Vanity Fair takes on Giuliani's connections to the Trans Texas Corridor

We started to send out word connecting the dots between Macquarie, Cintra, the law firm Bracewell & Giuliani and Presidential candidate Rudy Giuliani last spring. Finally, the mainstream press is starting to look into Giuliani’s crooked deals that involve the Texas Governor and many of the special interests that dominate Texas. It’s clear Cintra and Macquarie are trying to buy themselves a U.S. President!


Below is an excerpt from Vanity Fair, December 2007, on the Macquarie, Cintra, Bracewell & Giuliani, and Trans Texas Corridor connection – Link to full article here.

“Finally, last March, Giuliani managed to sell Giuliani Capital Advisors for an undisclosed sum to a fast-growing Australian bank called Macquarie Group. In a New York Times article, an analyst suggested that Macquarie might have paid as much as $76 million for it. Another analyst scoffs at that and says the price was closer to $10 million—essentially what Giuliani had paid for it. A source at Macquarie, while not confirming the lower figure, allows that the higher figure is “wildly” off. (Hess says, “We don’t comment on fees or compensation.”)

Why would an Australian colossus like Macquarie buy a money-losing U.S. investment bank? Perhaps because Macquarie is making inroads—literally—in the U.S., acquiring the leases on state highways and operating them as toll roads, in Indiana and Illinois, with more states to follow. The toll-road business is highly controversial and involves politics right up to the top. It can’t hurt to have helped out a man who might be the next president. (A Macquarie spokesperson says the only reason for the purchase of G.C.A. was “new sectors and new locations for us,” and that Giuliani “was not involved in discussions for acquisition of G.C.A. by Macquarie.”)

Even before the deal, there had been only one degree of separation between Macquarie and Giuliani. Macquarie’s partner in a $3.8 billion Indiana toll road is a Spanish company called Cintra Concesiones de Infraestructuras de Transporte, S.A. Cintra, in turn, is represented by a Texas law firm once known as Bracewell & Patterson, now called Bracewell & Giuliani.

Legal Eagles

For Giuliani, a law firm was the third leg of the stool. Not only did it fit right in with his other businesses; for the former prosecutor, appending his name to a large, established firm was a dream come true. But one in Texas?

The business marriage worked for the reason marriages often do: each partner could help the other. At 64, Bracewell managing director Patrick Oxford had accomplished a lot. A genial Republican with close ties to Senators Kay Bailey Hutchinson and John Cornyn, among other Texas stalwarts, he prides himself on his role in heading up his party’s delegation of lawyers in Broward County, Florida, in the aftermath of the 2000 election. Four years later, he took his strike force to Ohio and helped keep the tipping-point state in the Republican column. Oxford, then, had done about as much as any individual in the United States to determine the outcomes of the last two presidential elections. Yet Bracewell was overshadowed by larger Texas firms such as Vinson & Elkins, alma mater of former U.S. attorney general Alberto Gonzales, and Baker Botts, where former secretary of state James Baker presides. Giuliani would boost Bracewell’s profile, especially if he ran for president—and won.

To all who asked, Giuliani said he hadn’t yet made up his mind about entering the race for 2008. But the alliance with Bracewell in early 2005 was a move made by a man who knew exactly what he needed to shore up his prospects: credibility in the Republican heartland. Also, the money was good. Oxford agreed to give Giuliani Partners $10 million, to be split among its three senior partners: Giuliani, Mike Hess, and Daniel Connolly, according to a story in The American Lawyer. In becoming Bracewell & Giuliani, the Texas firm would also commit $25 million to establish a New York office. As the head of that office, Giuliani would be guaranteed at least $1 million a year, plus 7.5 percent of all fees generated by the office. Yet his commitment to the law firm was less than half-time: Mondays and Fridays.

Politically so far, the move has paid off. By the middle of 2007, Giuliani had raised $4,788,168 in Texas, more than Hillary Clinton ($3,137,134), more even than the two closest Republican candidates combined (Mitt Romney’s $2,254,349 and John McCain’s $2,189,696). But in marrying into Bracewell, Giuliani has acquired a whole family of squirrelly relatives, from the firm’s own lobbyist-lawyers to the clients they represent.

Bracewell & Patterson has long been known for representing school districts. By the time Giuliani became part of it, in early 2005, it had also become the go-to law firm for major polluters: oil and gas as well as coal companies. Among its significant clients are Chevron/Texaco, Pacific Gas & Electric, Dynegy, Southern Company, Valero Energy, and Shell Oil.

