Clinton Aide Penn Mixes Campaign Role, Advocacy for Companies

By Timothy J. Burger and Kristin Jensen

May 24 (Bloomberg) -- Presidential candidate Hillary Clinton proposed on Feb. 27 more research funds for new energy technology, including ``clean'' coal systems. The next day, Mark Penn, her top campaign strategist, had a different take on coal.

In an internal blog at his other job, as chief executive officer of public relations firm Burson-Marsteller, Penn wrote of how Burson worked ``behind the scenes'' for TXU Corp., a Texas company seeking to build power plants fueled by pulverized coal, which some environmentalists say would be major polluters.

Contradictions between Penn's private business dealings and Clinton's public policy positions -- which Penn helps formulate and sell to voters -- point up potential clashes in doing both campaign consulting and corporate advocacy. Penn's firm works for clients, from a tobacco company to drugmakers, whose interests are often at odds with the New York senator's agenda.

``That individuals and groups are serving today as both consultants to campaigns and as lobbyists or PR folks for private clients is a modern-day phenomenon that has inherent conflicts of interest,'' said Fred Wertheimer, president of Democracy 21, a Washington-based group that advocates for tougher ethics laws. ``It is a very unhealthy practice.''

Penn, 53, denies his work poses a problem. ``I don't think there's any obligation that the firm's clients agree on every issue that's out there with either themselves or Senator Clinton,'' he said in an interview yesterday. ``Lots of people have lots of disagreements, and that doesn't make it a conflict.''

Fine With Clinton

Clinton campaign spokesman Howard Wolfson said Penn is currently working only with Microsoft Corp., a longtime client, and on the election campaign, although he's free to handle and solicit other clients.

``The real question from the campaign perspective is whether Senator Clinton is comfortable with what Mark is doing, and the answer to that is yes, unequivocally,'' Wolfson said.

Penn's internal blog -- several months of which were obtained by Bloomberg News -- suggests that all along he has been working with multiple clients.

He downplayed his role in Clinton's presidential campaign, saying he is ``not a policy adviser, I'm a communications adviser.''

Others say he's the most powerful figure in the campaign, and an April 30 Washington Post profile said he ``has become involved in virtually every move that Clinton makes.''

1996 Campaign

Penn, who entered the top echelons of politics by helping President Bill Clinton win re-election in 1996, sees no conflict, according to the blog, which he regularly writes for colleagues at the 2,500-person, New York-based Burson. In one entry, ``Workin With Hillary,'' he wrote, ``I have found the mixing of corporate and political work to be stimulating, enormously helpful in attracting talent, and helpful in cross- pollinating new ideas and skills.''

``And,'' he added, ``I have found it good for business.''

Clinton's campaign owed Penn, Schoen & Berland Associates, the polling and consulting business Penn founded that's now part of Burson-Marsteller, $277,147 for the first quarter of 2007.

Campaign consultants aren't on the public payroll, so they're not subject to the disclosure and ethics rules that apply to senior government employees. Thus, Penn's blog offers a rare window into the strategic thinking of one of Washington's top political operatives.

`Always Good News'

On March 23 of this year, he described a trip to Houston, where he met with John Hofmeister, the head of Royal Dutch Shell Plc's U.S. arm and a leader in an industry that Clinton, 59, has criticized for reaping ``windfall profits.''

Hofmeister is ``interested in doing some more research around upcoming events -- always good news,'' Penn wrote.

In a blog entry last Dec. 20, Penn touts the work Burson- Marsteller did to win an account with the U.S. Tuna Foundation, which was contending with federal warnings of elevated mercury in the fish. Burson pitched ``ideas for how to act like a political campaign by neutralizing the negatives and bringing out the heart healthy benefits of tuna,'' Penn wrote.

Clinton, a Democrat, was one of 10 U.S. lawmakers who signed an August 2004 letter criticizing then-Environmental Protection Agency Administrator Michael Leavitt for downplaying the mercury warning, which ``specifically informs women that they and their young children should limit consumption of tuna.''

