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Giuliani speaking fees draw scrutiny(Chicago Tribune (KRT) Via Thomson Dialog NewsEdge) WASHINGTON _ As Rudolph Giuliani prepares to run for the nation's highest public office based on his image as the heroic take-charge mayor of New York in the aftermath of the Sept. 11 terrorist attacks, it may be his highly lucrative time in the private sector that invites the most scrutiny. Since he left office, Giuliani has leveraged his image as "America's mayor" to his decided financial advantage and in ways that belie his man-of-the-people persona. He commands $100,000 for a speech, not including expenses, which his star-struck clients are happily willing to pay. In one speech last year at Oklahoma State University, Giuliani requested and received travel on a private Gulfstream jet that cost the school $47,000 to operate. His visit essentially wiped out the student speakers annual fund. Like other high-priced speakers in the private sector, Giuliani routinely travels in style. Besides the Gulfstream, which is a standard perk on the big-time speakers' circuit, his contract with Oklahoma State called for up to five hotel rooms for his entourage, including his own two-bedroom suite with a preferred balcony view and king-size bed, in the event of an overnight stay. But he did not stay overnight. The contract also required a sedan and an SUV, restrictions on news coverage and control over whom Giuliani would meet, how he would be photographed and what questions he might be asked. In another speech, at a charity fundraiser in South Carolina in February 2005, Giuliani also commanded a $100,000 fee, though he donated $20,000 of it to the event. After he was criticized by a local official, he ultimately decided to donate an additional $60,000. Giuliani reportedly received more than $200,000 for another speech, given to benefit an Australian research hospital in 2003. When it was disclosed two years later that the hospital netted only $15,000, the revelation sparked widespread criticism in Australia. Months later, after the New York Observer picked up the story, Giuliani threw his own fundraiser for the hospital. Beyond his speaking engagements, Giuliani, 62, has built a network of businesses that has earned millions of dollars in fees. The companies have counseled businesses from blue-chip multi-national corporations to start-up firms with penny stocks, providing advice on everything from bankruptcies to corporate security. A Giuliani spokeswoman likened him to many other former public officials who have made well-paid forays into the speaking circuit or the business world. "The former mayor has been honored to speak all over the United States, as has been the case with former President Bill Clinton, Colin Powell and any number of public figures," she said. But unlike Clinton and Powell, Giuliani is trying to climb back into politics after his turn as a businessman on the big-time speaking circuit, with hundreds of personal appearances, business deals, court cases and investments potentially soon to come under review by the media and adversaries. Giuliani's investment bank, Giuliani Capital Advisors, has reaped seven-figure fees for providing advice in bankruptcy cases, but it has seen payment requests trimmed by courts following complaints that the firm was seeking excessive compensation. Giuliani also has collected more than $1 million in consulting fees from firms tied to criminal or regulatory missteps. His spokeswoman side-stepped a question about whether Giuliani would fully disclose his clients if he formally enters the race. "If and when Rudy Giuliani runs, he'll run on his record and on how he will move the country forward," she said, speaking on behalf of the ex-mayor on condition she not be quoted by name. In the modern presidential campaign, candidates are subjected to a microscopic examination of their personal, professional and public behavior. In Giuliani's case, there will be plenty of attention, not only because of his three marriages but also because on some core Republican issues, notably abortion and gay rights, he is far to the left of the conservative GOP activists who dominate the nomination process. At the same time, however, Giuliani enjoys a huge reserve of good feeling and is routinely cited as one of the top two candidates for the Republican nomination in national opinion polls, along with Sen. John McCain of Arizona. A poll this week gave Giuliani a favorability rating of 70 percent in New Hampshire, the highest of any Republican. That goodwill has been engendered with relatively little examination of Giuliani's activities since leaving New York's mayor's office after a highly controversial tenure capped by a widely praised performance in the period directly