South Tower in New York and escaped just before it collapsed.

As the three entrepreneurs picked up their conversations in the days following the attacks, they decided that the best way to help the nation was to start their business — a private equity fund focused solely on the need to protect the “homeland.”

“We were just generally pretty torqued and thinking of what we could to help,” Andreassen recalled a few years later at an investors’ conference in Washington. “We were too old and too out of shape to be EMTs or first-responders. And so we got together with a group of people we’d known for decades, in and out of the government, our strategic advisory group, and mulled through what we could do that would be meaningful.”

They decided that the best way to help the nation was to start their business.

Thus was born the Paladin Capital Group , the country’s first private equity fund to focus exclusively on homeland security. The fund was modeled after the Carlyle Group, the powerful, Washington-based investment fund famous for hiring as advisers former President Bush and his secretary of state, James Baker III, and tapping into their knowledge to make strategic investments in the military-industrial complex.

Besides Carlyle and Paladin, other private equity funds in this space include Veritas Capital and Novak Biddle . They provide the capital to help companies — some of them spun out of NSA and other agencies — develop their products and the “advisers” to help steer them to new customers within government. In this way, private equity has become the financial backbone of the $100 billion+ intelligence industrial complex.

In a deep-dive into private equity that I did for The Nation during the Iraq War , I described Carlyle as “a twenty-first-century version of capitalism that blurs any line between politics and business.” The fund, I wrote, “may be the ultimate in privatization: the use of a private company to nurture public policy — and then reap its benefits in the form of profit.” In a major break from the mainstream reporting on the subject, I compared its employment of former high-ranking officials to a corrupt Japanese tradition known as amakudari — literally, “descent from heaven.”

Under this system, senior officials from Japanese ministries retired, only to be instantly hired as senior advisors by the companies and industry groups they were paid to regulate as public servants. “What we’re really talking about is a systematic merging of the private and public sectors to the point where the distinctions get lost,” Chalmers Johnson , the late author of several acclaimed books on the U.S. Empire and the Japanese system of governance (and a friend and mentor ), told me. “The Carlyle Group is a perfect example. It’s the use of former government officials for their access to government bureaucracies to determine contractual relations. It’s inside knowledge — knowing where the government is going to spend money and then investing in it.”

That’s exactly how Paladin made its money. One of Woolsey’s first appointees to its strategic advisory board (which he chaired until his death) was Samuel R. Berger, President Clinton’s national security adviser and chairman of Stonebridge International, a partnership with the former chairman of Clinton’s Foreign Intelligence Advisory Board. Other advisers included Togo West, the former secretary of the Army, and six former officials who had worked in various capacities for the NSA, the chief of U.S. naval operations, the Defense Advanced Research Projects Agency and the Defense Science Board.

A quarter-century later, membership in Paladin’s advisory board hasn’t changed. Among its current crop are Chris Inglis, the former deputy director of the NSA; Richard Clarke, a former presidential adviser on counterterrorism; Jeremy Bash, the CIA’s former chief of staff; and many others from the so-called intelligence community. In an interview for my 2008 book “Spies for Hire,” Michael Steed, Paladin’s managing partner, told me how Paladin benefits from the service of former spooks.

These men and women, Steed explained to me, were part of a floating class of security experts who have become a permanent feature in Washington. “There is a cadre of people here in Washington who are considered to be trusted persons,” he said.

These are people who, whether they are Democrats or Republicans, that any president, any member of the leadership on Capitol Hill, any secretary of defense, any intelligence director, can call on for help and assistance. And they answer that call whether they were Democrats or Republicans. Minihan and Woolsey and a lot of the people who sit on our strategic advisory group fall into that category. And thank god you have people like that. Otherwise, if you went from one administration to another, you’d lost a lot of that institutional memory of what they have done. So they’ve become really very important helpers, especially in times of crisis.

With the advice of these “helpers,” Paladin created its own niche: funding startups that made products with national security applications that could be sold in both defense and commercial markets. It was a brilliant business stroke. As it proclaims on its website, “ Paladin is a leader in investing in technologies, products, and services focused on dual use in both commercial and governmental markets with a strong value-add culture.” Since 2001, it invested in over 85 companies on the cutting edge of defense and intelligence technology and managed over $2 billion worth of assets.

In his first years as a managing partner at Paladin, Woolsey spent about a day and a half a week at the fund, leaving the actual work to Steed and his cast of money managers. He collected a sizeable return from lucrative investments Paladin made in Iraq, homeland security and the global war on terror. Concomitant with his extremist political focus, he invested in companies profiting from government spending on bioterrorism and others with close ties to Israeli intelligence and the Israeli Defense Forces. One of the companies he often bragged about became the world’s largest supplier of national identification cards and smart chips for passports and first tested its technology on Palestinians forced to carry computerized ID cards by the Israeli Defense Forces.

