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Sunday, July 14, 2024

Rudy’s potential conflicts of interest

Energy companies, FBI agents, a media tycoon and even a candlemaker: Rudy Giuliani's firm has lobbied for them all and dozens more in Washington, opening the door to a wide range of potential conflicts of interest should he become president.

Energy companies, FBI agents, a media tycoon and even a candlemaker: Rudy Giuliani's firm has lobbied for them all and dozens more in Washington, opening the door to a wide range of potential conflicts of interest should he become president.

If Giuliani were elected, his administration would be on the receiving end of regulatory requests, contract bids and policy proposals by the same clients of his Houston firm, Bracewell & Giuliani, that have contributed toward his personal net worth of millions of dollars.

Although the Republican has so far declined to identify all the companies with which Bracewell and his other firms have done business over the past five years, The Associated Press identified more than 175 as part of an expansive review of lobbying records, court filings and securities reports.

Giuliani's law and lobbying clients have included Saudi Arabia, Rupert Murdoch's News Corp., and chewing tobacco maker UST Inc.

Traditional procedures for government officials to prevent ethical conflicts — expressly avoiding issues directly involving their former employer — would be unavailable for a commander in chief. It is unheard of for a president, when taking office, to promise to avoid a particular policy issue.

Bracewell & Giuliani alone has thousands of clients but will name only a few dozen. Since Giuliani became a partner in spring 2005, it has reported lobbying on various issues the White House, the vice president's office, Congress and every Cabinet agency except the Department of Veterans Affairs, the AP review found.

Federal conflicts-of-interest rules do not apply to the president or vice president, because they are not technically considered U.S. government employees. Giuliani isn't personally registered as a lobbyist for any of the interests on whose behalf his firms have acted, and he has so far declined to otherwise describe his work for them.

But appearances matter when it comes to the public's perception of conflicts of interest, and the large number of clients and issues linked to Giuliani's firms could prove a liability.

Giuliani's corporate ties may dog him as Vice President Dick Cheney's past as chief executive of Halliburton Co., has followed him, said Kent Cooper, co-founder of the campaign finance and lobbying tracking service Political MoneyLine. Democrats accuse the Bush administration of playing favorites by awarding more than $19 billion in contracts to Halliburton's KBR unit for work in Iraq and Afghanistan.

"I think Giuliani will probably be continuously criticized for his business connections because that's who he listened to — that was his circle of close advisers and his kitchen Cabinet so to speak," Cooper said.

Cooper said voters will face this question: "Are there past associations and business dealings that might impact the way the person thinks in office or how they craft a policy that might benefit one company or industry over another?"

Giuliani declined to comment.

"It's clear voters are looking for an experienced leader like Mayor Giuliani with a track record of results to tackle the difficult issues currently facing our country," campaign spokeswoman Maria Comella said. She declined to describe Giuliani's work at Bracewell & Giuliani or how he was compensated.

Congress, the Pentagon, Energy and Education departments and the Environmental Protection Agency were among the offices most frequently contacted by Bracewell & Giuliani, reports show.

The issues run the gamut. Records show the firm:

_Lobbied the Department of Health and Human Services on Medicare coverage of power scooters and wheelchairs from The Scooter Store. The Scooter Store agreed Friday to pay a $4 million fine and surrender $43 million in Medicare claims over allegations by the Justice Department that it had defrauded the government.

_Lobbied the Food and Drug Administration on behalf of UST Public Affairs' over regulation of tobacco products.

_Tackled issues of copyright protection and legislation governing how cable TV lineups are purchased for News Corp., and DirecTV.

_Lobbied for pay and working conditions on behalf of the FBI Agents Association.

_Lobbied on behalf of the Cornell Companies last year for contracts with the U.S. Bureau of Prisons. In 2004, the prison operator was named in indictments of two associates of then-Rep. Tom DeLay, R-Tex. Cornell wasn't charged but was listed among companies making political donations that prosecutors said DeLay's associates illegally laundered for use in Texas campaigns.