Until recently, Citgo oil company was among those significant clients, but no longer. Last March, after a flurry of news stories, Giuliani was embarrassed: Citgo, since 1990, has been run by a state-owned Venezuelan petroleum company, and thus is currently controlled by the country’s president, Hugo Chávez. Giuliani had been knocking the virulently anti-American Chávez in speeches around the country. “We need a president who knows how to get things done, so we don’t have to be sending money to Chávez,” he declared in a speech in May. “Who would listen to Chávez if he didn’t have all this oil money?” In fact, Bracewell & Giuliani had been happy to take Chávez’s money: Bracewell had registered as a lobbyist for Citgo in April 2005, for $5,000 a month, right after Giuliani joined the firm. Bracewell finally ended its relationship with Citgo in June 2007.

Perhaps most unfortunately, Bracewell & Giuliani has supplied the legal and lobbying muscle to get new coal-fired power plants built all over the country. A dramatic example is the coal-fired plant called Desert Rock Energy Project, to be built by Sithe Global Power, a Bracewell client, on Navajo lands in Burnham, New Mexico. “To us, this is environmental injustice and economic exploitation,” declares Dailan Long, a Navajo activist. “We were never informed about this project thoroughly. The terms of the lease agreement have never been released to us.” Bracewell’s lobbyist Frank Maisano, the point man on Desert Rock, scoffs at that. “There have been more than 400 public meetings about the project over a four-year period,” he says. “They don’t have to disclose the terms of the lease. This is an agreement between Sithe Global and the Navajo Nation, and the lease is part of an ongoing process.” Maisano notes that the council of the Navajo Nation voted 66 to 7 for the plant. Long and other activists say the tribe’s elders have been misled about the environmental and financial impact on the community.

Howard Rubinstein, the well-known New York public-relations man who now represents Bracewell & Giuliani, has said that Giuliani “doesn’t lobby in any way” for the firm, and that lobbying makes up only about 2 percent of the firm’s earnings. So none of this really matters, nor do the contributions that the firm’s employees have made to Giuliani the candidate—at least $100,000 to date—or the contributions from the oil and gas companies: $545,058 as of mid-November 2007, way ahead of Mitt Romney ($309,933) and Hillary Clinton ($220,550). And, presumably, if Giuliani wins in November 2008, the firm would be known simply as Bracewell, not as Bracewell & President Giuliani.

The Road Through Texas Is Paved with Gold

Still, Giuliani’s presence at the firm may create some synergistic connections. Consider the Trans Texas Corridor debate.

For several years now, Texas governor Rick Perry has been pushing a plan that appalls many of his constituents—except, apparently, the most powerful ones—to outsource a spider’s web of new and improved state highways to Cintra Concesiones de Infraestructuras de Transporte, S.A. To ease Texans’ fears that the state is putting its future roads in the hands of a foreign-owned company, Cintra is now partnered with a San Antonio construction company called Zachry. The roads envisioned in this $184 billion, 4,000-mile project are no mere superhighways. They’re three football fields wide. They will include not only a rail line but also pipelines that can carry oil, gasoline, or liquefied natural gas. Alongside the roads will be distribution centers. Cintra-Zachry will lease the roads and levy whatever tolls it likes. And it will also control the distribution hubs, and charge what it likes there too. “I don’t want to see transportation become another battle between the haves and have-nots,” says former Texas Democratic congressman Chris Bell. “And it could quickly become that.”

The roads of the Trans Texas Corridor, as currently envisioned, would cut wide swaths through hundreds of farms and ranches. “Eminent domain is a huge issue here,” says Democratic Texas state representative Garnet Coleman. “The biggest opposition has come from farmers and ranchers who are along the proposed roads.” Eventually, the corridor might be extended to Canada. Coleman calls it “a super-nafta corridor.”

The connections may be coincidence, but they’re striking. Cintra is a client in Texas of Bracewell & Giuliani. The company it’s most likely to work with to extend the corridor north is Macquarie, which already operates its Indiana toll road in partnership with Cintra. In early 2007, Macquarie bought a chain of some 40 local Texas and Oklahoma newspapers. Might it have bought those papers to control public opinion in advance of plans to build more controversial toll roads? Might it potentially have in Giuliani not only a legal partner for future toll roads but a political ally?

