Mississippi Governor's Associates Profit From Katrina Recovery

By Timothy J. Burger

Aug. 16 (Bloomberg) -- Many Mississippians have benefited from Governor Haley Barbour's efforts to rebuild the state's devastated Gulf Coast in the two years since Hurricane Katrina. The $15 billion or more in federal aid the former Republican national chairman attracted has reopened casinos and helped residents move to new or repaired homes.

Among the beneficiaries are Barbour's own family and friends, who have earned hundreds of thousands of dollars from hurricane-related business. A nephew, one of two who are lobbyists, saw his fees more than double in the year after his uncle appointed him to a special reconstruction panel. Federal Bureau of Investigation agents in June raided a company owned by the wife of a third nephew, which maintained federal emergency- management trailers.

Meanwhile, the governor's own former lobbying firm, which he says is still making payments to him, has represented at least four clients with business linked to the recovery.

No evidence has surfaced that Barbour violated the law; at the same time, the pattern that emerges from public records and interviews raises ``many red flags,'' said Ken Boehm, chairman of the National Legal and Policy Center, a watchdog group in Falls Church, Virginia, that investigates the investments of government officials. ``At the minimum, the public is entitled to a full explanation of the facts,'' he said.

Barbour, 59, who is running for re-election this year, turned down an interview request. His spokesman, Pete Smith, declined in an e-mail to answer questions.

Big-Name Clients

Mississippi records show that Henry and Austin Barbour, sons of Haley's older brother Jeppie, registered as state lobbyists soon after their uncle was elected in 2003. In January 2004, Henry, who managed the gubernatorial campaign, and Austin joined Capitol Resources LLC in Jackson, located less than a block from the governor's mansion, which represented such big- name clients as Lorillard Tobacco Co. and Northrop Grumman Ship Systems.

In July 2005, Capitol Resources signed on to represent Government Consultants Inc., a local firm that advises Mississippi and Louisiana on state bond issues. Deborah Phillips, president of Government Consultants, praises the work of Capitol Resources, saying Henry, 43, and Austin, 31, have ``good resources.'' Haley Barbour is ``naturally not going to be disinclined to help those boys when he can,'' said Ed Brunini Jr., the governor's lawyer.

Katrina struck the Gulf Coast on Aug. 29, 2005, flooding low-lying regions including the city of New Orleans, killing 1,330 people and causing an estimated $96 billion in damage in Mississippi and Louisiana.

Recovery and Renewal

After the storm, Haley Barbour formed the Governor's Commission on Recovery, Rebuilding and Renewal, appointing former Netscape Communications Corp. Chief Executive Officer James Barksdale as chairman and Henry Barbour as its unpaid executive director. The panel met from September through December of that year; in an e-mail, Henry Barbour says he took ``a leave of absence'' from lobbying while volunteering on the commission.

Government Consultants paid $65,000 for Henry Barbour's lobbying from July 2005 through 2006, a period that included his work on the governor's commission, state records show. Principals in the firm also gave at least $27,500 to Haley Barbour's re-election campaign in 2006; Henry Barbour is the campaign's treasurer.

Among the commission's recommendations was the sale of bonds to finance the Katrina recovery. According to state reports and figures provided by Government Consultants, the firm landed about $2.4 million in Mississippi bond fees in 2006, including at least $400,000 from Katrina-related issues. Its fees were up 3.3 percent from 2005, the first year Barbour lobbied for the company, and 125 percent from 2004, the year before it hired him.

Escalating Fees

All told, Henry Barbour's lobbying fees -- $150,000 in 2004, his uncle's first year in office -- rose to $183,000 in 2005, the year of the hurricane, and $379,000 last year.

In his e-mail, Henry Barbour said that ``I don't have any role with state bond issues in Mississippi.'' Government Consultants Vice President Steve Pittman said in an e-mail that most of the fees the company earns are awarded by cities and counties, and aren't controlled by the state of Mississippi.

Barbour said in his e-mail that he worked hard on the commission, which won a federal ``Gulf Guardian Award'' for its efforts. He said wanted ``to help position Mississippi for the best possible recovery.'' Having ``the same last name as Governor Barbour clearly puts a target on my back,'' he added. Barbour said Capitol Resources decided after the storm ``to not take any new, recovery-related clients.''

Engineering Firm

Last Oct. 18, Henry Barbour registered to lobby for Camp Dresser & McKee Inc., a Cambridge, Massachusetts-based engineering firm that had also been a client of his uncle's firm in Washington. A week later, seven CDM officials each gave the governor's re-election campaign $1,000.

One of the projects recommended by the governor's reconstruction commission was a $3 million study of water management systems in six Mississippi counties affected by Katrina. Camp Dresser and Waggoner Engineering, another client of Henry Barbour's firm, worked on that project. CDM paid Henry $15,000 for the final quarter of 2006, according to state lobbying records.

Officials at Waggoner didn't return calls, and a CDM spokeswoman wouldn't comment.

