Barbour Set to Reclaim Stake in Firm

Posted May 19, 2004 at 6:59pm

Just months after cutting all ties to the Washington lobbying firm that bears his name, Mississippi Gov. Haley Barbour (R) is poised to reclaim a profitable stake in his old firm under a deal being crafted by his former partners and the international conglomerate that bought the firm in 1999.

Barbour — who resigned as chairman and CEO of Barbour Griffith & Rogers before being sworn in as governor — said shortly after his Inauguration Day in January that “it’s plain to everybody that I have nothing to do with the firm.”

But under the proposed deal, Barbour stands to regain an ownership stake in the firm, which raked in $11.1 million in lobbying revenues last year, making it the 14th-largest firm in Washington, D.C., according to lobbying disclosure reports.

Sources close to the negotiations say that the two GOP lobbyists who founded the firm with Barbour more than a decade ago are nearing an agreement to buy back a portion of the firm from the Interpublic Group of Companies Inc., an advertising and communications company.

“We’re not far apart. It’s all lawyer-driven now,” said one person involved in the negotiations.

Under the terms of the deal, the firm would retain the name Barbour Griffith & Rogers and remain affiliated with Interpublic Group.

But Barbour and the firm’s other partners would regain a significant financial stake in the firm, and would stand to gain financially from its future successes, according to those involved in the negotiations.

It is unclear how much Barbour — a former chairman of the Republican National Committee — personally stands to gain from the deal, since profits for the firm are privately held.

As governor, Barbour will earn $122,160.

Any interest that Barbour could gain in the firm would be placed into a blind trust he established shortly after his inauguration in January.

The trust also manages his other assets and income-earning businesses, such as his stake in the Caucus Room, a Washington steakhouse.

Mississippi law did not require Barbour to create the blind trust, but the state’s law allows Barbour to shield the assets within it from public scrutiny.

Griffin Norquist, a lifelong friend of Barbour’s who manages his blind trust, said Barbour is prohibited from talking about what is in the account. If Norquist were to reveal the holdings in the trust, Barbour could find out what he owns.

“The purpose is to prevent conflicts of interest, by prohibiting the public official from knowing what his financial holdings and interests are,” Barbour’s office said in a statement when he established the trust.

As a result, only Norquist has the power to purchase or sell holdings in the trust.

“Anything placed in the trust would be a trustee’s decision,” said Norquist, the president of the Bank of Yazoo City.

Under Mississippi ethics law, Barbour Griffith & Rogers would be barred from lobbying on behalf of several state-owned universities if Barbour has a financial interest in the firm.

“If you are a public servant of the state of Mississippi, you cannot have a material financial interest in any contractor, subcontractor or vendor that does business with the state,” said Scott Rankin, a spokesman for the state’s ethics commission.

To prepare for Barbour’s return, Barbour Griffith & Rogers has already severed its ties with University of Mississippi, the University of Mississippi Medical Center or the University of Southern Mississippi. Instead, partners Lanny Griffith and Ed Rogers founded a new firm — Griffith & Rogers — that has filled out paperwork to represent the three Mississippi universities in Washington.

Since Barbour left the firm, several other major clients have left Barbour Griffith & Rogers, including the American Trucking Associations, Citibank, Delta Airlines, Lockheed Martin and Lucent Technologies.

However, each of these clients said it did not sever its contract with the firm because of Barbour’s departure.

“It was not renewed due to our own cost-cutting measures and our need to reduce professional fee expenses,” said John Kennedy, a spokesman for Delta Airlines.

Meanwhile, a final deal between Barbour Griffith & Rogers and Interpublic could signal a broader undoing of a longstanding K Street trend — the acquisition of lobbying firms by larger conglomerates.

For the past several years, many of Washington’s lobbying firms have sold themselves to larger holding companies, such as Interpublic, WPP and Omnicom. The deals helped make scores of lobbyists rich. But many lobbyists have come to resent the loss of control and the constant push for cash by their new corporate owners.

Barbour, Griffith & Rogers would become one of the first firms to buy back its interest from a corporate parent. Its four-year deal with Interpublic expired at the end of last year.