Ties That Blinded; the Controversy over Bernie Kerik's Failed Bid to Run Homeland Security Has Hurt More Than His Reputation. Just Ask His Friend and Business Partner, Rudy Giuliani

By Gasparino, Charles | Newsweek, December 27, 2004 | Go to article overview

Ties That Blinded; the Controversy over Bernie Kerik's Failed Bid to Run Homeland Security Has Hurt More Than His Reputation. Just Ask His Friend and Business Partner, Rudy Giuliani


Gasparino, Charles, Newsweek


Byline: Charles Gasparino

For 15 years, Rudy Giuliani and Bernard Kerik watched each other's back. They met in 1989 at a fund-raiser for a slain officer, grew close, and Giuliani asked Kerik to be his bodyguard and driver during his mayoral campaign in 1993. Giuliani loved Kerik's rags-to-riches story (Kerik wrote in his autobiography that his mother was a prostitute). Once in office, Giuliani named Kerik his police commissioner. They helped lower New York's crime rate, and their quick work restoring the city to order after the 9/11 terrorist attacks made them national heroes. When Giuliani left office in early 2002, he set up shop as a consultant, and quickly landed a roster of blue-chip clients like Merrill Lynch and Purdue Pharma. To add luster to Giuliani Partners, he brought in Kerik, and created an offshoot division--Giuliani-Kerik--just for security-related work. When Kerik was nominated recently to head the federal Department of Homeland Security, it seemed the ultimate reward, and it would mean only better things for Giuliani's business. At the time, Giuliani was basking in the reflected glow.

Kerik, of course, never made it to Washington. He withdrew his nomination after admitting that a nanny he hired may have been an illegal immigrant (her identity remains a mystery). An onslaught of media stories, filled with allegations of shady business practices, ties to organized crime and multiple sexual affairs, also shredded Kerik's reputation. Even so, he still has a place to go to work: Giuliani Partners, where the guy with his name on the door now finds himself in the increasingly difficult position of explaining how someone he's vouched for, and who's caused such a firestorm, can possibly give advice to others on how to avoid one. Giuliani is now like any other businessman concerned about his brand.

In a lengthy and candid interview with NEWSWEEK, Giuliani seemed to acknowledge that the whole episode has made him anxious about his business, which has thrived on his spotless reputation. Giuliani said repeatedly that Kerik's role in the firm is very limited, representing "less than 5 percent" of its business. He also said that Kerik's position was largely limited to their joint venture, Giuliani-Kerik. "He's not part of Giuliani Partners," the former mayor said. But at the firm's Web site, Kerik is described as a "Senior Vice President at Giuliani Partners." Giuliani later explained the discrepancy by saying: "Senior vice president of the group is what Bernie was when we started. I think that remains his title, but that's not the way we primarily relate to him. As you know, he does some work for a few of our clients." He added: "We should probably straighten it out and point out where his ownership interest is and primary work is done."

Giuliani says his firm, which specializes in crisis management and corporate security, hasn't lost any clients, but he acknowledged that there's no way to gauge the effect on efforts to land new business. "Maybe it's the impact you don't feel--it's the people who don't talk to you rather than the people who do," he said. "We haven't detected the slightest impact." One client, however, seems somewhat skittish. Michael O'Looney, a spokesman for Merrill Lynch, said that "we have absolutely no contact with Mr. …

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