after the Sept. 11 attacks in 2001. Neither Giuliani nor his representative, the Washington Speakers Bureau, would discuss his speaking fees or his schedule. But in his 2002 divorce filing, Giuliani estimated his annual income from public speaking at $8 million. The divorce filing also shows that Giuliani was to receive a $2.7 million advance to write his best-selling book, "Leadership," and a second book. (EDITORS: BEGIN OPTIONAL TRIM) Giuliani's stops included a corporate forum Nov. 17, 2004, at Chicago's McCormick Place funded in part by Tribune Co., corporate parent of the Chicago Tribune. Details of his compensation at this event were not known. His status as a possible presidential candidate helped persuade Eric Money, the student head of the Oklahoma State speaker's board, to shell out $100,000 for a Giuliani speech last March 24. The money represented the lion's share of the roughly $120,000 in activity fees raised annually by a 25-cent surcharge on each Oklahoma State University student's credit hours, though the university carried a surplus of funds from the previous year. Money said he wanted a big name so that students would think, "OK, I paid this much per credit hour. ... I got to see a (presidential) contender. It doesn't seem that outrageous." Giuliani drew a crowd variously estimated at 3,000 or 4,000 people. But a columnist for the Daily O'Collegian student newspaper wrote afterward that Giuliani's speech on six keys to leadership leaned heavily on his book, "Leadership," and that at $6 per new paperback copy, OSU could have supplied everyone at the event with the volume for $76,000 less than Giuliani charged for his appearance. Giuliani's spokeswoman declined to discuss his travel arrangements or his fees, saying only, "Rudy was very honored that the students wanted him to speak and put in a request for him to speak." (END OPTIONAL TRIM) Like many luminaries on the speaking circuit, Giuliani maintains tight control of his image by limiting press access, the polar opposite of the kind of unscripted campaigning that is expected in states like Iowa and New Hampshire. His contract with OSU, negotiated through the speakers bureau and obtained by the Chicago Tribune, stipulated that the university "shall not allow general or major mass media press coverage" except for local and student newspapers. It also prohibited any visual or audio recording. An addendum to the contract stated that "Mr. Giuliani prefers not to participate in candid photo opportunities, but he is happy to participate in a receiving line photo opportunity. ... (Pictures taken) between posed photos are not permitted." For trade shows, the contract said, "client shall not permit any general press or media coverage ... unless specifically authorized by Mr. Giuliani." For events at which the public is admitted, "Mr. Giuliani will consider some media ops to include a 15-minute press op (which may or may not include Q & A as determined by Mr. Giuliani)." A significant number of Giuliani's speaking engagements benefit charities, such as the event hosted by the South Carolina Hospital Association in Charleston to raise money for assistance to victims of the December 2004 South Asia tsunami. He even wrote a $20,000 check to the relief effort, and he departed to a standing ovation. Weeks later, it was disclosed that Giuliani had charged $100,000 for his speech, sparking criticism from state Rep. Tracy Edge, a Republican. "Here's a guy who gets $100,000 on any given day," Edge said in a recent telephone interview. "I thought, you know, the guy could give up the money for one night." On June 2, 2005, Giuliani sent the hospital association a check for $60,000, according to hospital association spokeswoman Patti Smoake. The disposition of the remaining $20,000 of his fee was unclear. A Giuliani spokeswoman acknowledged that Edge's complaint prompted Giuliani to return the money. "He (Giuliani) was conflicted, there was controversy and he felt that it was the right thing to do," she said. (EDITORS: BEGIN OPTIONAL TRIM) Giuliani made another belated effort to recoup goodwill following a complaint and bad publicity resulting from an appearance to benefit a cancer research hospital in Adelaide, Australia, in August 2003. The event netted The Queen Elizabeth Research Hospital only about $15,000 while Giuliani reportedly was paid more than $200,000 by a promoter sponsoring his speaking tour, according to hospital director Maurice Henderson. When the same promoter in February 2005 negotiated large fees for charity speeches by Cherie Blair, wife of British Prime Minister Tony Blair, Henderson warned that donations raised by Blair's appearances might be eaten up by her fees, as had been the case with the Giuliani-headlined fundraiser. The furor over Giuliani's