_Lobbied Congress on behalf of Concentrax Inc. of Houston, which was trying to raise government interest in a vehicle-tracking system called "Track Down." The lobbying work in 2005 came a few years after Concentrax settled an SEC lawsuit accusing it of falsely claiming to have won contracts to buy the vehicle-tracking system.

_Represented a Utah candlemaker, For Every Body, before the Consumer Product Safety Commission, which last year debated whether to require mandatory fire standards for candles.

_Lobbied Cheney's office, the Energy Department, EPA and others for Houston-based Dynegy, one of several energy companies on its client list.

The firm expected a boost from Giuliani's presence, and it got one.

It took in roughly $500,000 more from its lobbying business the first year of Giuliani's partnership than it had the previous year, rising from nearly $5.8 million between mid-2004 and mid-2005 to $6.3 million between mid-2005 and mid-2006, a Political MoneyLine analysis found.

The firm's managing partner, Patrick Oxford, declined to discuss details of Giuliani's compensation. It is typical for a partner in a law and lobbying firm to get a share of the firm's proceeds.

"Mayor Giuliani's worldwide reputation for leadership has contributed to the firm's stature and success," Oxford said. "Of course, should he be inaugurated as president, the firm's name will change."

Giuliani's corporate work sets him apart from his leading Democratic rival — New York Sen. Hillary Rodham Clinton — and the past three presidents, who moved from one political post to another.

It's not unusual for Cabinet secretaries to come from industry, such as the executive for the Kellogg cereal company — Carlos Gutierrez — who became Commerce secretary. Typically, appointees acknowledge the need to avoid even an appearance of a conflict of interest by promising to sell company stock and avoiding issues directly involving their former employer. Presidents typically deal with stock issues by having their investments placed in a blind trust.

Giuliani, the former New York City mayor, became a national hero after the September 2001 attacks on the World Trade Center, earning accolades and the cover as Time magazine's "Person of the Year." That high profile gave him a marquee name and the potential to earn millions after leaving office in January 2002, and he has.

A publishing contract alone made Giuliani a wealthy man; he left the mayor's job with a $3 million book deal with Talk Miramax Books. He can command six figures for a speech, and took in $11.4 million from speeches last year alone.

Even greater riches have likely come from Giuliani's business dealings. Giuliani will have to put a number on his recent earnings in a personal financial disclosure report due Tuesday.

Giuliani's partnership with Bracewell & Giuliani is just one of several of the former mayor's enterprises. The firm was known as Bracewell & Patterson before Giuliani came aboard in spring 2005.

Others, past and present, include Giuliani Partners, a consulting firm; Giuliani Capital Advisors, an investment banking firm formed through the acquisition of an Ernst & Young division; Giuliani & Kerik, an arm of Giuliani Partners focused on security; and a security firm, Giuliani Security & Safety LLC.

Soon after leaving the mayor's office, Giuliani agreed to chair the board of advisors of Leeds Weld Equity Partners IV, a private equity fund whose principals at the time included former Massachusetts Gov. William Weld.

Giuliani's campaign has said he is still considering how and when to separate himself from his business interests. Earlier this year, Giuliani Capital was sold to Australia-based Macquarie Group for an undisclosed sum.

Giuliani's vast network of business associates provides a ready-made base of potential campaign fundraisers, donors and grass-roots, get-out-the-vote volunteers. At least some have already followed him to his presidential campaign: Oxford is the campaign's national chairman and plays a lead role in fundraising.

Through March, the most recent figures available, Giuliani raised at least $300,000 for his campaign and political action committee from employees and partners of his firms and the lobbying clients identified by AP. Of that, nearly half came from partners and employees of Bracewell, Giuliani Partners and Giuliani Capital.

In addition to its lobbying clients, Bracewell & Giuliani represents businesses in legal and financial matters. Many are household names, such as AOL Time Warner; Apple Computer; Bank of America; General Electric; Southwest Airlines; Goodyear Tire & Rubber Co.; and the San Antonio Spurs.

