Giuliani's business ties create challenge-clients secret

Rudy Giuliani adds war/disaster profiteer Joe Allbaugh to campaign staff
The former head of FEMA who gave America "Brownie" and helped disembody the agency will be senior advisor on homeland security issues

On October 30, Joseph Allbaugh was named Senior Advisor to Rudy Giuliani's presidential campaign. According to a Giuliani campaign press release, Allbaugh "will advise the campaign on general strategy and homeland security."

"Rudy Giuliani is the only candidate who will keep America on offense in the Terrorists' War on Us," the press release quoted Allbaugh as saying. "The leadership he showed after 9/11 was an inspiration not only to New Yorkers but to the country. He knows what it takes to keep America safe, and as President, he will ensure that our country never goes back on defense in this war."

Giuliani said that the two of them had "worked closely together in the aftermath of 9/11 to ensure that everything possible was being done to help victims and their families. He has significant experience in emergency management and I will look to him for sound advice and expertise."

The Politico reported that "The endorsement is valuable ... because it gives the former New York mayor additional entrée to the Bush-Cheney organization. Allbaugh was one-third of the 'Iron Triangle' of Allbaugh, Karl Rove and Karen Hughes, the powers-that-be in the president's original Austin-based presidential campaign."

Both Giuliani and Allbaugh are disaster profiteers.

"Giuliani himself has parlayed his own fame in connection with 9/11 into lucrative consulting deals with his own private security firm," Sheldon Rampton, Research director with the Center for Media and Democracy told Media Transparency in an e-mail exchange.

In addition, media reports have pegged his earnings from speeches about the threat of terrorism at more than $10 million.

In May of this year the Washington Post reported that over a five year period starting in early 2002 Giuliani Partners (website) "earned more than $100 million, according to a knowledgeable source, who spoke on the condition of anonymity because the firm's financial information is private. And that success helped transform ... [him] from a moderately well-off public servant into a globe-trotting consultant whose net worth is estimated to be in the tens of millions of dollars."

The Washington Post pointed out that Giuliani chose as his partners longtime associates, including a former police commissioner later convicted of corruption, a former FBI executive who admitted taking artifacts from Ground Zero and a former Roman Catholic priest accused of covering up sexual abuse in the church."

"Given that Giuliani's private company has a history of hiring people with questionable character and serving shady clients, it's not surprising that he would hire a profiteer like Allbaugh to advise him on homeland security," Rampton noted.

"Allbaugh has shown proficiency at private deal-making, but there's no evidence that he knows how to serve the public good. There's certainly no evidence that his time at FEMA prepared the agency to respond effectively to subsequent disasters like Hurricane Katrina, although Allbaugh and his clients evidently made quite a bit of money from it."

Over the past few years, Allbaugh's enterprises have raked in money from both the war in Iraq and Hurricane Katrina.

The last we heard about Allbaugh he was heading down to the post-Hurricane Katrina Gulf Coast. However, he wasn't going to help the victims of the hurricane - he was there to drum up business for his corporate clients.

Allbaugh, George W. Bush's longtime Texas pal and the campaign manager of his 2000 presidential campaign, is probably best known for being the man who gave the American people "Brownie" -- Michael Brown, the former head of the International Arabian Horse Association (IAHA) -- a breeders' and horse-show organization based in Colorado -- who Allbaugh brought into Federal Emergency Management Agency (FEMA), and who later succeeded him as head of the agency. Brown's disastrous tenure at FEMA is only one of the FEMA-wrecking projects on Allbaugh's resume.

After his appointment as FEMA chief, Allbaugh, who had no previous experience in emergency management, took a Rumsfeldian approach to the agency, setting about to make it leaner and meaner, all the while putting privatization front and center.

In September 2004, Jon Elliston reported in the Independent Weekly that Allbaugh had ominously testified before Congress in May 2001 that "Many are concerned that federal disaster assistance may have evolved into both an oversized entitlement program and a disincentive to effective state and local risk management. Expectations of when the federal government should be involved and the degree of involvement may have ballooned beyond what is an appropriate level."