`Light' Cigarettes

Among other Burson clients is Altria Group Inc., the New York-based successor company to Philip Morris Cos. As first lady in 1993, Clinton banned smoking in the White House. Last year, she cosponsored Senate legislation to force tobacco companies to stop advertising cigarettes as ``light.''

Burson also represents Merck & Co. and Pfizer Inc., two of the largest companies in a pharmaceutical industry that's opposed to a Clinton-backed proposal to allow the federal government to negotiate Medicare drug prices on behalf of consumers.

``On a wide range of policy issues, lots of people have lots of disagreements,'' Penn said in the interview.

In the TXU case, company spokeswoman Lisa Singleton confirmed that Burson helped with its campaign to build 11 coal plants. She said TXU is ``looking at clean-coal technologies and we have been all along.''

Clinton isn't the only candidate with advisers who have business interests. And the candidates themselves can choose to draw the line at the outside connections. President George W. Bush, during his 2000 campaign, forced adviser Karl Rove to largely withdraw from a political consulting firm that had made him a millionaire. Philip Morris had been among his clients.

Thanks to Blair

Still, few advisers have the range of outside interests or the prominent role in the presidential campaign that Penn does.

In his blog, Penn suggests he has used the access afforded by at least one major political client to woo business. In late January, he wrote that, thanks to an invitation by former client Tony Blair, the U.K.'s prime minister, he would be making his first trip to Davos, Switzerland, for an annual conclave of the world's elite in business and government.

He hoped ``to make it as useful as possible for Burson- Marsteller,'' he wrote, ticking off planned meetings with executives from Visa International and Coca-Cola Co. Microsoft ``rented an entire house right there, so they do Davos BIG,'' Penn said in a later entry. At one point, ``Bill Gates shook my hand, which is unusual... I missed Bono.''

Penn denied in the interview that he's ever used his political connections to win business -- including Blair's invitation to Davos. ``It's inaccurate and false,'' he said. ``I'm sorry but being asked to a conference is hardly gaining access to clients,'' he said. ``You've turned this into an absurd game of gotcha.''

Inner Circle

Penn was first ushered into the Clinton inner circle by consultant Dick Morris to help on Bill Clinton's presidential campaign. Morris had to step aside after he was linked to a prostitute, and Penn moved into the void.

Penn co-founded Penn, Schoen & Berland in 1975 while still an undergraduate student at Harvard University, according to the company Web site. Thanks in part to the boon of Clinton business, the firm generated $31.4 million in revenue in 2000, according to London-based WPP Group Plc, the world's second- biggest advertising company and owner of Burson-Marsteller. WPP acquired Penn Schoen the next year.

Politics, Business

In announcing the purchase in a Nov. 16, 2001, press release, a company executive said: ``Penn, Schoen and Berland has been successful in taking the research skills originally applied in the political arena and adapting them to corporate issues including brand identification and enhancement.'' Penn became chief executive of Burson-Marsteller in December 2005.

Penn, Schoen & Berland, Penn said in one blog entry, landed 124 new clients in 2006, while also working for politicians, including Clinton, whose Senate campaign wrote $3.1 million in checks to the firm that year.

In the blog, he assures colleagues that being ``named a top strategist and pollster in the campaign'' will not ``change my overall responsibilities'' at Burson-Marsteller and at Penn Schoen. And he touts ``major'' international trips he plans to take this year for Burson.

In his Dec. 20 year-end entry, he wrote: ``I visited the c- suite of seven of Fortune's top 25 companies and 12 of the top 50.'' He added: ``Taking what we've started to build together, I am committed to opening more of those doors.''

To contact the reporters on this story: Timothy J. Burger in Washington at tburger2@bloomberg.net ; Kristin Jensen in Washington at kjensen@bloomberg.net

Last Updated: May 24, 2007 00:10 EDT

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