Mississippi Governor Barbour Held Stock in Parent of Lobby Firm

By Timothy J. Burger

Aug. 29 (Bloomberg) -- When Haley Barbour was sworn in as governor of Mississippi in 2004, he set up a blind trust to avoid conflicts of interest and said he had severed ties with the Washington lobbying firm he co-founded.

The blind trust document he signed about six weeks later says that on Jan. 13, 2004, the day he took office, Barbour still had a stake worth $786,666 in the publicly traded parent company of Barbour Griffith & Rogers Inc., as well as pension and profit-sharing plan benefits from the lobby firm.

A copy of the notarized trust agreement, obtained from an individual who requested anonymity, says Barbour receives $25,000 per month, or $300,000 a year, from it. He lists the trust in his annual Mississippi ethics filing as his only source of income outside his $122,160 salary as governor.

Barbour, 59, a former Republican National Committee chairman, has refused to discuss his personal finances. His attorney, Ed Brunini Jr., said in a statement yesterday that ``the provisions of his blind trust are fully appropriate and legal under Mississippi law.'' Brunini alleged that the disclosure of the information was unlawful. Barbour spokesman Pete Smith said Brunini's statement would have the governor's approval.

It couldn't be learned what, if any, interest Barbour had in Barbour Griffith when the members of the firm lobbied the state last year in the aftermath of Hurricane Katrina two years ago. The minimal disclosure required by Mississippi law contrasts with federal executive-branch rules that individuals who set up blind trusts report publicly their initial holdings and what they are worth, within ranges.

`Losing Disclosure'

Barbour's blind trust ``is allowing him to hide things,'' said Bob Stern, president of Los Angeles-based Center for Governmental Studies, which studies ethics and campaign laws. ``For him then to not disclose the sources of income from it -- then actually we're losing disclosure.''

If Mississippi law doesn't specifically provide for shielding a trust's income sources from disclosure, Barbour should list them on his annual disclosure form, said Stern, who has advised the state of California on ethics laws. He said he disagrees with a decision by the Mississippi Ethics Commission to accept Barbour's level of disclosure.

Barbour's ``best response here is to more fully disclose all the relevant facts,'' said Ken Boehm of the National Legal and Policy Center, a watchdog group in Falls Church, Virginia. ``If there's nothing improper, he certainly has no reason not to. And if that's not the case, boy, the public's really entitled to know what's going on.''

Salary and Bonus

In a May 2004 financial disclosure statement covering 2003, Barbour reported that he received salary and bonus income from a lobbying firm. He wasn't required to list the 48,321 shares of New York-based Interpublic Group of Companies Inc., which bought Barbour Griffith in 1999, because he owned less than 10 percent of its shares. Since 2004, Barbour hasn't specified each ``Type of Business'' that generates income for the trust.

Barbour's former partners bought the company back from Interpublic on May 28, 2004, for about $6 million, according to a person familiar with the matter. Interpublic stock closed that day at $14.38, meaning the shares Barbour put in the blind trust were worth $694,856 if he still held them.

Ed Rogers, one of the founding partners, declined via e-mail to say whether Barbour participated in the buyback. Rogers didn't reply to an e-mailed question on the buyback price. He said Barbour ``earns no income from'' the lobbying firm.

Katrina-Recovery Clients

The lobbying firm in Washington that still bears Barbour's name represented at least four clients with business linked to the recovery from the devastation of Hurricane Katrina on Aug. 29, 2005, according to federal lobbying filings, a filing with the state of Mississippi and senior officials of two of the clients.

The trust agreement says that any payments due to the governor coming from Interpublic's ownership of his former firm will be paid into an investment account benefiting Barbour.

Barbour is running for re-election this year. Brunini, his attorney, said the trustee of Barbour's ``blind trust has fully complied with all the provisions of these documents so that the governor does not know what of the securities, property, etc. that he owned in January of 2004 have been sold or retained; nor does he know what, if anything, has been purchased.''

``That, after all, is the purpose of a blind trust: to keep the elected official, in this case Governor Barbour, from knowing what his investments are so that he will not be, or appear to be, affected in any decision by his own financial considerations,'' Brunini said in his e-mailed statement.

Teresa Westbrook, Brunini's assistant, confirmed last week that she had notarized Barbour's trust on Feb. 27, 2004. ``I do remember it,'' she said.

Trustee

In an earlier interview, Brunini said the trustee, Griffin Norquist Jr., may have divested any holdings linked to Barbour's old firm and its former parent company.

``I don't think there's any specific contract in place'' disposing of Barbour's share of the company, Brunini said Aug. 14. He added that if Barbour ``wanted to go back'' after he finishes serving as governor, ``they'd be a fool not to take him back.''

Norquist, the trustee, didn't return four calls and an e- mail with detailed questions over the last week.

When he took office, Barbour declared in an interview with the Associated Press that he had already cut all ties to Barbour Griffith. ``It's plain to everybody that I have nothing to do with the firm. I have no participation in it,'' Barbour said, according to the Jan. 15, 2004, story.

Gave Up Titles

Barbour said, according to the story, that ``he did not receive a severance package when he gave up his titles of president and CEO, and he has no ownership or stock in the company he helped found in 1991.''

More recently, Barbour said in an Aug. 6 appearance on the Matt Friedeman Show on American Family Radio broadcast statewide from Jackson that he receives retirement payments from Barbour Griffith -- and denied having stock in it.

``When I left the firm at the end of 2003, I resigned as chairman and chief executive officer, I didn't have any stock. So that totally severed my relationship. Except they do pay me retirement. I don't want to act like they don't,'' Barbour said.

``But they pay me a flat retirement that if they make $50 million or $5 million, I get paid the same retirement. So I don't have any participation, I don't have any financial interest I don't have anything to do with the firm other -- today other than they pay me retirement.''

Brunini said in the Aug. 14 interview that after the trust was established, the governor had no idea what was in it and may have been incorrect when he said he was receiving payments from Barbour Griffith. ``I'm not sure whether the trustee continues to take that money,'' Brunini said. ``If I was the trustee, I might go into that company and make a deal to cash that out and invest it in some other way.''

To contact the reporter on this story: Timothy J. Burger in Washington at tburger2@bloomberg.net

Last Updated: August 29, 2007 00:03 EDT

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