According to Elliston's report titled "A Disaster Waiting to Happen," "As a result [of Allbaugh's efforts], says a disaster program administrator who insists on anonymity, 'We have to compete for our jobs--we have to prove that we can do it cheaper than a contractor.' And when it comes to handling disasters, the FEMA employee stresses, cheaper is not necessarily better, and the new outsourcing requirements sometimes slow the agency's operations."

William Waugh, a disaster expert at Georgia State University who has written training programs for FEMA, told Elliston that the "consultant culture" was not a positive development. "It's part of a widespread problem of government contracting out capabilities," Waugh said. "Pretty soon governments can't do things because they've given up those capabilities to the private sector. And private corporations don't necessarily maintain those capabilities."

By the time Allbaugh handed in his resignation in December 2002, FEMA was well on its way to becoming part of the newly created gargantuan Department of Homeland Security (DHS). Elliston reported that "Analysts in and out of government warned against subsuming the emergency agency's vital functions in a new super-department. 'There are concerns of FEMA losing its identity as an agency that is quick to respond to all hazards and disasters,' the agency's inspector general noted in a memo to Allbaugh. Congress' Government Accountability Office judged the merger to be a 'high-risk' endeavor for FEMA, and the Brookings Institution, a leading Washington centrist think-tank, cautioned in a report that such a move could hobble the agency's natural disaster programs. 'While a merged FEMA might become highly adept at preparing for and responding to terrorism, it would likely become less effective in performing its current mission in case of natural disasters as time, effort and attention are inevitably diverted to other tasks within the larger organization.'"

Albaugh's college friend Michael Brown, who served as FEMA's general counsel, was named head of the agency which had become part of the DHS's Emergency and Response Directorate. "When the reorganization took effect on March 1, 2003," Elliston reported, "Brown assured skeptics that under the new arrangement, the country would be served by 'FEMA on steroids' -- a faster, more effective disaster agency."

A 2004 article in the Journal of Homeland Security and Emergency Management pointed out that "Allbaugh brought about several internal, though questionably effective, reorganizations of FEMA. The Bush-Allbaugh FEMA diminished the Clinton administration's organizational emphasis on disaster mitigation."

Elliston noted that after Allbaugh left the agency in March 2003, he was expected to again play a major role in the Bush-Cheney re-election campaign in 2004. Instead "he set about creating a string of lobbying firms, including New Bridge Strategies [where he became Chairman and Director], which helps U.S. companies win reconstruction contracts in Iraq. [In the summer of 2004] he started [Blackwell Fairbanks, LLC], another consulting company with Andrew Lundquist, the former director of Vice President Dick Cheney's secretive energy policy task force. The firm's first client was Lockheed Martin, one of the country's largest defense contractors."

Early on, the website of New Bridge Strategies maintained that "The opportunities evolving in Iraq today are of such an unprecedented nature and scope that no other existing firm has the necessary skills and experience to be effective both in Washington, D.C., and on the ground in Iraq."

Two plus years later, in early September 2005, shortly after Hurricane Katrina devastated the Gulf Coast and New Orleans, Joe Allbaugh's boots hit the ground in Louisiana; this time as a private citizen. No longer representing the government, Allbaugh was there for one thing and one thing only: to drum up business for corporate clients of The Allbaugh Company, LLC (website) -- a firm he co-founded with his wife, Diane -- which advises companies how to get in on lucrative disaster relief projects.

Based in Washington, D.C. with offices in Austin, Texas and Oklahoma City, Oklahoma, The Allbaugh Company's website points out that it "is uniquely able to create new opportunities and expand competitive advantage."

In a report dated September 1, 2005 and titled "Joe Allbaugh, Disaster Pimp," Slate's Timothy Noah pointed out that Allbaugh is "a lobbyist and a consultant who's been cashing in on his close ties to President Bush since 2003."

"Now." Noah wrote, "Allbaugh is the man to see if you want a contract in Iraq, or a piece of the action on homeland security, or, apparently, a shot at rebuilding New Orleans. 'I don't buy the 'revolving door' argument," Allbaugh told the National Journal [in 2004.] 'This is America. We all have a right to make a living.'"

