Over the last few days we’ve seen a slew of arrows directed at Rudy Giuliani for the hateful, derisive comments he made about Barack Obama’s alleged lack of “love for his country.” There’s even been a few grunts of dissatisfaction from fellow Republicans worried about the impact of Giuliani’s outlandish comments on the 2016 elections.
Few commentators, however, have seen his differences with the president in economic terms.
That’s a mistake: Giuliani’s disgust with our first African-American president is deeply rooted in his own security-business interests, which depend on magnifying the potential danger from terrorism and gang violence to the highest extent possible.
Seen in this context, the Giuliani flap is a simple case of a reactionary businessman angry that his market is threatened by a rival. Kind of like the Mafia.
Specifically, Giuliani seems deeply concerned about Obama’s more conciliatory approach to terrorism and crime, particularly his view (albeit somewhat naïve) that some Islamists may have economic grievances with their Middle East or European governments. That runs counter to the aggressive, warlike tactics Giuliani sells to private clients, oligarchies and governments, especially overseas.
Last Thursday, Obama explained his views in a speech to a White House summit on “Countering Violent Extremism” this way:
“Terrorist groups are all too happy to step into a void. They offer salaries to their foot soldiers so they can support their families. Sometimes they offer social services—schools, health clinics—to do what local governments cannot or will not do,” Obama added. “So if we’re going to prevent people from being susceptible to the false promises of extremism, then the international community has to offer something better.”
To Giuliani, this smacks of treason—or, as he calls it, “ socialism and anti-colonialism.” His approach is always to use the big stick.
“The best answer to terrorist groups and gangs is to confront them,” Giuliani likes to say in his many speeches, according to a recent profile in The Economist. In an address last year to a conservative business association in Guatemala about crime, for example, he warned that “you are not going to solve it with schools, libraries, nice neighborhoods and sports teams. You have to emphasize law enforcement.”
It’s all part of the Giuliani method: cultivating fear and loathing to market himself as the savior of good, old-fashioned imperialist values. For Rudy, that means one thing: the greater the threat or the instability, the more he makes.
“The money’s really good.”
Rudy’s conflicts with Obama and other Democrats about how to deal with terrorism are nothing new. To understand the mindset of this national security profiteer, let’s go back to some insightful remarks he made in 2004, in the aftermath of 9/11 and subsequent invasion of Iraq.
On November 2 of that year, as American voters nervously watched the returns come in from what turned out to be a remarkably close election, Giuliani made the traditional rounds on cable television to support his candidate, President George W. Bush.
During an interview on CNN, he declared that John Kerry, the Democratic standard bearer and future Secretary of State, had a “pre-9/11 mentality” and wanted to “take us back to when terrorism was just a nuisance.” This was basically the same criticism he directed at Obama last week.
A few hours later, with Bush’s victory clearly in sight, Giuliani was asked by an NBC reporter if he would consider taking a prominent part in a second Bush administration. After all, a man with his experience and stature might want to serve as attorney general, or secretary of Homeland Security.
“I’m happy in private life in my security business, security consulting with the former police commissioner,” he said, referring to Giuliani Partners, the firm he founded in 2002 with Bernard Kerik and other former colleagues from the US Attorney’s office and the New York City police and fire departments. Besides, he added with a broad smile, “the money’s really good.” Indeed it was.
Since almost the minute he left office, Giuliani has been using the global fame he acquired on 9/11 and its aftermath to rake in millions of dollars from consulting with “corporations, individuals, and governments” (as his website describes his client base) on security matters, financial audits and crisis management.
Corporations that have sought his help over the years include Aon, the global risk-management firm that lost 175 people in the World Trade Center attack; Entergy, the nation’s largest operator of nuclear power plants (and, ironically, the number one corporate donor to President Obama’s 2008 presidential campaign; and Delta Airlines and US Airways.
Other prominent clients include TransCanada, the developer of the controversial Keystone XL Pipeline Project (which Obama opposes, further damaging Rudy’s economic interests); Purdue Pharma, which manufacturers Oxycontin, once Rush Limbaugh’s drug of choice: Nextel, the wireless services company now owned by Sprint; Shell Oil; and the Government of Mexico.
