Meet Rudy Giuliani, Businessman
It's business as usual for Rudolph W. Giuliani. During a recent meeting in his new consulting-and-investment firm's office overlooking Times Square, about half the time is devoted to scheduling the former New York City mayor: The 58-year-old is stumping for Republicans on the ballot around the country and is still one of the most requested public speakers, typically earning about $100,000 for an appearance. On this day, he has to decide if he will meet with a Midwestern mayor while promoting his recently published book, Leadership, and whether he should watch the Thanksgiving Day Parade with children of dead firefighters or attend an event sponsored by Ronald McDonald House.
When Giuliani stepped down in January and opened a business, who didn't think that it was just a comfortable rest stop on the road to the next elected position? Especially since he brought so many members of his administration's inner circle. Giuliani Partners LLC might as well be called Rudy Inc.--an enterprise devoted to protecting the political capital and potential he earned during his performance following the September 11 terrorist attacks.
Even Giuliani isn't promising he'll be around the office beyond a further three years or so. But, for now, it's not all politics at Giuliani Partners. The firm's mandate seems sound enough: offering advice on crisis management and security issues at a time when ethical breakdowns at many high-profile corporations and fears of further terrorism have increased the demand for these kinds of services. Giuliani says: "We are trying to take what we were able to do in government and make it work in the private sector. That is what I know how to do--organize and reorganize and establish accountability." And companies in trouble know that hiring someone with Giuliani's aura can confer its own benefits now and perhaps later too, if he returns to politics.
Giuliani Partners does have an impressive list of clients, including Merrill Lynch, Nextel Communications, and Purdue Pharma, maker of the much-abused pain medication OxyContin. And although neither the firm nor its clients will disclose the fees involved, Giuliani Partners is growing: The former mayor has more than doubled his staff, to 35, and managed to hire people such as Lisa Genova, a Morgan Stanley alum, to serve as chief investment officer. (The firm plans to take equity stakes in a range of companies, but hasn't yet made an investment.) "It's the best of both worlds," says Bruce J. Teitelbaum, Giuliani's long-term political aide and a partner in the firm. "He's able to work in business, make some money, and keep involved in politics."
It certainly should be more lucrative than, say, the teaching positions that some politicians turn to during their hiatus. The security industry is already a $111 billion business and is expected to grow 10% a year in the next decade, according to investment adviser Morgan Keegan. Consulting fees can run as high as $1 million. Among those spending big to get in on the business are consulting giants such as Booz Allen Hamilton Inc. and accounting firms like Ernst & Young, which owns a minority stake in Giuliani Partners and provides its paneled offices in the Ernst & Young building. The two firms plan on bidding together for contracts; Giuliani would lend his ideas, and name, while Ernst & Young would be responsible for the nuts and bolts of the projects.
Giuliani Partners isn't about to overtake its bigger rivals. Giuliani himself has decreed that he wants the firm to work with only a half-dozen or so major clients. In part, that's because he wishes to be involved in each relationship--although "involved" may not be a strong enough word for such a notorious micromanager. Howard R. Udell, general counsel for Purdue Pharma LP, got a call a couple of months ago from Giuliani saying he happened to be flying into Teterboro Airport, a 20-minute drive from Purdue's factory, and wanted to take a tour. Giuliani talked to employees, got a feel for the facility's layout, and began formulating security measures. "He's a good consultant because he listens," says Udell. "When he's with you, you have his attention 100%." Indeed, Giuliani turned away Tyco International, Arthur Andersen, and Enron early on, fearing they were too much to handle.
Giuliani, whose prostate cancer is in remission, is definitely interested in running for office again, but it's not clear where he might fit in, say observers. And in the meantime, he risks losing some of his political cachet by working for corporations caught up in scandal. He was criticized for calling Eliot Spitzer to intervene on behalf of Merrill Lynch & Co. last April just before the New York State Attorney General charged it with publishing false and misleading research. Giuliani, once famous for prosecuting corrupt financiers Michael R. Milken and Ivan F. Boesky, says defending today's corporate villains doesn't bother him. "What Merrill Lynch is doing is exactly what they should be doing--using our expertise to help straighten things out," says Giuliani.
For now, Giuliani Partners is doing well enough operating by the dictates and whims of the former mayor. But when Giuliani makes his next political move, many of his staff members are likely to join him. And Giuliani isn't just bragging when he says it's uncertain the consultancy could survive very long without him.
By Nanette Byrnes in New York