"If Joe Allbaugh's advice is the basis for Giulani's approach to national security, I think we can expect that a Giuliani presidency would see further erosion of the government's ability to actually respond to disasters, coupled with more profiteering and ineffectual posturing when disasters happen," the Center for Media and Democracy's Sheldon Rampton pointed out.
http://www.mediatransparency.org/story.php?storyID=219

Mainstream media ignoring Rudy's business ties
Keith Olbermann is the only TV cable commentator reporting this scandal.
---BBB

Giuliani's Business Ties To "Terror Sheik" From Qatar
by Joe Conason, Salon
December 1, 2007

The familiar herd instinct of the mainstream media is powerful, unswerving and often plain wrong. While editors and producers are supposed to make judgments based on a combination of news value and public interest, their choices often seem to be based on nothing more elevated than an allergy to complexity or an affinity for smut. And occasionally, as in the case of Rudolph Giuliani during this past week, the sudden appearance of not one but two juicy investigations overwhelms the system's capacity to absorb and regurgitate.

But when the nation's news executives decided which of two highly embarrassing Giuliani stories to feature, nearly all of them made the wrong choice. While they lavished enormous attention upon a Politico story dealing with adultery and bureaucracy, they should be devoting at least as much time to yet another in the long series of Wayne Barrett scoops in the Village Voice, because this one involves business and terrorism.

If broadcast minutes is an accurate measure, the sexier tale was Ben Smith's investigative feature in the Politico, which used city documents released under New York's Freedom of Information Law to trace the former mayor's early trysts from 1999 to 2001 with his then mistress and current wife, Judith Nathan Giuliani. As usual, the sex angle had to be approached via worthier concerns, such as whether the time of the police officers who guarded Giuliani during his trips to see Nathan on Long Island was billed to the correct city agency...

...Meanwhile, Barrett's latest article -- probing the lucrative relationship between Giuliani's security firm and the emirate of Qatar -- prompts questions that "America's Mayor" might have found truly hard to answer. With Qatar's troubling record as both an American ally and a longtime haven for al-Qaida terrorists, including 9/11 mastermind Khalid Sheikh Mohammed, or "KSM," the little Gulf sheikdom is a curious client indeed for Giuliani Security and Safety, a division of Giuliani Partners.

Read the full article here.
http://www.salon.com/opinion/conason/2007/11/30/giuliani_qatar/?source=whitelist

I linked to the Barrett article in the McCain etc thread.

I continue to recommend a read of the Barrett book on Giuliani - get it from your local library. He's got a bias, but he's also got good sources.

Isikof Had Rudy's Terror Money Story Before Voice's Barrett
Newsweek's Isikoff: I Had Story on Rudy's Terror Money Before Voice's Barrett
by Zachary Roth
December 3, 2007

This week's issue of Newsweek contains a story by DC investigative reporter Michael Isikoff on Rudy Giuliani's ties to terror-financing outfits in the Middle East. The piece treads much of the same ground as a Village Voice story by Wayne Barrett published last week. Today, in a blog post that drew attention to the two pieces under the heading "Giving Credit Where It's Due," The Voice appeared to argue that its reporting should have been credited by Newsweek.

Media Mob asked Mr. Isikoff about the decision not to credit The Voice. Here's his emailed response:

Fair question. The truth is I was aware of, and done reporting on all this, before the Village Voice piece and even before the earlier Wall Street Journal piece by Mary Jacoby. I wasn't aware of the Singapore connection until the Chicago Tribune disclosed it, which is why I credited them.

No intention to slight Wayne Barrett who was generously credited in our cover story on Rudy last week.

Nathan forced police to chauffeur her friends & family
Dec 1, 2007
by Andrew Kirtzman
NEW YORK (CBS)

The Rudy Giuliani campaign has denied allegations that Judith Nathan, Giuliani's one-time mistress and current wife, abused police protection during his tenure as mayor.