But ironically, as his recent stop in Guatemala illustrates, much of his money is now being made overseas, in places like El Salvador, where a right-wing business association has brought him to advise on curbing crime. Apparently Giuliani himself loves the Latin American oligarchies far more than he loves the American elite.
Wayne Barrett, the New York Daily News reporter who wrote a devastating biography of Giuliani, laid out the full spectrum of the hypocricy in a rip-roaring commentary last week:
Rudy said Obama is “more of a critic than he is a supporter of America,” an odd admonition coming from a security salesman who told a Tijuana audience of consulting clients in October: “America needs to stop lecturing other countries and start working on how to stop drug use in its citizens,” shifting the onus for the Mexican drug trade onto us. He’s a consultant in Mexico, El Salvador, Honduras and Guatemala, the very countries where right-wing governments, traffickers and/or gangs are driving children and teenagers across the U.S. border.
He was a consultant for the government of Qatar, the country his friend and FBI director Louis Freeh accused of hiding 9/11 mastermind Khalid Sheik Mohammed before the attack. That’s the ultimate triumph of money over memory, since he’s still talking, as recently as a week ago, about the 10 friends and 343 firefighters he lost on 9/11.
But here’s the irony: foreign governments and business groups make up his primary market after a series of failed business deals and partnerships in New York and Washington since he left the mayor’s office in 2001. The overwhelmingly foreign nature of his business is revealed in an statistic embedded in the official biography of CEO John P. Huvane , a twenty-one-year veteran of the NYPD. Huvane’s work for Giuliani Security & Safety, it states, “has taken him on over 280 international trips, in 56 different countries.” The company’s news feed offers more details).
A quick look at Giuliani’s record and personnel choices shows that, aside from raking in lots of money, he has a pathetic record as a businessman.
Giuliani’s history in national security capitalism
The former mayor’s first major deal was with Bear Stearns, the soon-to-fail investment bank. Here’s how Reuters reported his initial mix of patriotism and profits in 2003:
Former New York City mayor Rudy Giuliani, who was hailed as a hero for his response to the Sept. 11 attacks, announced Thursday a new investment fund with Bear Stearns that will invest in the burgeoning security industry.
Giuliani will work with the investment bank’s merchant banking unit to launch a $300 million private equity fund that will invest in security and public safety companies, according to a joint statement from the former mayor and the firm.
“The world is facing challenges that it has never faced before,” Giuliani said in a statement. He said he looked forward to “…helping companies as they seek to supply products and services that will make the U.S. and the world a safer place.”
The plan was to invest in companies developing identification technologies and “ways to identify biological and chemical agents”—perfect products for the aftermath of 9/11. One of its partners was a Washington investment firm called GlobeSecNine that was “filled with former senior military and intelligence officials,” including Brent Scowcroft, the former national security adviser to Presidents Gerald Ford and George H.W. Bush.
All this made Giuliani very wealthy, allowing him to buy a house in the Hamptons and other prime real estate. Between 2001 to 2007, his various subsidiaries had grossed Giuliani Partners more than $100 million, and in 2006 he was pulling down a salary of $4.1 million. This, of course, was just one slice of his earnings, which also included millions of dollars in revenue from book sales and speeches (the sordid tale of his company is told well in a 2008 profile in Vanity Fair called “A Tale of Two Giulianis.”)
But Giuliani Partners never had much impact. According to an extensive 2007 investigation in The New York Times, the Bear Stearns joint venture made only one investment—a California company that made “canteens worn like backpacks” (that will really keep the terrorist away). “Two other relationships were ended after questions emerged in news accounts about the backgrounds and operations of the client,” the Times added.
And Bear Stearns was a disaster waiting to happen. In 2008, facing a serious cash crisis, the once-vaunted bank “had to turn to the Federal Reserve and JPMorgan Chase for a bailout.” It was absorbed into Morgan/Chase to the great excitement of Jamie Dimon, who has his own disgraceful history.