Other major investments made during his time at Paladin included:

- Nexidia , an Atlanta company that developed software that can phonetically search texts and audio tapes and signals in dozens of languages at speeds thousands of times faster than traditional techniques. The technology was first deployed in Iraq by the U.S. Marines and later sold to U.S. intelligence agencies for “data-mining” global communications picked up by the NSA.

- ClearCube Technology , which transformed desktop computers into miniature replicas called “blades” that allowed government agencies like NORAD, Army intelligence, the U.K. Ministry of Defense and various U.S. military commands around the world to centralize control over their information systems.

- Arxan Technologies Inc. , which developed anti-tampering software now used by U.S. military contractors to protect critical technologies on weapons they sell overseas.

- Agion Technologies Inc., which provided antibacterial solutions that were incorporated into fibers, fabrics and other products to fight bacteria and are seen by Paladin as a way to combat bioterrorism — a key concern of Woolsey during his counterterrorism career.

The full portfolio of Paladin’s investments are listed on its website . Many of these companies, like Carlyle’s, were later sold and merged with larger military and homeland security companies. That was the way Woolsey and his other neocons from the war on terror made their money, and the press soon caught on.

“Fight terror, make a buck”

When the Paladin fund’s first investments were announced in 2003, many in the media seized on the connection with 9/11.

“Fight terror, make a buck,” was the headline of a Business Week story on Paladin that began by asking: “Does the war on terror have a silver — or even a golden — lining? A couple of onetime intelligence chiefs think so.” Buyside, a newsletter for the mergers and acquisitions specialists, dubbed its Paladin story “Patriotic profits.” The Los Angeles Times took a more even approach. “There are two ways to look at this activity: as a grim attempt to turn public anxiety into a business opportunity or — the viewpoint naturally favored by those in the industry — as a chance to fight the good fight while upholding sound capitalist principles.”

During that time, I was writing on contract for The Nation and Salon about the new capitalism in Washington, and managed to hear Woolsey speak many times at conferences and press events. He was strident in everything he said but could also be incredibly defensive when questioned, like he had a huge chip on his shoulder. At one event, I asked him about critics who said he was cashing in on his CIA and national security experience to profit from war.

“Fight terror, make a buck,” was the headline of a Business Week story on Paladin.

He glared at me and snapped: “What should I be doing, selling women’s dresses?” It was like I had challenged his manhood or something. That was the only interview I ever wrangled from him. (I regret not mentioning that in “Spies for Hire.” When Jeff Stein, the intelligence reporter and editor of SpyTalk , reviewed my book for The Washington Post, he chided me in an otherwise favorable review for not interviewing Woolsey. I let him know the full story, and he understood).

Bottom line: Woolsey was all about the business of terrorism, and proud of it. And Paladin was only a start.

One of Woolsey’s most important gigs in national security was for Booz Allen Hamilton, one of the most important contractors to U.S. intelligence (and the company that produced Edward Snowden, who leaked his huge collection of NSA documents while working for Booz in Hawaii).

Shortly after 9/11, Booz Allen CEO Ralph Shrader organized a “CEO summit” that explored public-private partnerships for national security that attracted dozens of senior executives from Fortune 500 companies. The overall message was that the government needed to create “new types” of partnerships as well as “new types of market incentives to address sustainability.” Most critically, Shrader pointed out, “business leaders cannot opt out of geopolitics and leave the job of security solely to government and the military.”

That was a perfect job for Woolsey, who was hired specifically to straddle that fence. On July 15, 2002, in the midst of his feverish work promoting the George W. Bush foreign policy agenda, Woolsey was hired to be vice president of Booz Allen’s newly created Global Strategic Security service. Its purpose was to help CEOs of major corporations integrate security into their strategic business planning. Woolsey’s team, the company noted, included “former leaders of the nation’s highest security and intelligence agencies, as well as experts in cyber-security, global-supply chain management and wargame-scenario planning.”

Woolsey was all about the business of terrorism, and proud of it.

His job was to lead an initiative to shape and implement public-private partnerships “to reduce risk and help ensure resilience in corporations, government agencies and critical infrastructures.” As a Booz Allen VP, Woolsey provided strategic advice to corporations and government agencies about how to protect vital economic networks — oil and gas pipelines, toxic chemical production and delivery, the food system, and the electrical grid — from attack by America’s terrorist enemies. His clients included some of the largest companies in the United States as well as the CIA and the NSA.