and Blair's fees led a state lawmaker to file legislation in the South Australia Parliament to require disclosure of how much of the price of a fundraiser ticket actually wound up as a charitable contribution. "I think it's fair to know up front approximately how much is going into the speaker's and promoter's pockets and how much is going to the charity," the legislator, Nick Xenophon, said in an interview. After the fees became public in the U.S., Giuliani arranged to host a dinner in New York that raised $75,000 for the Queen Elizabeth research hospital and mollified its director. "If I were able to, I would most certainly vote for him as president," Henderson said. Giuliani's spokeswoman acknowledged that Henderson's complaint had prompted Giuliani to act. She disputed the amount of the fee cited by Henderson in the Australian press but declined to say what Giuliani was paid. (END OPTIONAL TRIM) Giuliani's fees per speech are modest compared to the money Giuliani Capital Advisors has reaped from bankruptcy proceedings. The firm, which Giuliani recently put up for sale, has been awarded nearly $10 million as consultants in the bankruptcies of Aloha, US Airways and Delta airlines, according to court records. In the Aloha case, Giuliani was awarded $2.5 million, but only after the union representing the airline's 420 flight attendants objected to a last-minute effort by the ex-mayor's company to boost its bonus in the case to $1.5 million from $1 million. Giuliani's company argued that it was entitled to two fees instead of just one, a line of reasoning the union's attorney denounced in a November 2005 filing as "false and ... contrived solely to bestow a wholly undeserved monetary reward upon this firm." Giuliani's firm received $1.5 million in various fees, and the judge in the case permitted an additional $1 million "success fee" while deferring ruling on the request for an additional $500,000. In a statement, Giuliani's company said the additional fee was justified because the firm "performed far more work than originally contemplated in the hiring order." Still, the firm withdrew its request in February 2006 "rather than go through a protracted negotiation and possibly cost the estate more money." (EDITORS: BEGIN OPTIONAL TRIM) In January 2006, Giuliani Capital Advisors requested a flat monthly fee of $100,000, plus hundreds of thousands of dollars in success fees, for its consultant work in the bankruptcy of Musicland, a Minnetonka, Minn., corporation that operated music and video stores. Lawyers for some of Musicland's creditors vigorously objected, declaring in a court filing that "the only thing GCA has done in these cases is to attempt to disrupt the very transactions for which it now seeks compensation." A judge in the case eliminated the success fees, scaled back some of the monthly payments and required Giuliani's company to account for its time instead of receiving a flat amount. According to court filings, Giuliani's firm was awarded $254,000 in fees and expenses for about three months' work in early 2006. In a statement, GCA said the trimmed fees were agreed to in its negotiations with the creditors group that had objected to the higher charges. Giuliani's company suffered a similar setback in the bankruptcy of Premium Papers Holdco LLC, a Hamilton, Ohio, specialty paper company. In March 2006, a judge trimmed GCA's request for $125,000 in monthly fees to $100,000 and eliminated hundreds of thousands of dollars in transaction fees but still eventually approved fees of more than $1 million, according to court records. (END OPTIONAL TRIM) If Giuliani's handsome fees have sometimes been controversial, the clients he has accumulated in his years in the private sector also may invite scrutiny in the coming campaign. Before he was New York mayor, Giuliani was a U.S. attorney who built his reputation by busting junk bond kingpins Ivan Boesky and Michael Milken. But as a private businessman, Giuliani has worked for firms that critics say he might have pursued as a prosecutor. In one of his first private business ventures after leaving office, Giuliani in 2002 advised Merrill Lynch & Co. in settlement negotiations with then-New York Attorney General Eliot Spitzer when Spitzer investigated accusations of conflicts of interest and misleading advice by the firm. Merrill Lynch wound up agreeing to pay a $100 million fine and change some practices, but it did not admit wrongdoing. In August 2004, Giuliani announced a consulting agreement between another of his firms, Giuliani Partners, and Applied DNA Sciences, which markets a technology that embeds genetic material from plants into consumer goods such as DVDs, clothing and pharmaceuticals to thwart counterfeiters. Applied DNA was backed at the time by Richard