Bracewell spokesperson Melanie Hillis says that Giuliani has not worked on behalf of Cintra or Macquarie. A Macquarie spokesperson adds that Cintra used Bracewell before it became Bracewell & Giuliani. He says that Macquarie is as likely to compete with Cintra as to cooperate on any future toll roads. He also declares that the purchase of those newspapers was made by the Macquarie Media Group, a separate division with no connection to Macquarie’s toll-road business. “To suggest that the acquisition was made to control public opinion in advance of building toll roads is absurd and incorrect. The business continues to be run by the same management team, with the same editorial staff. No editorial influence has been exercised by the Macquarie Media Group.” Anyway, the spokesperson adds, “I don’t think it is correct to say that the building of more toll roads in the United States is ‘a highly controversial plan.’ ”

That might come as a surprise to the farmers and ranchers who face the prospective loss of their land through eminent domain, and the Texans who feel their taxes entitle them to state-built freeways, not foreign-run toll roads. At the least, they seem less likely to get a sympathetic hearing from a president whose law firm represents Cintra and whose investment bank was sold to an Australian bank that often partners with Cintra and wants to build more U.S. toll roads.

Perhaps Giuliani does have little or nothing to do with his law firm’s principal clients. With at least one smaller client, however, he clearly played a role, and that role appears, to say the least, unpresidential.

In early 2006, Bracewell & Giuliani reviewed a proposed bank purchase. The Spanish bank Santander wanted to buy 20 percent of Sovereign Bancorp of Philadelphia. Bracewell’s review recommended the deal, the New York Stock Exchange and the S.E.C. eventually approved it, and so Santander bought in for $2.4 billion. The story, however, was a bit more complicated than that.

The review, according to one Sovereign insider, was paid for by the Spanish bank and dismissed the concerns of shareholders opposed to the acquisition. As a result, says this source, Bracewell ignored dubious dealings by Santander, such as its donations to Venezuelan president Hugo Chávez’s political campaigns and its connections to Cuba and Iran (Santander was fined by the U.S. in 2004 for doing business with Cuba and has come under scrutiny for trading with an Iranian bank blacklisted by the U.S. for links to terrorism), not to mention the fact that its C.E.O. had been investigated for corruption. “I questioned why Rudy stuck his neck out like that,” the insider says. “Obviously it was for a fee, but with his long-term aspirations there didn’t seem like a lot of upside.” (Bracewell says that the firm was hired by Santander to assess the proposed investment and found that the bank “had fully and completely complied with all laws relevant to the transaction.”)

From the Archives

“Cheer and Loathing in New York,” by Gail Sheehy (June 2000), about the showdown between Rudy and Hillary in that year’s Senate race—before Rudy bowed out

“Giuliani’s Princess Bride,” by Judy Bachrach (September 2007)

“Crazy for Rudy,” by Michael Wolff (June 2007)

Illustration by Risko.

Almost immediately after the buy-in, Sovereign’s chairman, Jay Sidhu, resigned with a $44 million parachute. In November of that year, Giuliani gave a speech, for $100,000, at the Jay S. Sidhu School of Business & Leadership at Wilkes University, in Wilkes-Barre, Pennsylvania.

When the Chicago Tribune asked Bracewell managing partner Daniel Connolly about the timing of these events, Connolly said that Giuliani’s speech had no connection to the Bracewell review, which in any case was completed nine months before the speech. But a Wilkes University spokeswoman told the Tribune that, in fact, the university had identified Giuliani as a potential speaker in April 2006, formally asked him to speak in May, and signed a contract with him on June l3—two weeks after the Santander-Sovereign deal closed. (Giuliani’s speeches were arranged by the Washington Speakers Bureau.)

In the businesses that Giuliani built and bought these last six years, more deals have yet to be examined, more dots connected in the picture of his great financial success. But enough are there already, with lines between them, for a shape to have clearly emerged. It’s a picture of a politician leading a parade, as Mayor Giuliani so often did. Only the marchers behind him aren’t drum majorettes or wartime veterans or firefighters or police. They’re a ragtag band of Texas lawyers and energy lobbyists, penny-stock sharpies and security-industry entrepreneurs, agog with visions of the ultimate pay-to-play presidency.”

With additional reporting by Christopher Bateman.

Michael Shnayerson is a Vanity Fair contributing editor.