Giuliani’s Consulting Firm Reflects Businesslike Trend

Former New York Mayor Rudolph Giuliani, reveling in public adulation for leadership of the city after terrorist attacks Sept. 11, is starting a consulting business, Giuliani Partners, along with key aides from his two terms as mayor, including the former commissioners of the police and fire departments.

Consulting firms are a dime a dozen in the U.S. economy, however. What unique capability does Giuliani Partners offer business clients? “I think we know as much as anyone about security in the modern world, how to protect people, how to react to a crisis,� Giuliani says, citing a strength demonstrated in the months since Sept. 11.

But the former mayor, a lawyer and former prosecutor of organized and white-collar crime, stressed other capabilities in an interview in Los Angeles the other day.

The aim of Giuliani Partners, which hopes to bring in at least

$20 million a year in revenue, is to show corporations, other cities and large organizations “how we took a $40-billion city that was seen as unmanageable and ran it like a business,� he says.

That’s not a bad idea. Cities began to be “run like businesses� in the last decade, as a new breed of mayors, including Giuliani, focused on business efficiencies rather than political patronage to staff municipal operations and concentrated on attracting new businesses to their towns.

And the new decade even more than the last will demand that cities be “run like businesses,� so Giuliani could be on to a growth field.

The $40-billion figure he cites for New York is a reference to the budget and reach of that city’s government, which owns 17 hospitals and the nation’s largest school system. By contrast, the city of Los Angeles’ annual budget is about $6 billion--$12 billion if the harbors, airports and the Department of Water & Power are included. New York employs 250,000 compared with about 46,000 for Los Angeles.

“We ran the city by using constant statistical analysis of each city agency to increase accountability,� Giuliani says. “For example, in the Police Department we measured crime statistics every day in 77 precincts of New York City, looking for areas where crime was going up and then assigning resources to bring crime down,� the former mayor says.

Giuliani won public approval in his first term as mayor by reducing crime in New York, using a technique called “broken windows� by its developer, criminologist James Q. Wilson. Crime prevention begins with zero tolerance for broken windows, goes the theory, because a neighborhood that tolerates broken windows, graffiti and other minor crimes soon is forced to tolerate drug dealing, robbery and more serious crimes.

“Broken windows is the philosophy, the computer statistical program is the management system that executes that philosophy,� Giuliani says.

His administration applied daily statistical reporting to 26 city agencies, from welfare and hospitals to Off-Track Betting, the legal horse-betting operation owned by New York city and state that was set up decades ago to raise funds for education.

When Giuliani took office in 1994, OTB was losing $7 million a year-- “the only bookmaking operation in New York that lost money,�’ says Giuliani, who grew up in Brooklyn and in the city’s Long Island suburbs.

“The illegal bookies run their operations like a business, but OTB was being run as a political patronage activity,� Giuliani says.

So his administration closed some of the betting operation’s 65 outlets, cut expenses and got the state to approve televised betting so gamblers, using a special credit card, could play the horses from home.

“OTB is making a profit today and the city could sell it to private industry for $350 million,� Giuliani says.

And indeed New York may have to sell OTB. The city is facing a budget deficit of historic proportions because tax collections from Wall Street firms are down since the stock market’s slide in 2001 and the devastation of the Financial District on Sept. 11.

Giuliani’s successor, Mayor Michael Bloomberg, the founder of Bloomberg Communications, is having to make budget cuts that Giuliani did not make in his final year, including canceling Giuliani’s approvals for city funds to help build new baseball stadiums for the Yankees and Mets.

Giuliani himself was failing to run New York “like a business.� He acknowledges that the city faces long-term debt problems to “build schools and rebuild bridges,� but avoids discussing the city’s looming budget deficit, saying only that city finances are sound.

Clearly, Giuliani is moving on to his consulting business and a future in which he hopes for new political office. The 57-year-old former mayor, a Republican who campaigned for President Bush in 2000 despite suffering through treatments at that time for prostate cancer--he is now cancer free--intends to speak out on political questions nationally.

“I’m going to remain very active,� says Giuliani, who is mentioned in political circles as a possible candidate for New York governor or senator or even as a candidate on the Bush 2004 ticket if Vice President Cheney retires.

After a career dedicated mostly to public service, Giuliani is not a wealthy man. So to make more money than a typical consulting practice would earn, Giuliani Partners plans to make investments “where we can take over or participate in companies and enhance the value by our expertise and background.�

Given their expertise in urban affairs, that could mean companies providing services to cities on a contract basis or companies redeveloping America’s inner cities--a growth field for the new decade, experts say.

Of course, Giuliani has years of experience in white-collar crime. A graduate of Manhattan College and New York University’s law school, Giuliani served as U.S. attorney in New York City in the 1980s.

“I prosecuted Ivan Boesky and Michael Milken and all the other Wall Street scandals of that time,� he says.

And prevention of white-collar crime also could be a growth industry for the new decade. Giuliani sees similarities between the Wall Street scandals of the 1980s and Enron today.

“I don’t think any of us know the final results of Enron, but a clear conclusion is that you can never allow your business to become more complicated than you can keep control of,� Giuliani says.