Last Tuesday afternoon, Calio was out spinning the Republican message on CNN, defending Bush and lashing out at Democrats for their “personal attacks” on the president during the run-up to the State of the Union address.
“[The president] thinks that the greatest resource we have is the American people, with their resolve in trying to get things done,” said Calio. “And I think they will see it in him. It’s reflected in them. And we’ll move forward from there.”
CNN made no mention of the fact that Calio had just been hired by Citigroup Inc., the largest financial-services company in the United States, as a senior vice president and head of Citigroup’s government affairs operations here and abroad. The move by Citigroup, which has had a reputation in Washington of being cozy with Democrats, is a strong signal that the company is moving dramatically to improve its ties with the Republican Party.
‘It sounds like they realize that having Rubin as one of their most visible people is not useful when you have a Republican president and Republican Congress,’ said one GOP source.
In addition to hiring Calio, Citigroup has also signed up several other well-connected GOP lobbyists during the past several months, including former Rep. Bill Paxon (R-N.Y.), ex-Republican National Committee Chairman Haley Barbour and Bush confidant Ed Gillespie of Quinn Gillespie & Associates, to watch over its interests on Capitol Hill. Paxon now works for Akin Gump Strauss Hauer & Feld, while Barbour is chairman and CEO of the GOP-only firm Barbour Griffith & Rogers and a likely Republican gubernatorial candidate in Mississippi this fall.
And there is talk of further changes in Citigroup’s Washington office by Calio, who also became part of the powerful management committee within Citigroup when he was brought aboard. Calio officially started in his new post last week.
Calio has been given a mandate to “shake things up,” said several sources who have spoken with him in recent weeks.
“They didn’t hire him for nothing,” said a GOP lobbyist close to the company. “They’ve had problems communicating with Republicans. There was a cultural issue there.”
Most of the blame for that perception is laid at the feet of Sanford Weill, Citigroup’s chairman and CEO, and Robert Rubin, the former Treasury secretary who now chairs Citigroup’s executive committee. Weill, who has contributed to the campaigns of many prominent Democrats over the years, was personally close to former President Bill Clinton. Rubin, of course, served as Treasury secretary during Clinton’s tenure in the White House.
“It sounds like they realize that having Rubin as one of their most visible people is not useful when you have a Republican president and Republican Congress,” said a GOP source of the hiring of Calio and the other Republican lobbyists.
Citigroup spends $4 million-plus annually on its lobbying activities, which puts it in the upper tier of corporations and trade associations, and employs a host of outside firms including Barnett & Sivon, Baker & Hostetler, Sullivan & Baldick, Venn Strategies and Washington Council Ernst & Young, among others.
While Roger Levy, a Citigroup senior vice president and director who oversaw federal affairs prior to Calio’s arrival, is a well-known Republican with ties to former GOP vice presidential candidate Jack Kemp, the hiring of Calio has set off a tremendous round of speculation within Gucci Gulch about what will come next.
Some lobbyists believe Calio will re- examine whether Citigroup will continue to use all the firms now on its payroll, although Citigroup officials declined to comment for this article. Calio was also unavailable for comment, as well.
House Majority Leader Tom DeLay (R-Texas) is well-known for pressuring companies to use GOP lobbyists when dealing with the Republican Congressional leadership or to hire former GOP staffers as lobbyists. Paxon is particularly close to DeLay and Speaker Dennis Hastert (R-Ill.).
“I advise all my clients, including Citigroup, to be as supportive of Republicans in every way they can,” said former Rep. Guy Vander Jagt (R-Mich.), now a lobbyist with Baker & Hostetler. “Especially if they are aiming at the House.”
Despite its pro-Democratic image, Citigroup actually gave slightly more in PAC donations to GOP lawmakers and incumbents than to Democrats in the last election cycle, although there was a huge lead for Republicans in now-banned soft-money contributions.
But Citigroup also has poured hundreds of thousands of dollars into other Democratic-affiliated organizations. Citigroup gave $75,000 to the New Democrat Network last cycle, and another $130,000 to the Democratic Governors’ Association.
There has been lots of work for Citigroup lobbyists in the past year. Citigroup and its Salomon Smith Barney subsidiary have come under intense federal scrutiny since the implosion of failed energy giant Enron Corp. in December 2001, which touched off a wave of corporate scandals that rocked Wall Street.
Rubin, who joined Citigroup in 1999 after four and a half years as Treasury secretary, contacted a top Treasury Department official in November 2001 seeking his help as Enron was sliding into bankruptcy. Citigroup was one of Enron’s biggest creditors with hundreds of millions in loans outstanding, and GOP Congressional leaders seized on Rubin’s intervention to help prove that Enron’s collapse was a bipartisan problem, not just a Republican one. Rubin did not violate any federal rules or regulations by placing his call on behalf of Enron, according to a Senate Governmental Affairs Committee report released last month.
Citigroup has also been criticized for its role in some of the highly questionable financing deals arranged by Enron. Internal Citigroup documents showed that company officials had doubts about participating in some of the agreements, a number of which were allegedly designed just to show paper profits for Enron. The release of those documents has proven highly embarrassing to Citigroup, as well as exposed the company to lawsuits filed by disgruntled Enron investors.
Jack Grubman, the former star tech analyst for Salomon Smith Barney, has attracted a lot of attention as well. Grubman was close to top officials at failed telecom company WorldCom, recommending WorldCom stock to investors even as the company fell apart. Former WorldCom officials have been accused of misstating the company’s revenues by as much $9 billion in an effort to prop it up.
Grubman gave $100,000 to the Democratic Senatorial Campaign Committee on the same day he was subpoenaed by the House Financial Services Committee last year as it probed WorldCom’s failure, a move that brought howls of protest from Republican lawmakers.
Grubman agreed in December to pay $15 million to avoid criminal fraud charges from the New York attorney general, and Citigroup itself paid $300 million as part of the WorldCom settlement.