The controversy over the lobbying activities of former deputy White House chief of staff Michael K. Deaver has become an issue in his negotiations to sell his firm here to the British advertising giant Saatchi and Saatchi, and informed sources in London said yesterday the deal was in trouble.
"There were conversations; there never was a deal," said one source in London familiar with the talks. The conversations are "not being aggressively pursued at the moment," the source told Karen DeYoung of The Washington Post foreign service.
Deaver said in a telephone interview yesterday that he met in London with officials of Saatchi and Saatchi this week and that talks are "still in progress." He said lawyers and accountants are going over terms of the agreement.
A source here familiar with his meeting said the Saatchi executives are "very concerned" about recent publicity surrounding Deaver's activities, but insisted "there has been no diminution in their interest" in the deal.
Deaver has hoped to sell his lobbying and communications firm here, Michael K. Deaver & Associates, to Saatchi and Saatchi for $18 million, sources said previously. Deaver, who opened his firm less than a year ago, would receive payments in stages according to a schedule linked to his firm's performance over several years, the sources said.
Sources in both Washington and London said executives at Saatchi are concerned about the public attention in the United States recently to Deaver's lobbying and about published reports questioning whether he violated lobbying rules. Deaver has denied any wrongdoing.
The General Accounting Office is investigating Deaver's handling of the acid rain issue while in the White House and his subsequent representation as a lobbyist of the Canadian government on this and other matters.
Questions were also raised recently about Deaver's meeting with Office of Management and Budget Director James C. Miller III to discuss efforts by another client, Rockwell International, to sell the government more B1 bombers. Federal law bars senior government employes from lobbying their former agencies on certain matters for at least one year.
Two weeks ago, a source close to Deaver said an agreement with Saatchi and Saatchi might be concluded in a few weeks. Yesterday, this source estimated the deal might be finished in 30 days and was delayed somewhat because Saatchi was involved with a public stock offering.
But the London source close to the negotiations indicated that Saatchi and Saatchi is not now eager to acquire Deaver. The source said a reason for the delay was the negative publicity over Deaver's activities. The source said Saatchi and Saatchi "took note of the publicity.
Obviously, everything gets taken into account on a deal like this."
Founded in 1970 by two English brothers, Maurice and Charles, Saatchi is the largest advertising agency in Europe and the fourth-largest in the world. According to the Financial Times of London, the brothers are exceedingly private, "surrounding themselves with a cordon of silence." Others said they are very sensitive to the kind of public glare in which Deaver has recently been operating; Deaver recently posed for Time magazine's cover photograph for a story about "peddling influence" in Washington.
Saatchi in the last 15 months has made seven major agency acquisitions in the United States.