Woolsey left Booz in 2008 and went on to become a leading financier with several other national security funds, including First Wall Street , Woolsey Partners LLC and Lux Capital . The latter is the investment home for Brent McGurk , the former White House coordinator for the Middle East region who was appointed by President Joe Biden in 2023 to oversee hostage talks between Israel and Hamas . Like Woolsey was during the war in Iraq, McGurk now is a constant presence on CNN , where he is a global affairs analyst. Woolsey’s style of influence capital is now a way of life in D.C.

Still, there’s more to tell about Woolsey and his new school of capitalism. One important piece of the story revolves around how Paladin and Carlyle got their capital. The answer may surprise you: American labor unions.

How union money funded the war for the homeland

Paladin built its niche in the private equity world by combining the national security expertise of its founders with the bountiful capital available from one of the richest veins of money in America: union pension funds.

To attract the union money, Woolsey and his colleagues turned to Michael Steed, the former managing director of the Union Labor Life Insurance Company (Ullico) , the nation’s largest union-owned investment company. At Ullico, Steed had funneled billions of dollars of union pension money into big industrial projects, including Newport News Shipbuilding in Virginia. Steed was no stranger to private equity: Ullico was one of the first union-backed funds to invest in the Carlyle Group. And because Ullico was managed by the presidents of large unions and the top officials of the AFL-CIO, Steed had excellent contacts in union pension funds, which collectively control trillion of dollars in assets.

To attract the union money, Woolsey and his colleagues turned to Michael Steed.

“When the events of September 11 occurred and we started getting our thoughts straight, really the only person we knew in the venture capital business was Mike (Steed),” Andreassen, who is still an adviser to Paladin, told me then. “Ullico is in the same sense for him what Bell Labs is for me. It’s part of our makeup.” Steed joined the Paladin board in 2002, and as a result of his influence, several large pension funds agreed to invest in Paladin, starting with the Communications Workers of America . The CWA was followed by the New York City fire and police unions and the plumbers and pipe fitters union.

Paladin also attracted large investments from Boeing, Motorola, Sumitomo Bank of Japan and Siemens of Germany, according to Andreassen. “What we got was a set of strategics who want to be customers of (Paladin’s) portfolio companies,” said Andreassen. “And then we got the more passive Taft-Hartley funds that provide the build of the funding. So it’s a great mix.” To get the unions on board, Paladin promised that the companies it would invest in would be “worker-friendly.” This didn’t mean that workers would have to agree to join a union, Andreassen said. “It’s just that you want to have fair labor practices. The companies that have happy employees do a better job. It’s just good ethics.”

Investing union pension money into the military industrial complex may not be the best choice for American workers concerned about a just foreign policy and opposed to U.S. wars. The political nature of pension investments has largely been seized upon by the anti-union right and the business press, most notably The Wall Street Journal . But the question asked in a recent WSJ editorial — “Do members of four large government-worker unions know where their wage deductions go?” — should be asked by the left as well. As a former dues-paying member of the CWA and a CWA shop steward at The Journal of Commerce, I certainly don’t want my dues money going to war industries. It’s about time the labor movement and radicals in the DSA take up this issue.

How Woolsey went from Stanford liberal to Washington neocon

The other piece of the Woolsey puzzle that was left untold in the media coverage of his death was his early dalliance with Cold War liberalism and the anti-war movement.

One of his first mentors was Allard Lowenstein , the former antiwar Democratic congressman from New York. Lowenstein, who was a major figure in the early days of the Vietnam protest movement, was a controversial figure on the left. After making a mark as a fierce opponent of the war, he became alarmed about the presence in the anti-war and civil rights movements of leftists and communists, and slowly drifted to the right. Many on the left became suspicious that he was a CIA agent — a story given credence by the Carlyle Group’s late chairman Frank Carlucci , who worked closely with Lowenstein to keep communists out of Portugal’s new government in the wake of the 1974 left-wing “Carnation Revolution.”

Woolsey first met Lowenstein at Stanford University, a hotbed of anti-war activities in the late 1960s. At Lowenstein’s suggestion, Woolsey founded a campus club for peace candidate Eugene McCarthy and became peripherally involved in the civil rights movement. But as an ROTC candidate, Woolsey’s anti-war proclivities were thin. In 1968, after graduating as an Army lieutenant, he got a job at the Department of Defense as a systems analyst.