The campaign issued a statement, saying: "That assertion is absolutely ridiculous. The security detail was only used to protect the personal safety of Mrs. Giuliani."

At the dawn of 2001, Nathan was Giuliani's good friend and was receiving a blanket of police protection. It was an unusual circumstance, as his wife, first lady Donna Hanover, was still living at Gracie Mansion with their children.

But the mayor was unapologetic, citing security concerns.

"If you had any concern for people's safety, you'd have the decency to leave it alone. You should be ashamed of yourselves," the former mayor said back in 2001.

Six years later, presidential candidate Giuliani is facing questions about that security. A source involved with the mayor's operations at the time tells CBS 2 HD that Nathan took flagrant advantage of that police car and driver.

The source says Nathan forced police to chauffeur her friends and family around the city -- even when she wasn't in the car.

That set off alarms with ethics watchdogs.

"The rules are clear, you can't use city resources for private reasons," said Gene Russianoff of the New York Public Interest Research Group. "And if you're using a city car, a police driven car to chauffeur around relatives, unless they're explicitly protected and their deemed to be the subject of potential security threats, it's just wrong."

Nathan's detail was approved by the NYPD after a stranger made an unspecified threat to her. The commissioner at the time was Bernard Kerik, who was recently indicted on tax fraud charges in an unrelated matter.

"It wasn't about her being the mayor's girlfriend," Kerik said. "The person spoke to her by name and made comments to her."

On Friday, Giuliani avoided reporters' questions about the security for Nathan back then. He told reporters off camera "we've explained it."

Giuliani's press secretary, Maria Comella, angrily denounced the use of an unnamed source in this story.

But she did not deny the assertion that Nathan used her police detail to ferry around friends and family.

And she repeated what Giuliani has said about reports questioning how his security detail was financed, saying, "This is nothing more than partisan politics aimed at the Republican front-runner."

Giuliani No Longer Heads Consultant
Rudy must really be scared of this scandal revealing his ethics in the pursuit of big money. How stupid could he be if he thought he could hide it? With Rudy's sex escapdes and his money drive, Giuliani is toast!---BBB

Giuliani No Longer Heads Consultant
December 4, 2007

DES MOINES, Iowa ?- Republican presidential hopeful Rudy Giuliani has stepped down as head of his consulting firm, Giuliani Partners, after months of refusing to disclose the firm's clients or the role he played.

Giuliani has been replaced as chairman by Peter Powers, a longtime friend and former aide, Giuliani Partners spokeswoman Sunny Mindel said Tuesday. The change was reported by The Wall Street Journal earlier Tuesday, and Mindel noted news stories over recent months saying Giuliani was handing control to Powers.

The firm, started by the former New York mayor when he left City Hall, earned Giuliani around $4 million last year. The spokeswoman said he would retain his equity stake in the company.

While insisting the firm's client list was confidential, Giuliani has noted the media have named a number of his clients.

Published reports have identified one client as the Persian Gulf country of Qatar, which was accused of sheltering suspected Sept. 11 mastermind Khalid Sheikh Mohammed, although today it is a U.S. ally.

Also identified as Giuliani clients are airlines, energy companies and communications businesses; one client, Purdue Pharma L.P., makes the controversial painkiller OxyContin. His law firm, Houston-based Bracewell & Giuliani, has represented an American subsidiary of an oil company controlled by Hugo Chavez, the Venezuelan president.

Giuliani aides said he has not been involved in day-to-day operations of the firm since last spring. Yet he never formally announced he had relinquished his titles, despite being asked repeatedly about it. The firm's Web site listed him as chairman as recently as last month.

He has used the office in Times Square to conduct campaign activity, such as giving interviews; aides said Giuliani's campaign pays for office and conference space for meetings.

Asked in a Nov. 5 interview with The Associated Press to outline his role in the firm or list its clients, Giuliani laughed, then grew agitated:

"Everything I did at Giuliani Partners was totally legal, totally ethical," he said. "There's nothing for me to explain about. We acted honorably, decently."