It also is working for Saudi Arabia. In March, the firm filed papers in a Texas court case on behalf of Saudi Arabia's oil ministry — taking sides with another international energy giant, Citgo, which is controlled by Venezuelan President Hugo Chavez, a rival of the Bush administration. One month after the 2001 terrorist attacks, then-Mayor Giuliani famously rejected a $10 million check from a Saudi prince to help terrorism victims. Giuliani spokeswoman Comella declined to comment on the firm's Saudi connection.

Other Bracewell & Giuliani legal clients include ChevronTexaco; government nuclear lab contractor Bechtel; BMB Munai, which develops oil wells in Kazahkstan; the Norway-based Statoil oil and gas conglomerate; the Luby's restaurant chain; online retailer; some of the bank lenders in the Adelphia Communications bankruptcy case; El Pollo Loco chicken restaurants; and even a country club — River Oaks in Houston — that is owed money by a bankrupt company.

Bracewell & Giuliani lawyers represented Joseph Nichols, a Texas killer ultimately executed for the 1980 murder of a 64-year-old Houston convenience store clerk. Nichols was executed in March after the U.S. Supreme Court declined to hear his final appeal based on the claim that he was being put to death for a murder his robbery partner had admitted to committing. Giuliani is a staunch supporter of capital punishment.

Giuliani's private enterprises at times put him in league with corporate executives who, decades ago, he might have faced in the courtroom.

Case in point: Naturex Inc, a French food-flavoring firm that hired Giuliani Capital Advisors to help with its 2005 acquisition of another company.

A year later, Naturex was sued in federal court by the U.S. attorney in New York — the same job Giuliani once held — for violating the Controlled Substances Act. The prosecutor accused Naturex of importing a chemical that can be used to make amphetamines and methamphetamines without registering or keeping proper records of the transactions.

A Drug Enforcement Administration inquiry concluded Naturex had, over a period of years, imported and exported benzaldehyde more than 100 times without notifying the government. In 2004, Giuliani was hired by the pharmaceutical industry to study — and testified before Congress on — the dangers of importing prescription drugs.

A spokeswoman for Giuliani Capital Advisors said Monday the firm was unaware of any inquiry by the DEA into Naturex's business at the time.

Naturex paid $325,000 to settle its case. A company spokeswoman in France and its lawyer on the New York case did not return calls or e-mails from AP seeking comment.

Giuliani Partners was hired in 2002 by Purdue Pharma to help it combat smuggling and abuse of its prescription painkiller OxyContin, which was blamed for causing or contributing to hundreds of deaths nationwide. On Thursday, Purdue and three current and former executives pleaded guilty to misleading the public about the risk of addiction to the drug; they face $634 million in fines.

Security has been a key business area for Giuliani Partners, whose ventures include Bio-ONE, which decontaminates buildings tainted by anthrax and other biological and chemical weapons. Giuliani Partners and Nextel Communications partnered on a police and fire communications venture.

The firm's clients include Shell U.S. Gas & Power Co. and TransCanadaCorp., which hired it to provide security consulting services for its Broadwater natural gas project in Long Island Sound.

The National Thoroughbred Racing Association and a coalition it formed, the Wagering Integrity Alliance, hired Giuliani Partners to oversee a review of electronic betting systems and recommend security improvements after three fraternity brothers tried to fix bets to get a $3 million payoff during the Breeders' Cup races in Arlington Heights, Ill. A group of Mexican businessmen paid Giuliani Partners $4.3 million to fight rampant crime in Mexico City.

If a business needs to ask what Giuliani costs, it probably can't afford him.

In 2003, Giuliani chatted with Don Imus on the "Imus in the Morning" radio show about how well he was recovering from prostate cancer thanks to a treatment called Theraseed, made by Theragenics.

Theragenics' chief financial officer touted Giuliani's remarks in a conference call with reporters discussing its earnings.

"Late in the year we purchased airtime on the popular `Imus in the Morning' New York radio show and received excellent exposure," the executive, James MacLennan, told reporters. "During an Imus interview with Rudy Giuliani, the pair talked about Theragenics Theraseed and how well Rudy is doing following his treatment with Theraseed."

The company didn't pay Giuliani to promote its product. Theraseed spokeswoman Lisa Rassel said: "It was after 9/11, and we couldn't have afforded him."


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