Another Relative

The FBI raid involved another relative of the governor, Rosemary Ramirez Barbour, who's married to Henry's and Austin's brother Charles, 44, a member of the Hinds County board of supervisors. Rosemary owns a Jackson company, Alcatec LLC; OMB Watch, a Washington organization that monitors federal spending, says the company has received almost $27 million in U.S. contracts to maintain trailers used by the Federal Emergency Management Agency, the government's disaster-relief arm.

On June 21, FBI agents searched three Alcatec offices, seizing computers and documents as part of an investigation into what the warrant said was possible mail fraud. The company didn't respond to repeated requests for comment.

Brunini, Haley Barbour's lawyer, said in a telephone interview that the governor ``doesn't have any connection with Charles Barbour, and certainly not with his wife.'' Smith, the governor's spokesman, declined to comment.

It isn't just Barbour relatives who have found opportunities in Katrina-related work; lobbyists at the governor's former firm, Washington-based Barbour Griffith & Rogers LLC, have profited from Katrina, too.

Salvaging a Casino

On Feb. 9 of this year, the governor's two partners, Ed Rogers and Lanny Griffith, filed forms with the state of Mississippi disclosing lobbying they did last year for Leucadia National Corp., a New York-based buyout firm that acquired the Hard Rock Casino in Biloxi, which had been ravaged by Katrina just days before its scheduled grand opening.

The lobbyists used their personal addresses instead of the business office that still bears Barbour's name. They faxed the forms from a FedEx Kinko's store in Washington. Rogers, 48, said in an e-mail that he and Griffith, 56, used their personal addresses because Mississippi asks lobbyists to file as individuals. The state form asks for a ``physical address.'' Lobbyists such as Henry Barbour commonly use a business address.

Leucadia paid Rogers and Griffith $80,000 each, according to state filings. Casino president Joe Billhimer said he believes Rogers helped Leucadia win state approval of its liquor license. Barbour's chief of staff, Charlie Williams, said ``we encouraged'' the state Gaming Commission and alcoholic-beverage control division ``to expedite'' the Hard Rock's approval process, ``and they did.''

Rogers's Response

``Not going to talk about my client's work,'' Rogers said in a telephone interview. A Leucadia official didn't return phone calls seeking comment.

According to federal records, Barbour Griffith & Rogers also received $200,000 from USMP Group LLC, an Iuka, Mississippi, company incorporated five weeks after Katrina by an attorney in the Jackson office of Balch & Bingham, a Birmingham, Alabama, law firm where Rogers is of counsel.

USMP manager Billy Kidd said the company plans to produce concrete and open the largest U.S. Department of Transportation- grade stone quarry in Mississippi, which could be used in reconstruction.

Beer and Kleenex

Kidd said BGR arranged a meeting with officials of the Mississippi State Department of Transportation for the fledgling firm. Today, the USMP facility, in an industrial park owned by Tishomingo County, shows few signs of activity, county officials say. Kidd said telling USMP's story would take ``a case of beer and a box of Kleenex.''

It isn't exactly clear what ties Governor Barbour retains to the lobbying firm. While the governor was listed as president of Barbour Griffith & Rogers Inc. in Mississippi filings through March 6 of this year, Todd Eardensohn, the firm's chief financial officer, said this was an error he made when BGR converted to a limited liability company in 2004.

Unlike previous governors, Barbour hasn't released his income-tax returns. In January 2004, shortly after his inauguration, he told the Associated Press that ``it's plain to everybody that I have nothing to do with the firm,'' adding, ``They didn't give me a bunch of going-away cash.''

On an Aug. 6 call-in show on American Family Radio, Barbour said that ``they do pay me retirement. I don't want to act like they don't.'' His attorney, Brunini, said this could also be considered a buyout payment, and that a manager overseeing Barbour's assets may have made ``a deal to cash that out and invest it in some other way.''

`Nothing From the Firm'

Rogers said last week that Barbour ``gets nothing from the firm.'' The governor ``earns no income from the firm and does not participate in the firm's governance or operations,'' he said. On March 20, Rogers gave Barbour's re-election campaign $25,000 and Griffith gave $5,000.

Barbour has placed his personal holdings in a blind trust, a move critics say serves mostly to shield them from public and regulatory scrutiny. ``Governor Barbour's so-called `blind trust' has 20/20 vision,'' said Brad Pigott, a former Clinton administration U.S. attorney for the Mississippi district that includes Jackson. ``I don't know of a soul down here who believes Governor Barbour doesn't know what Governor Barbour owns or gets out of the Washington lobbying firm that still uses his name.''

The state's Democratic attorney general, Jim Hood, has told Barbour he ``must report'' the ``actual assets'' in his trust, according to a Jan. 29 letter from lawyer Brunini to the state Ethics Commission.

Brunini defended the use of blind trusts, telling the commission that while ``Mississippi has no formal statutory or regulatory procedure'' authorizing them, ``there is clearly no specific prohibition against their use.''

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

Last Updated: August 16, 2007 00:07 EDT

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