He added: "There are some things that a law firm and security firm do that are confidential. You can't release it because the client asks for confidentiality. We do sensitive work. So maybe there are some exceptions like that."

Giuliani said it's unfair to ask for details about his consulting firm as well as his law firm, Bracewell & Giuliani.

"What's the standard? Giuliani Partners and Bracewell Giuliani are firms. Nobody has ever accused them of doing anything wrong. So all of the sudden, you are going to start jumping to conclusions about them when there are absolutely no suggestion they have done anything wrong?"

Giuliani had income of $4.1 million from his share in the consulting business and $1.2 million from Bracewell between January 2006 and February 2007, he reported in financial disclosure forms filed in May.

Critics accuse him of hiding his business dealings because he won't release a client list or describe his work at the firm.

"Given that he still has a financial stake in Giuliani Partners and it's managed by his childhood friend, Rudy is not going to get away with covering up his ties to shady clients like the government of Qatar, the pharmaceutical industry, and Hugo Chavez," Democratic National Committee spokesman Dag Vega said.

Rudy: All Business
Thursday, Dec. 13, 2007
Rudy: All Business
By Michael Weisskopf and Massimo Calabresi
Time Magazine

Not long after he stepped down as mayor of New York City, Rudy Giuliani received an intriguing offer. A group of officials from a Florida company called Seisint Inc. asked him to promote a powerful new database technology capable of tracking potential terrorists and other criminals. Their timing was perfect. Giuliani had just opened Giuliani Partners (GP), a consulting shop that planned to specialize in helping companies like Seisint grow. "Nobody knew us; everybody knew him," says Michael Brauser, a major shareholder who negotiated the December 2002 contract between GP and the Boca Raton-based firm. "It was an unbelievable fit."

For Giuliani's new company, it was a remarkably profitable fit too. GP pulled in more than $30 million for just one year's work on Seisint's behalf, company records show. Big paydays have not been unusual for GP, which in just five years has reaped tens of millions of dollars from clients at home and abroad, a business success story closely linked to Giuliani's fame as a hero of 9/11. That same legacy has propelled him to the top tier of Republican presidential candidates.

But now Giuliani the candidate is facing a growing number of questions about the clients, earnings and practices of Giuliani the businessman. Although much of his work has been for blue-chip American corporations, it has been widely reported that GP has also represented more controversial clients, including the maker of the prescription drug OxyContin and the government of Qatar. TIME has also learned that Bracewell & Giuliani, a Houston-based legal and lobbying firm he joined as a name partner in 2005, represents Saudi Aramco, the Saudi national oil company. Thus far, Giuliani has refused to divulge a client list or many details of his work for either GP or Bracewell & Giuliani, and he has maintained his ownership stake in both companies as he continues his run for the White House. Ed Rogers, White House political director under the first President Bush, says the Giuliani campaign has to do better at handling his business situation "to keep it from becoming a real issue and something that may drive votes."

The Seisint deal, details of which TIME pieced together from interviews and corporate documents, seemed like a good match for Giuliani's company. Seisint's founder, Hank Asher, was regarded as a database wizard who used supercomputers to store billions of pieces of information from public records, which, he claimed, were able to spit out the names of some of the 9/11 hijackers before they were publicly identified. The firm's potential seemed endless to GP, and it signed on for what Seisint saw as a heavily discounted fee of $2 million a year, plus a percentage of revenue from company sales to government and corporate buyers.

In the first year, GP earned $6.5 million, Seisint records show, in part for what Brauser and Seisint's in-house lobbyist, Dan Latham, say were commissions for state and federal contracts. Giuliani "came through," says Brauser. "The doors were wide open. It was almost a flood of business opportunities." Latham says GP set up meetings in 2003 at the Department of Homeland Security at which Seisint executives pushed a data-mining program called the Multistate Anti-Terrorism Information Exchange, or MATRIX. The program looked like a promising law-enforcement tool that states could use in partnership with Seisint. The Federal Government spent $12 million to run the program, and eventually 13 states signed up to participate in it.