There, Woolsey was brought into the national security inner circles by one of the so-called “Wise Men” from the Cold War, Paul Nitze , who was President Lyndon Johnson’s deputy secretary of defense and the Pentagon’s representative to the SALT 1 arms talks negotiation team. Nitze, a Vietnam hawk who disagreed with Woolsey’s opposition to the Vietnam War (tepid though it was), saw in the young Yale graduate someone “not afraid to speak up” and hired him as an assistant. While working for Nitze, Woolsey first met Richard Perle , his future comrade-in-arms in the campaign to topple Saddam Hussein (much of this account of his early life is from a 1993 profile in The New York Times).

As an ROTC candidate, Woolsey’s anti-war proclivities were thin.

Perle at the time was an anti-Soviet hardliner working on the staff of Sen. Henry M. “Scoop” Jackson , and had earned the nickname “prince of darkness” for his intense opposition to the Nixon and Kissinger arms control/detente regime. Perle liked Woolsey from the start, and later brought him into the Senate Armed Services Committee as general counsel. That experience, from 1970 to 1973, expanded Woolsey’s experience in the bowels of the intelligence community. In 1973, Woolsey joined Shea & Gardner, the law firm he would be identified with throughout his career. He worked then primarily as a corporate lawyer, representing defense contractors like McDonnell Douglas and General Dynamics.

After Ronald Reagan was elected president in 1980, Woolsey made a smooth transition to the Republican administration, earning a reputation as “an ambitious man who saw a professional advantage in being to the right of most of his Democratic counterparts [and] becoming the Republicans’ favorite Democrat. His mentor this time was Brent Scowcroft, the national security adviser to President George H.W. Bush. Scowcroft helped Woolsey win appointments to a high-powered commission on strategic forces and, later, as U.S. representative to the negotiations on a treaty that reduced the size of U.S. and Soviet conventional armed forces in Europe.

In the 1980s, Woolsey was involved in a classified government program that was kept secret for more than 20 years. This was his experience as a member of a “continuity of government” task force initiated by the Reagan administration to protect the nation’s leadership in case of a nuclear attack. This plan was first disclosed in 2002 by the journalist James Mann and detailed in his excellent book on the George W. Bush war cabinet, “The Rise of the Vulcans.” In the early 1980s, Reagan appointed a select group of former high-ranking officials to periodically gather in secret locations around the country to practice setting up an underground government in case Washington was destroyed in a Soviet attack. Many of the participants in the program would later take key positions in the second Bush administration.

The program was supposedly abandoned during the Clinton administration. But a version of it was put into play on Sept. 11, 2001, when members of the Bush administration joined senior lawmakers and top officials with the CIA and other intelligence agencies at secret government locations in the hills of Pennsylvania and Virginia. “[Dick] Cheney and [Donald] Rumsfeld were familiar with the Armageddon exercises of the Reagan era,” Mann wrote. “They themselves had practiced all the old drills.” For Woolsey, this experience would provide valuable background for the homeland security exercises he would later run for corporations and government agencies as vice president of Booz Allen Hamilton.

Former CIA Director R. James Woolsey testifies on Capitol Hill on Sept. 24, 1996, before a Senate Foreign Relations Committee hearing on the need for a national ballistic defense system. (AP Photo/Dennis Cook)

Thus, long before he was appointed director of the CIA by Clinton, Woolsey had found a home in the defense and intelligence contracting industries. In the early 1980s, he was recruited to the board of directors of Titan Corp. , a firm represented by his law firm that would later be implicated in the Abu Ghraib prison abuse scandal and is now a hugely profitable subsidiary of L-3 Communications Inc. These were formative years for Titan and very lucrative ones for Woolsey that must have provided an early taste of his value as a former high-ranking government official.

Titan’s roots were the nexus between private defense electronics firms and black operations and the missile programs that Woolsey knew so much about as an arms negotiator. It was founded by J. Sidney Webb, the retired vice chairman of TRW Inc., which has a long and storied relationship with the CIA as chief builder of its surveillance satellites. By 1987, Titan had assembled a science and management team that Business Week said “may be the envy of the defense Establishment.”

In 1991, Woolsey was elected to the board of Martin Marietta, one of the nation’s largest rocket manufacturers that would later merge with Lockheed. The next year, he joined the board of British Aerospace, which was just beginning its rise to the top tier of the U.S. defense industry — a ranking it would achieve in 2006, when it was known as BAE and Woolsey’s business colleague, Kenneth Minihan, had joined the board. It was during that time that Bill Clinton approached him to be his CIA director.

That’s why I call Woolsey the “apotheosis” of national security capitalism . We can only hope not to see his kind ever again.

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