Ghouliani Firms Had Potential Conflict of Interest

[jefferson_dem]

Giuliani Firms Had Potential Conflict of Interest
Roles in Delta Bankruptcy Case
May Put Pressure on Campaign
To Open Up About Businesses
By CHRISTOPHER COOPER
May 7, 2007; Page A6

A pair of companies owned by Rudy Giuliani represented both a debtor and a creditor in a recently concluded bankruptcy proceeding, a potential conflict of interest that wasn't disclosed to the federal judge overseeing the case, records show. The matter could heighten pressures on Mr. Giuliani's presidential campaign to be more forthcoming about the candidate's stable of businesses, their clients and the services they provide.

In September 2005, a subsidiary of closely held Giuliani Partners LLC signed a consulting agreement with Delta Air Lines Inc. to provide restructuring advice during the carrier's bankruptcy reorganization, drawing more than $5 million in fees for the service. Then, in January 2006, a separate Giuliani Partners division -- Giuliani Security & Safety -- signed a $2 million consulting deal with Command Security Corp., a tiny provider of security-guard services that had been left with $1 million in unpaid bills when Delta and Northwest Airlines Corp. filed for bankruptcy-court protection in September 2005.

As an adviser to Delta, one Giuliani Partners unit -- Giuliani Capital Advisors -- would be in a position to recommend that the airline give Command business and perhaps even suggest contract terms. Command's chances of being paid by Delta, however, depended entirely on court approval of a reorganization plan worked out with a committee of creditors.

Command says the company's ambition in the bankruptcy case wasn't to recoup owed payments but to "provide additional services" to Delta under new contracts. It had about that time hired another Giuliani Partners unit -- Giuliani Security & Safety -- to drum up new business and by that standard, Command Chairman Bruce Galloway said Mr. Giuliani's firm was instrumental in turning around the company's fortunes. "It was a terrific relationship right across the board," said Mr. Galloway.

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