But the Seisint deal wasn't as perfect as it seemed. One problem: the payment of percentages or commissions to "solicit or secure" government contracts is prohibited by federal law and laws of some states. Tom Susman, ethics chairman of the American League of Lobbyists, says the bar on commissions is intended to eliminate incentives for middlemen to bend the rules to land a contract. A GP official who refused to be named insists that the firm never received "commissions" from Seisint ?- despite what Brauser and Latham remember and despite the fact that payments to GP are labeled "commissions" in both the minutes of a Seisint board meeting and a key financial statement. Instead, says the official, GP earned "special bonuses" based on the achievement of corporate "milestones." Another problem: Seisint CEO Asher had a shady past. After the statute of limitations made his crimes unprosecutable, he admitted to having been a cocaine smuggler in the 1980s. He stepped down from Seisint's board in August 2003. Giuliani told Vanity Fair in 2004 that Asher's "mistakes are way behind him."

Meanwhile, Seisint's premier product ?- MATRIX ?- had proved controversial. The databases it searched contained personal histories of millions of Americans, their relatives, past addresses, property records and credit ratings. Civil-liberties groups said MATRIX would create detailed data profiles of innocent Americans. Georgia and Utah, which had signed up for MATRIX, launched investigations into the privacy concerns raised by the program's vast data files.

Seisint wasn't the only GP client to receive government scrutiny. In 2002, Giuliani's firm agreed to represent Purdue Pharma, the maker of the painkiller OxyContin, after the Drug Enforcement Administration began looking into thefts of the highly addictive drug from company plants. Purdue Pharma ended up agreeing to pay a $2 million fine for lax security at some of its plants. Sunny Mindel, spokeswoman for GP, says the firm helped Purdue balance the need to produce a "lifesaving medicine ... with the need to make sure that this vital medicine did not get diverted by criminals for criminal use."

Giuliani's international clients have also attracted controversy. Last summer the firm dropped Citgo, the oil company that is majority-owned by a company nominally controlled by Venezuelan strongman Hugo Chávez, after news reports uncovered the relationship. (Maria Comella, a Giuliani campaign spokeswoman, says the candidate "continues to provide general guidance to the management of the firm," and adds, "But he doesn't participate in any client matters or in the day-to-day operation.") The security firm within GP has provided advice and training in counterterrorism to the government of Qatar, an emirate on the Persian Gulf, though Qatar's Interior Minister, Sheik Abdullah bin Khalid al-Thani, is a controversial figure whom several former U.S. officials have suspected of protecting major al-Qaeda suspects. The head of GP's security arm, Pat D'Amuro, says the firm is helping protect American service members and private citizens in Qatar. Of al-Thani, he says, "We've never met him; we've never dealt with him. Our contract is not with him. He's not involved at all."

In most cases, it's impossible to say how much a specific contract has been worth to GP or Bracewell & Giuliani. That's one reason the Seisint case is interesting. By December 2003, Seisint was positioning itself to go public or be bought out. GP, according to Seisint's financial statements, agreed to waive $2.2 million of accrued commissions from its total bill of $6.5 million. In return, the firm received $5.5 million in cash and a much reduced exercise price on 1.7 million stock options that had been granted in the contract.

But however promising MATRIX's future appeared, it was unable to escape the concerns of privacy watchdogs. In early 2004, a commission appointed by Utah's Governor recommended dropping MATRIX over privacy concerns. One commission member, Elizabeth Dunning, said the program's accumulation of personal data on innocent Americans was "shocking" and "outrageous." Shortly thereafter, however, Seisint was sold to the British-Dutch firm Reed Elsevier. The sale netted GP $24 million, records show, with half of that made possible by the lower stock-option price. "A lot of people made a lot of money on the sale of Seisint," said Latham. "[Giuliani] was one of them." Did law enforcement benefit too? Hard to say. By mid-2004, fewer than half the states that had originally signed up for MATRIX remained in the program, and by the end of the year the rest had quit. Less than two years after Giuliani signed on to market MATRIX, the program was dead.

Find this article at:
http://www.time.com/time/nation/article/0,8599,1694093,00.html