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GM Axes Consultants

In-House Team Will Stay

General Motors Corp. is firing all of its outside lobbyists as part of the automaker’s massive court-supervised reorganization, the company confirmed on Tuesday.

“We have begun notifying our outside consultants that we will be terminating their contracts,” GM spokesman Greg Martin said on Tuesday afternoon.

The Duberstein Group, which raked in the most fees from GM during the first three months of the year, confirmed late Tuesday that it had been notified by the company.

According to Senate disclosure statements, GM spent $2.8 million on lobbying during the first three months of 2009, including $100,000 in fees to Duberstein, $70,000 to the Washington Tax Group and $60,000 to the Nickles Group.

All three would not comment on the terminations.

“We never talk about clients,” Duberstein lobbyist Michael Berman said.

A spokesman for Greenberg Traurig, which was paid $20,000 by GM in the first quarter, said the firm had not been notified by GM as of late Tuesday afternoon.

The once-storied maker of Cadillac, Chevrolet and Pontiac sought bankruptcy protection Monday, telling a New York court that it had reached a deal that would make the U.S. government, bondholders, retirees and Canadian authorities all owners in a new company.

Under the plan, which could be finalized within two months, U.S. taxpayers would own 60 percent of GM. The remaining GM shares would be divided between the company’s debtors, the governments of Canada and Ontario and a health care trust fund benefiting union retirees.

GM’s announcement appears to be a pre-emptive move, as it was widely expected that Bankruptcy Judge Robert Gerber ultimately would have taken issue with the lucrative contracts, said former Rep. Robert Walker (R-Pa.), a lobbyist at Wexler & Walker Public Policy Associates.

“Very often the bankruptcy judges have forced companies to eliminate a lot of their consultants as part of the bankruptcy proceedings,” Walker said.

But, he said, “we’ve never had a situation that I’m aware of where the government ends up being such a percentage owner of the company at the end.”

Walker also said that the new and complex legal issues presented by GM’s historical bankruptcy filing do not stop at lobbying.

“Then there are considerations about whether a company that’s owned by government can then, in fact, employ people who would provide help to them in advocating against government policies or about government policies,” Walker said.

And while its contract lobbyists may be out in the cold, the GM spokesman said the company will keep its in-house team intact. Its political action committee, however, will remain dormant until at least Jan. 1, 2010.

GM’s PAC had about $400,000 in cash as of May 1. According to CQ MoneyLine, the PAC last cycle gave $249,758 to Democratic candidates and $236,750 to Republicans, a dramatic change from previous cycles.

In the 2006 cycle, GM’s PAC gave nearly 75 percent of its federal contributions to Republicans. Since 1980, the company has given 67 percent of its PAC contributions to Republicans.

“We suspended PAC donations Jan. 1 [2009] and have not donated to any federal candidate this year,” Martin said. “We fully expect that to continue through 2009.”

Newly minted GM CEO Fritz Henderson will be on Capitol Hill on Wednesday, appearing before the Senate Commerce, Science and Transportation Committee. Along with Chrysler President James Press and National Automobile Dealers Association Chairman John McEleney, Henderson will testify on the economic impact of the recent Chrysler and GM bankruptcies, which are expected to slash the number of auto dealerships around the country.

GM’s announcement that it is axing its outside lobby team would appear to satisfy watchdog groups like Public Citizen — but not entirely. Craig Holman, a Public Citizen lobbyist, said the now-taxpayer-owned GM “should be treated as a quasi-government organization, much like Freddie Mac or Fannie Mae.” The two mortgage giants, which were put into conservatorship last year, both had their political and lobbying operations dismantled entirely by the federal government.

“General Motors should not be trying to operate itself as a special interest distinct from the public’s interest. They are a public entity and, quite frankly, the government had to take over to make sure the public interest is ensured here,” Holman said.

“General Motors should not be operating as an independent special interest group ... no more than a government agency should be allowed to make lobbying expenditures or campaign contributions.”

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