As the White House began detailed preparations last winter for a presidential visit to Canada in March, a number of officials noticed that deputy chief of staff Michael K. Deaver had taken what they thought was an unusual interest in acid rain.
Deaver, who concentrated on skillfully packaging and enhancing President Reagan's image, had rarely delved into substantive issues. In this case, however, officials said, he stepped in and helped persuade Reagan to make a significant concession to the Canadian government: the appointment of a special envoy on acid rain.
Not only did the Canadians get a special envoy on an issue the White House had previously played down, but they got a heavy-hitter: Drew Lewis, a former secretary of transportation. Lewis later pleased the Canadians by calling for an acid rain cleanup program that far exceeds what the administration has proposed.
Less than two months after Reagan's trip to Canada, Deaver left the White House, as he had announced earlier he would, to form a lobbying firm. Three months later, he signed up one of his first clients -- at an annual fee of $105,000 -- the government of Canada, which had a special interest in acid rain.
In an interview, Deaver said his activities at the White House before the U.S.-Canadian summit had nothing to do with the subsequent contract with Canada.
"Anything I did in the White House on that basis or any other basis was in the best interests of the president and it did not have anything to do with the Canadians," he said. Deaver has had notable success in attracting major clients who pay fees of $100,000 to $300,000. He is among what has become a wave of former White House officials moving into the private sector of Washington, selling influence, access and a claimed ability to manipulate public images and private deals.
When Reagan won the presidency in 1980 and the Republicans captured the Senate after a two-decade dry spell, there was a huge opening for the exercise of power and the reaping of profits that was just waiting to be filled.
"There are lots of companies that need representation, lots that don't have representation. There are not a lot of Republican firms out there," said Edward J. Rollins, who just left his White House job as chief political adviser to the president to form a political consulting-lobbying partnership.
Deaver acknowledges that in the case of Canada and other clients, he is providing help for a fee on issues he was involved in only months ago at the White House. But he sees no conflict and says he is following the law on such revolving-door issues.
On Canada, he said, "I would be involved in advising them on any issue. Acid rain happens to be the largest issue in Canada, so it is logical that I would advise them on that issue." Since taking on the job, he said he has talked to Lewis about the issue on behalf of Canada.
But, Deaver said, "I try to bend over backwards to be sure that I'm covered under the law."
The law governing the activities of high-ranking government employes after they leave office prohibits them from talking "to anybody that's in the executive office of the president for one year" on business matters, with no restrictions on social contacts, he said.
Donald E. Campbell, chief counsel in the Office of Government Ethics, said Deaver's interpretation of the law is accurate.
The one-year prohibition against business contacts applies in Deaver's case only to those working directly under Donald T. Regan, White House chief of staff. It does not apply to anyone else in government.
In addition, the prohibition does not preclude those who work for Deaver from calling executive office officials.
"I can't call Don Regan and say, 'Look, I've got a problem with sugar quotas ,' " Deaver said. He added, "I can talk to anybody else in government that I want to on any subject . . . . I have people here in the firm who can deal with the White House."
Deaver remains a close friend of the Reagans and talks to them often, but he said he would never raise a business issue with them. "I would never talk to her Nancy Reagan about a client. The Reagans are friends of mine. I talk to them about other things all the time."
The Canadian contract is one small slice of business for Deaver, who estimates he has signed up 11 clients in less than six months. These clients produce annual billings in the neighborhood of $2 million. Deaver is known to have a goal of setting a minimum annual retainer for each of his clients at $300,000.
Deaver is hardly alone in using Reagan credentials to attract business after leaving the administration. Among the others who have moved from the White House into the world of consulting and lobbying are:
*Richard V. Allen, former assistant to the president for national security affairs. Clients of the Richard V. Allen Co. include the Panama Canal Study Group and the Republican National Committee.
*Joseph W. Canzeri, former deputy assistant to the president. The Joseph W. Canzeri Co. has represented Columbia Pictures; High Frontier, the lobby supporting the Strategic Defense Initiative (SDI); the White House Tennis Tournament, and Cable News Network's Ted Turner.
*Kenneth M. Duberstein, former chief White House lobbyist, now a partner in Timmons & Co., a lobbying firm whose clients include ABC, the American Petroleum Institute, Chrysler, Eastern Airlines and Standard Oil of Indiana.
*Wayne H. Valis, former special assistant to the president for contact with the business community, who now runs Valis Associates, which is associated with the public relations firm of Hill & Knowlton. Valis specializes in the representation of coalitions of business and trade associations on such issues as deficit reduction and banking deregulation. Among the various coalition participants are the Chamber of Commerce, the National Association of Manufacturers, the American Business Conference and the American Bankers Association.
*Franklin (Lyn) C. Nofziger, former presidential assistant for political affairs, whose firm, Nofziger-Bragg Communicators, has represented Conrail and the Long Island Lighting Co.
*Lee Atwater, former White House deputy political director and deputy campaign manager of the Reagan-Bush '84 campaign, is a partner in the firm of Black, Manafort & Stone, with clients ranging from the Dominican Republic to the Squibb Corp.
There are others who did not work in the White House, but whose earlier connections to President Reagan placed them in a position to capitalize on the partisan shift of power. Among them are Robert Gray of Gray & Co., and Peter Hannaford, a one-time partner of Deaver's who now heads his own firm, the Hannaford Co.
Deaver, however, stands out from the crowd. When he left his job as deputy chief of staff to join Washington's army of lobbyists and public relations specialists, he was the recipient of a special and symbolic gesture: The Reagans allowed him to keep his White House pass.
"The president has been very kind and allowed me to keep my pass," Deaver said in a recent interview. "The only time I've used the pass is if I go see the Reagans privately or to go play tennis" on the White House courts, he said.
