As The Revolving Door Turns
At 6:56 p.m. on Friday, Dec. 15, 2000, Congress was wrapping up a rare lame-duck session. But Tony Rudy, deputy chief of staff to then-House Majority Whip Tom DeLay (R-Tex.), still had work to do. He shot a terse e-mail to lobbyist Jack Abramoff: "Got the pow thing done." Abramoff forwarded Rudy's message to another lobbyist, Ronald W. Kleinman, at the law firm Greenberg Traurig LLP: "Email from Tony Rudy. Looks like it is done.... The guy's DiMaggio."
"The pow thing" was a congressional resolution that directed the outgoing Clinton Administration to "put forth its best efforts" to settle claims by American World War II prisoners of war against Japanese companies that had used the POWs for slave labor. The resolution, passed by the House that day, didn't carry the force of law -- but it sent a powerful political signal on behalf of the POWs. Greenberg Traurig says it was working on the POW issue at the time.
A week earlier, Abramoff had urged Greenberg Traurig to hire Rudy. Abramoff was about to shift his shingle from the rival firm of Preston Gates & Ellis LLP to build what became known as "Team Abramoff" at Greenberg Traurig. Fred W. Baggett, head of Greenberg Traurig's national governmental affairs practice, interviewed Rudy some time in December, but the firm could not provide an exact date. Greenberg Traurig offered Rudy a job on Dec. 21. Team Abramoff eventually unraveled, and Abramoff and others are now under investigation by Congress and the Justice Dept. for allegedly defrauding Indian tribal clients.
That scandal is turning a spotlight on Washington's lobbying practices -- and a revolving door that often spins too quickly. The Rudy and Abramoff e-mails obtained by BusinessWeek show that Rudy -- a powerful staffer in the office that controlled the flow of House business -- was in close contact with a future employer about issues in which the employer had an interest.
Well before the POW resolution passed and Greenberg Traurig offered Rudy a job on Dec. 21, Rudy knew his days on the Hill were numbered. On Dec. 11, in an e-mail exchange with Fannie Mae (FNM ) lobbyist Duane Duncan, Rudy wrote: "I am probably going to work at a firm down town. I would love to keep working with you." In 2001, Rudy listed Fannie Mae as one of his initial lobbying clients at Greenberg Traurig.
The House ethics manual warns staffers to avoid conflicts of interest as they look for new jobs. It says: "Individuals should be particularly careful in how they go about negotiating for future employment, especially when negotiating with someone who could be substantially affected by the performance of official duties."
The account of Rudy's hiring suggests that he may not have tried hard enough, an ethics expert says. "If in fact he had the job or was negotiating the job and was ushering a resolution through for them, you have an appearance of a conflict of interest," says Larry Noble, executive director of the Center for Responsive Politics. "And I think it's relatively serious."
Rudy would not comment for the record. He is now a lobbyist at Alexander Strategy Group, a firm closely connected to DeLay and other conservative leaders. DeLay lawyer Richard Cullen, of the Richmond (Va.) firm McGuireWoods LLP, says: "Mr. DeLay expects all his employees to conform with House ethics standards, and he would take appropriate action against a staff member he knew willfully violated those standards." In a statement, Greenberg Traurig says the firm was "specifically unaware of any advocacy effort by Abramoff or Rudy."
Rudy was not the only one in the revolving door. Around the same time, Greenberg Traurig hired an obscure Senate aide, Gary M. Shiffman, who had helped push through legislation that brought the firm $4 million in fees.
On the Hill, both Rudy and Shiffman were involved in issues that were creating a new and lucrative lobbying niche for Greenberg Traurig and others: claims brought by victims of war, terror, and torture against foreign governments and companies. In these cases, U.S. cooperation was key, either in pressing the POWs' case against Japanese companies or in unblocking foreign assets frozen by the U.S. Treasury.
