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Giuliani Still Working at Firm He Promised to Leave

By John Solomon
Washington Post Staff Writer
Tuesday, October 30, 2007

Ten months into his presidential bid, Rudolph W. Giuliani continues to work part time at the security consulting firm he promised to leave this past spring to focus on his pursuit of the Republican nomination.

Giuliani's continuing involvement with a firm catering to corporate clients makes him unique among Republican contenders. It also complicates the task of separating his firm's assets from his campaign spending.

Several of the firm's employees do volunteer work for his campaign. And Giuliani did not decide until mid-June, six months after he entered the race, to bill his campaign for the cost of the security detail traveling with him on campaign trips; before then, the firm paid the expense.

Aides at Giuliani Partners in New York and with his campaign confirmed that he continues working part time at the firm. They declined to answer specific questions about the nature of his efforts, his compensation or the amount of time he spends there.

"Mayor Giuliani spends the majority of his time on the campaign," Giuliani Partners spokeswoman Sunny Mindel said, declining to be more specific.

Federal election laws prohibit Giuliani's firm from absorbing costs or providing services that legally should be covered by political donations, campaign experts said.

"This is a lawyer's nightmare," said Republican political consultant Scott Reed, who ran the 1996 presidential bid of then-Sen. Robert J. Dole (R-Kan.) but is not aligned with a presidential campaign in this race. "I don't think the vulnerability is with voters on the level of his commitment to the race. The concern is really about FEC violations and whether anything this corporation does to help him essentially is making a contribution to run for president in the form of staff time, materials, travel billing or security."

Giuliani's aides said the firm and the campaign comply with all federal election rules and laws.

Giuliani formed the firm after he left the New York mayor's office in 2002. He built upon the reputation he earned while helping the city recover from the Sept. 11, 2001, attacks to advise clients across the world on security issues.

The clients have included civic leaders in Mexico City, who sought Giuliani's expertise on law enforcement strategies; companies that wanted to build a post-Sept. 11 security plan; and those that sought strategic advice on how to win business in the growing homeland security sector.

Giuliani's firm has grossed more than $100 million since its formation. It has employed many of the same political insiders who worked around Giuliani during his mayoral years, such as former chief of staff Anthony V. Carbonetti, former fire chief Thomas Von Essen and former corporation counsel Michael D. Hess. It also includes former FBI executive Pasquale J. D'Amuro, a highly regarded terrorism expert.

Last year, Giuliani earned about $4.1 million from the firm, according to the presidential campaign financial disclosure report he filed in May.

Because the firm represents many security interests, some of which might have business before the federal government, Giuliani faced questions about his continuing employment there. He announced in April that he planned to leave the firm to concentrate entirely on the campaign.

"I'm largely out of it, and I'm pretty much going to be out of it at some point pretty soon," he told reporters on April 4 while campaigning in South Carolina.

Six months later, he continues to do some work at the company.

Aides refused to discuss the exact nature of the work, but Hess, in an interview with The Washington Post earlier this year, provided some insight into Giuliani's role in the firm since he became a candidate.

"When Rudy is here, he is hands-on," Hess said in late April. "He does discuss all the different matters. When we get a client, sometimes they are people Rudy knows and sometimes others of us know or hear about them. Invariably, a new client will want to meet with Rudy, and this was frequent a while ago, and it has become less frequent as he is going around on his campaigning."

Hess said Giuliani also tries to attend the firm's strategic meetings when he is in New York, gatherings that resemble the early-morning staff meetings he held as mayor.

"Over the years since we've been here, we do have frequent meetings. They varied with the time Rudy has. Sometimes Rudy is in New York a lot, and sometimes he is here less," Hess said. "They are reminiscent of staff meetings that we had in City Hall. He was somewhat famous for having the 8 a.m. meeting with about a dozen or 15 commissioners. Likewise, we have staff meetings here."

During an interview in June with CNBC's Larry Kudlow, Giuliani said that he was spending no more than 10 percent of his time doing work for the firm while he was campaigning and that he planned to take a leave of absence.

"I would have thought during the general election, but it seems to me nowadays, with all these things moving up, probably sometime during the primaries," Giuliani said about the timing of his leaving. "But right now I'd say I'm 95 percent campaigning, maybe 5 to 10 percent trying to settle up last-minute things."

Giuliani has ended another of his more lucrative private ventures -- giving paid speeches. The former mayor, popular on the motivational speaking tour, earned about $11 million in speech and book fees last year but stopped giving such speeches in February.

Giuliani falls in the middle of the presidential field when it comes to job commitments. Several candidates have full-time jobs as members of Congress, such as Democratic Sens. Hillary Rodham Clinton (N.Y.) and Barack Obama (Ill.), GOP Sen. John McCain (Ariz.), and Republican Reps. Duncan Hunter (Calif.), Tom Tancredo (Colo.) and Ron Paul (Tex.).

But the two Republicans closest to Giuliani in the polls -- former senator Fred D. Thompson (Tenn.) and former Massachusetts governor Mitt Romney -- are multimillionaires who have no private-sector jobs.

Reed said if he were managing Giuliani, another multimillionaire, he would have advised the candidate to step aside from his firm as soon as the race started.

"I think it always is wise to close down all of these other efforts . . . so that, one, you give the campaign 100 percent, and two, you don't give your political enemies possible ammunition," he said.

One concern among ethics experts is that Giuliani's continuing affiliation with the firm might create a public perception that clients with business that could be affected by a Giuliani presidency might hire the firm to curry favor.

The firm's past clients had many connections to government. They include:

¿ Purdue Pharma, which resolved a lengthy Drug Enforcement Administration investigation into the security of its OxyContin painkiller with only a fine, with the Giuliani firm's help.

¿ A confessed drug smuggler who hired Giuliani to help ensure that his company could do security consulting business with the federal government in the post-Sept. 11 period.

¿ The horse-racing industry, which hired Giuliani's firm to review the security of its betting systems after a wagering scandal shook public confidence.

¿ BioOne, a company that can do biological cleanups, such as its cleaning of a Florida media building after the 2001 anthrax attacks.

¿ Energy giant Entergy, which hired Giuliani's firm to help tighten its security.

In addition, Giuliani's firm created a spinoff called Giuliani Capital Advisors, which advised companies on bankruptcies and expansion in the homeland security marketplace. Giuliani sold that arm of the firm earlier this year.

Research editor Alice Crites contributed to this report.

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