Dec. 11 (Bloomberg) -- Former New York City Police Commissioner Bernard Kerik withdrew his nomination as U.S. secretary of Homeland Security, saying he would endure ``intense scrutiny'' for failing to file taxes and other legal papers for an immigrant he employed as a housekeeper and nanny.

``In the course of completing documents required for Senate confirmation, I uncovered information that now leads me to question the immigration status of a person who had been in my employ as a housekeeper and nanny,'' Kerik said in a statement.

The withdrawal forces Bush to find a new leader of the agency charged with protecting U.S. borders, transportation systems and utility plants after the president pinned his re-election campaign on safeguarding the nation from terrorist attacks. Former Pennsylvania Governor Tom Ridge, Bush's first Homeland Security director, resigned after the election. Ridge said he would remain in office until a success was approved by the U.S. Senate.

Kerik informed President George W. Bush of his decision by telephone at 8:30 p.m. local time in Washington yesterday, White House spokesman Scott McClellan told reporters on a conference call.

``We will move as quickly as we can to fill this nomination,'' McClellan said. Hours earlier, McClellan had defended the nomination in a briefing, and U.S. Senators Hillary Clinton of New York and John Corzine of New Jersey, both Democrats, had praised Kerik.

In a letter to the president, Kerik wrote, ``I am convinced that for personal reasons, moving forward would not be in the best interests of your administration, the Department of Homeland Security, or the American people.''

Taser

Kerik's decision to withdraw also followed a New York Times report yesterday that he became rich working for companies that do business with the department he will oversee. The Wall Street Journal said Kerik would face questions in the U.S. Senate about his role as former corporate director at Taser International Inc., a maker of stun guns for law enforcement agencies.

In June 2002, Kerik was named to the board of Taser. On Nov. 11, he exercised options on 102,166 shares of Taser stock at 57 cents to $14.43 and sold them at $57.32, netting $5.47 million. He now owns no shares.

Taser's share price is more than 19 times higher than when Kerik was named to the company's board. Kerik exercised his options three days after Taser announced the U.S. Transportation Security Administration approved a request by Korean Air Lines to use the company's stun guns on its planes. The news sent Taser stock up 16 percent. Five Taser insiders sold $68 million in shares the week of the decision. The Homeland Security secretary oversees the Transportation Security Administration.

Housekeeper

Kerik, 49, released a public statement yesterday through Sunny Mindel, spokeswoman for Giuliani Partners, the consulting and venture capital firm founded by New York City's former Mayor Rudolph Giuliani, where Kerik was a principal. In it he said he'd decided to remove his name from nomination because of the concerns about the housekeeper.

``It has also been brought to my attention that for a period of time during such employment, required tax payments and related filings had not been made,'' Kerik wrote.

Kerik said that while he has ``already initiated efforts to fulfill any outstanding reporting requirements and tax obligations related to this issue, it is my belief that upon disclosure of this matter the intense scrutiny that it is likely to generate will only serve as a significant and unnecessary distraction to the vital efforts of the Department of Homeland Security.''

In a prepared statement released by Mindel, Giuliani said the issue became decisive ``given the fact that the Department of Homeland Security has responsibility for the Immigration and Naturalization Service.''

Giuliani Partners

Kerik will return to Giuliani Partners, said Mindel, who said the former mayor was ``disappointed but he feels this was the right thing to do, as given the nature of the problem it would have been impossible for Bernie to go forward.''

Giuliani referred to the failed nominations of two Justice Department appointments in the administration of former President Bill Clinton, saying that at that time, the Justice Department had oversight over the federal immigration agency.

In 1993, Clinton's nominee for attorney general, Zoe Baird, withdrew after disclosures that she had employed an illegal immigrant couple for child care and housework and failed to pay their Social Security taxes. Several weeks after Baird removed herself from consideration, Clinton's second choice for attorney general, U.S. District Judge Kimba Wood, withdrew after administration officials learned she had employed an illegal alien as a babysitter.

Precedents

Bush encountered the issue in 2001, when Linda Chavez withdrew as his first nominee for labor secretary after she disclosed she had housed and paid an illegal immigrant 10 years earlier.

The president nominated Kerik Dec. 3, citing his experience as a former New York City police officer who rose to commissioner and guided the city's response to the Sept. 11 attacks.

``Bernie Kerik is one of the most accomplished and effective leaders of law enforcement in America,'' Bush said at the White House, with Kerik beside him. He ``understands the duties that came to America on Sept. 11. The resolve he felt that morning will guide him every day on this job.''

Bush called him a long-time friend, and the administration drew on his expertise when it sent him to Iraq to oversee the formation and training of Iraq's police force following the ouster of Saddam Hussein's regime.

New York Mayor Michael Bloomberg's press secretary, Edward Skyler, said the mayor would have ``no comment'' on Kerik's withdrawal. The mayor said when Kerik's nomination was announced that it would help the city because the former police commissioner knew the risks it faced as a ``prime target'' for terrorists. The mayor is founder and majority owner of Bloomberg LP, parent of Bloomberg News.

Kerik, a New Jersey native who last year moved to Franklin Lakes, New Jersey, had been defended earlier yesterday by Corzine, who described him as an ``accomplished and well-respected law enforcement official.'' Clinton, of New York, had said ``I look forward to working with him again to help address the nation's homeland security needs.''

A spokesman for Clinton didn't immediately return a call seeking comment on Kerik's relationship with Taser. A Corzine spokesman said he didn't know if the senator was concerned about Kerik's relationship with Taser.

To contact the reporters on this story: Henry Goldman in New York in City Hall at hgoldman@bloomberg.net Richard Keil in Washington at dkeil@bloomberg.netRichard Keil

Last Updated: December 11, 2004 01:17 EST