Shiffman, a Navy veteran of the first Gulf War, worked as senior policy adviser to Senator Connie Mack (R-Fla.). There he helped draft legislation directing the Treasury Dept. to use frozen Cuban assets to satisfy $96.7 million in damages that families of three slain Cuban-Americans had won in U.S. federal court against the Castro regime. The men, members of the anti-Castro group Brothers to the Rescue, died when their small plane was shot down by Cuban jets on Feb. 24, 1996. The Clinton Administration at first declined to turn over the assets. So the families hired Miami-based Greenberg Traurig and other lobbyists to help shake the money loose.
Greenberg Traurig lobbyists Kleinman and Ronald L. Platt were on the case. They spent a lot of time with Shiffman throughout 2000 as they labored to get the measure passed. Platt says the three had dinner and drinks, as well as meetings at the Greenberg Traurig offices.
Senator Mack had announced his retirement, and his aides were soon to be on the job market. But Platt, Shiffman, and Greenberg Traurig are adamant that there was no discussion of a specific job offer while the Brothers to the Rescue bill was pending.
BusinessWeek found no evidence that Shiffman violated Senate ethics guidelines. But he did discuss job possibilities in general with the lobbyists. In the summer of 2000, recalls Platt, who is no longer with Greenberg Traurig, he told Shiffman that if he was interested in leaving the Hill, he should call Platt. And a source says Shiffman discussed his career with Kleinman -- getting advice on job opportunities in the Senate and at another firm -- as the bill was moving on the Hill. Shiffman doesn't recall that talk but says: "It is totally plausible because Ron [Kleinman] had become a friend." However, he adds, he never discussed a job with Greenberg Traurig before the bill passed in October, 2000. "After the bill was signed into law, I had my first conversation [about a job] with Greenberg Traurig," Shiffman says.
Jill Perry, a spokeswoman for Greenberg Traurig, says: "Ron Platt had no authority to hire or discuss employment at Greenberg Traurig with anyone, including Gary Shiffman. Discussions about Gary joining our firm started on or around Oct. 31, 2000, which is after the Victims of Trafficking and Violence Protection Act had been enacted into law." Greenberg Traurig ultimately reported $4 million in lobbying income from the Brothers to the Rescue families. Shiffman didn't share in those fees: He earned $100,000 in 2001 during his first year at Greenberg, a source at the firm says. But in 2003, a document obtained by BusinessWeek shows, Shiffman earned $1.425 million. That's a number few recent transfers from the Hill to K Street can command. Indeed, Abramoff, who managed a stable of lobbyists, earned $1.75 million that year. Shiffman was not a member of Team Abramoff.
Why the huge jump? Shiffman had brought in a lucrative set of clients: lawyers representing Americans held as human shields during the first Gulf War. The captives had sued against frozen Iraqi assets held by Treasury and won almost $100 million in judgments, Shiffman says. Shiffman got to know these lawyers while he was working on the Brothers to the Rescue payout in the Senate. "I talked to Gary on the phone when he worked with Senator Mack," says James Cooper-Hill, a Rockport (Tex.) lawyer whose clients sued Iraq. "We would have loved to have gotten into that  bill." Cooper-Hill signed up Shiffman in 2001 to unlock Iraqi assets. It was a contingency deal: If the captives weren't paid, the firm got zero.
When the U.S. invaded Iraq in March, 2003, President Bush unlocked frozen Iraqi assets. Greenberg Traurig was paid $5 million, which was shared by Platt, Kleinman, and about a dozen other employees. Shiffman got the biggest cut. Shiffman says his earnings, though large, were "appropriate for what I did and what I accomplished. I am very proud of what I did for those victims of terrorism."
After his big payday, Shiffman decided to leave Greenberg Traurig. He became chief of staff at U.S. Customs & Border Protection in May, 2004. "Post-9/11, I had the opportunity to work in Homeland Security, and that's an honor and a privilege," he says. Of his three years as a lobbyist, Shiffman adds: "I was very, very fortunate. No doubt about it."
Team Abramoff didn't last long. In 2002, Tony Rudy left Greenberg Traurig for Alexander Strategy Group after what some sources say was a falling-out with Abramoff. To date, the former Japanese POWs haven't collected a dime.
By Eamon Javers in Washington