The pass -- the only one to be issued to a departing White House aide -- symbolizes Deaver's exceptional, if tenuous, status in the intensely competitive world of Washington influence-peddling, where corporations and foreign governments are willing to pay as much as $300,000 a year or more for what appears to be power and access.
Deaver's client list includes CBS, TWA, the government of Canada, Phillip Morris, a coalition of Caribbean sugar-producing countries and Puerto Rico. He is expected to sign up soon an arm of the government of South Korea, and he is in negotiations with the government of China, according to sources.
"I just don't think I can talk about my clients," Deaver said, saying only that he has signed up 11. "Like I don't talk about my clients, I don't talk about my fees. It's an annual retainer."
Deaver, according to reliable sources, is asking clients to commit to a minimum annual retainer of $300,000, although he is by no means getting that much from all 11. Of four clients that could be identified through required public disclosures or other sources, only one, a group of Caribbean countries seeking to lower American sugar quotas, is paying the top dollar figure; the rest are paying from $105,000 to $250,000, according to public documents and background interviews.
While Deaver is reluctant to discuss most clients, he described strategies he has developed to help Puerto Rico defend a special federal tax break for corporations doing business on the island.
Deaver said he told his client he would not take on the issue unless "we never talked about it as a tax issue, only as a question of foreign policy." In return for retention of the favorable tax provision, 28 U.S. companies have agreed to build "twin plants" in other Caribbean counties, a step Deaver said would function to support the administration's Caribbean Basin Initiative, encourage capitalist development and increase employment.
"By doing that, we got the Department of State, AID Agency for International Development and the National Security Council to be strongly supportive. You can't go head-on with Treasury, because you'll go head-on until you're dead on the tax issue."
Just as Deaver's ties are key elements of his appeal to prospective clients, he has been the beneficiary of a growing belief in the corporate community that hostile takeover fights are not just marketplace struggles but contests subject to political influence.
"More and more companies are recognizing that Washington influence, and not just at the SEC the Securities and Exchange Commission , can be vital," another well-connected lobbyist said. "If you can get someone at Treasury to raise questions about the economic implications, someone at Justice to mention antitrust, even in an off-hand kind of way, or a congressman to call for hearings, you can slow the process down, or speed it up, depending. So these companies are looking more and more for help from political firms down here."
Deaver is not the only political lobbyist who has been hired by takeover candidates such as TWA and CBS. The firm of Black, Manafort & Stone has attracted similar business, as has National Strategies, a Democratic outfit.
One of Deaver's clients, who asked not be be identified, said: "When you're a company near the top of the Fortune 500 in the middle of a takeover battle, paying a couple of hundred thousand dollars to get someone who can call the secretary of the Treasury is just a drop in the bucket."
For the son of a Shell Oil distributor in Bakersfield, Calif., creation of Michael K. Deaver & Associates represents a gamble on shooting to the top in one of the nastiest, most competitive terrains in America.
Deaver, a political operative who rarely exibited interest in the mundane substance of legislation or policy, is now under pressure to perform in an arena of backroom negotiation over the minute details of tax legislation and administrative regulation.
This arena does not easily lend itself to his substantial talents -- even some of his critics would say genius -- as a driving force shaping the public essence of Ronald and Nancy Reagan, both in the presidency and on the campaign trail.
"You would never find Mike in the fight over the number of MX missiles or OSHA Occupational Safety and Health Administration regulation," said a friend and associate. Instead, Deaver excelled in the manipulation of public images, in the calculated use of individual heroes and historic backdrops to communicate a political message and in the use of the power of the presidency to change the terms of debate on a politically dangerous issue. (He did not succeed on every outing, however; the public relations fiasco known as Bitburg -- Reagan's visit to a German cemetery containing the graves of Nazi storm troopers -- was largely Deaver's responsibility.)
"He was very good at knowing the soul of Ronald Reagan," said a political operative who worked with Deaver. But, in an assessment shared by a number of persons interviewed, he added: "I don't know if that is a transferable skill . . . . "
But Lee Atwater, deputy manager of the Reagan-Bush '84 campaign, disagrees. "I think the guy has a true gift in public relations, and that certainly ought to be transferable anywhere," he said.
By his own description, Deaver's intention is to set up "a small organization that would take on a limited number of clients on an annual retainer that would not be involved in the putting out of fires, but rather involved in stategic planning . . . . " He added, "I hope people hire you for your general knowledge and ability and experience, and not just because of your access although right now it's probably a mixture of both."
While access to power is central to Deaver's appeal, background interviews with clients show, one company has hired him for another reason.
The international arm of Phillip Morris has contracted with Deaver to represent the firm not in Washington, but in Taiwan, South Korea and Japan, each of which has an extremely lucrative cigarette market with high protective trade barriers preventing entry by American producers.
"Deaver has the Reagan imprimatur," a source at Phillip Morris said. When he goes to see officials of an Asian country, "they know that he worked at the White House and remains a deep, personal friend of the Reagans." The White House connection, he said, is expected to add a different dimension to the corporation's Asian negotiations for a larger market share.
Unlike many lobbying firms, Deaver's is owned totally by him. He has no partners. He has purposefully decided to maintain a very low overhead. He has a staff of eight, including three professionals -- Doral Cooper, formerly with the office of the U.S. trade representative, William F. Sittman and Pamela G. Bailey, both former White House aides -- on salary.
The overwhelming importance to clients of having Deaver himself work on projects is reflected in a provision of the contract with the 10-member Caribbean sugar-producing countries that provides that "if Michael K. Deaver should cease to be actively engaged in the business of Michael K. Deaver Associates, whether by death, incapacity, assumption of public office or otherwise, the client may, by written notice to Associates, terminate this agreement."