And then there’s Giuliani’s cronies. Best known, of course, is Bernard Kerik, whose name adorned the former mayor’s first company, Giuliani-Kerik, that later became Giuliani Security & Safety. After Giuliani pushed Bush to nominate the ex-cop to run DHS, Kerik quickly ran into trouble, and had to withdraw when tax violations and other transgressions came to light. He eventually pled guilty to eight felony charges that included receiving bribes from a construction company tied to the mob, tax fraud and lying to White House officials vetting his nomination. He served three years in federal prison before being released in May 2013 on good behavior.
Other questionable characters in Giuliani’s list of partners and clients include Stuart Rabin, hired to conduct hedge fund due diligence, who had once lost over $200 million for clients whose money he had invested with swindler Bernie Madoff; Hank Asher, an admitted cocaine smuggler who founded a data-mining company called Seisent for whom Giuliani helped obtain $12 million in government grants; and Alan Placa, a former priest who Giuliani hired “despite allegations that he sexually molested young men years ago,” according to the Times.
Undeterred, Giuliani moved on from private equity to running for president, hoping to capitalize on his brilliant success in business. But his campaign was a dismal failure. In the years since, he has desperately been searching for clients overseas.
In 2011, he went to Peru to campaign for rightist Keiko Fujimori, the daughter of the disgraced former president Alberto Fujimori, who is still serving a twenty-five-year sentence for human rights abuses. As reported by CNN, “she praised Giuliani’s tough stance on crime and his track record turning around New York City, signaling that Giuliani would be her security adviser.” She lost, dismally. Around the same time, he was advising Mexico City’s police department and speaking in Brazil to law enforcement agencies about his “zero tolerance” crime policies.
In 2013, he formed a partnership with Bart Schwartz, an old crony who once served under Giuliani as the chief of the Criminal Division in the Southern District of New York. They created Giuliani SolutionPoint Global Services, saying their clients would include “developing nations, mature governments facing security challenges, multi-national companies doing business in high risk areas, international construction companies, and international sports authorities.”
Schwartz is an interesting partner, and his extensive biography includes work as an “independent compliance expert” for intelligence contractor SAIC when it was being investigated in connection with the “City Time” fraud and corruption case, which cost New York City millions of dollars. (Another job gives a flavor for the joint venture’s “sports” work: Schwartz was retained “by the United Arab Emirates (UAE) to oversee compliance with MOUs between the UAE and Bangladesh, Pakistan, Mauritania and Sudan relating to the repatriation and compensation of children from those countries who were involved in camel racing in the UAE.”
Rudy loves the oligarchies
Another new Giuliani-Schwartz subsidiary, NSM Surveillance, develops “surveillance and sensor” systems to federal agencies and the military to “provide situational awareness to the war fights, the investigator, the commander and/or senior leadership to enable effective tactics and decision-making.”
Which brings us to Giuliani’s work with El Salvador’s largest business association, the National Association of Private Enterprise, or ANEP.
For anybody who lived through the 1980s, the very thought of a Salvadoran business association brings to mind the horrific repression of that era. From the late 1970s to the early 1990s, tens of thousands of labor and social activists were murdered by death squads funded by El Salvador’s business elite. The United States was directly involved, sending Special Forces and the CIA to help the Salvadoran government crush the leftist resistance.
Last March, Salvador Sánchez Cerén, a former guerrilla commander with the Farabundo Martí National Liberation Front, was narrowly elected president. A key part of his platform was to defuse crime by negotiating with the country’s powerful gangs. But his conciliatory approach has not gone down well with Salvador’s business community. So in December, ANEP hired Giuliani as a security consultant. He and CEO John Huvane made their first trip in January, where the “drew up a plan” for El Salvador’s crime problem. They are doing similar work in Honduras, now ruled by a right-winger who seized power in a 2009 coup.
On Monday, Hizzoner tried to back down from his incendiary comments about Obama in an op-ed in The Wall Street Journal. But there’s not much he can do to repair the damage to his image—except, perhaps, in the far-right netherworld of Fox News and the 1 percent of Central America.