Langley Jr., who pleaded guilty to conspiracy to commit wire fraud in 1999. A year later, Langley was barred by the Securities and Exchange Commission from participating in penny stock offerings because of his involvement in an alleged stock scam. Giuliani's company ended its relationship with Applied DNA in 2005 after USA Today reported on the technology firm's links with Langley and other regulatory troubles. Giuliani Partners collected $1.25 million in fees, according to an Applied DNA filing with the SEC. In a written statement, Giuliani Partners said it "reviewed the management team that was in place at (Applied DNA) ... and had no interactions with other investors in the company." (EDITORS: BEGIN OPTIONAL TRIM) Giuliani Partners also has advised We the People USA, of Santa Barbara, Calif., a seller of do-it-yourself kits for bankruptcies, divorces and other legal documents. Since late 2003, We the People has been sued by U.S. trustees at least 10 times for alleged deceptive practices and in December 2004 paid $286,000 to settle Federal Trade Commission charges that it hid the lawsuits from potential franchisees. A Giuliani Partners spokesman said the firm ended its relationship with We the People when the California company changed ownership in March 2005. "When we took them on (in September 2003), we did not see any big legal problems," the spokesman said. He declined to say how much Giuliani Partners was paid. (END OPTIONAL TRIM) In his most recent major venture, Giuliani signed on in March 2005 as a name partner in the Houston-based law firm formerly known as Bracewell & Patterson. Long known for its representation of oil companies and other energy interests, Bracewell & Giuliani hired the former mayor of New York to head its newly opened office in that city. Although Giuliani himself is not registered to lobby, his association with the firm indicates his value as rainmaker. Bracewell & Giuliani has seen a sharp increase in its lobbying work in Washington since its new name partner came aboard, according to the U.S. Senate clerk's records. The firm reported income of $6.8 million for lobbying in 2005, compared to $5 million in 2004, the year before Giuliani came aboard, records show. Giuliani typically has not advertised his involvement in Bracewell & Giuliani cases. An exception was his work in February 2006 on behalf of a Spanish bank, Banco Santander, for what the law firm termed an "independent review" of Santander's compliance with state and federal regulations in attempting to buy about 20 percent of Sovereign Bancorp of Philadelphia. The investment was bitterly opposed by a group of Sovereign shareholders but welcomed by Sovereign CEO Jay Sidhu, who wanted to use the infusion of money from Santander to buy another bank. In news reports at the time, dissident shareholder Ralph Whitworth questioned the validity of the Giuliani company's review because it did not include interviews with investors opposed to the deal and because it was paid for by Santander. On March 2, Giuliani & Bracewell weighed in with a report that found Banco Santander in compliance with applicable laws. Regulators approved the Santander investment in late May and the deal was completed June 1. Sovereign CEO Sidhu, meanwhile, resigned under pressure in October, taking with him a $43 million golden parachute. The next month, Giuliani delivered a speech at the Jay S. Sidhu School of Business and Leadership at Wilkes University in Wilkes Barre, Pa. Daniel Connolly, a Bracewell & Giuliani managing partner, said there was no connection between the firm's work for Santander and Giuliani's appearance at the university more than eight months later. "The speech was much later in time," Connolly said. But a Wilkes University spokeswoman said, "We identified Mr. Giuliani as a potential speaker in April of 2006, made a formal request and invitation in May" and signed a contract with him on June 13 _ two weeks after the Santander-Sovereign deal closed. She declined to say how much Giuliani was paid, but said that Sidhu was involved in selecting the ex-mayor to speak. Giuliani delivered his speech at the university, on the principles of leadership, on Nov. 12. Two days before, he had filed papers setting up the Rudy Giuliani Presidential Exploratory Committee, Inc. ___ (c) 2007, Chicago Tribune. Visit the Chicago Tribune on the Internet at http://www.chicagotribune.com/ Distributed by McClatchy-Tribune Information Services. _____ GRAPHIC (from MCT Graphics, 202-383-6064): 20070206 Giuliani bio ARCHIVE PHOTOS on MCT Direct (from MCT Photo Service, 202-383-6099): Giuliani ARCHIVE CARICATURES on MCT Direct (from MCT Faces in the News Library, 202-383-6064): Giuliani For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. Copyright 2007 Chicago Tribune |