Staying in the Black

BKSH Weathers the Exit of Charlie Black

Posted June 6, 2008 at 5:46pm

Its most powerful rainmaker may be gone, but BKSH & Associates is still betting on Black.

In recent months, the venerable lobby shop has faced not only the departure of one of its founding members and key strategists, Charlie Black, to a prominent role in presumptive GOP presidential nominee John McCain’s campaign, it has also taken heat for the work Black did on behalf of half a dozen foreign dictators, starting in the mid-1980s.

That’s no small price to pay for a firm whose clients expect it to perform its Washington lobbying duties outside of the spotlight.

One thing, however, could make the scrutiny worth it: a McCain White House.

Although Black has severed his ties to the firm, in a business where connections are everything, a McCain victory would mean that BKSH would, at the very least, be viewed as a lobby shop with some very close ties to the White House. And given the Arizona Senator’s maverick tendencies against certain mainstream business interests, such as defense contractors and pharmaceutical companies, that could mean potential sway with McCain when much of the business community is going to be forced to play defense.

For years, Black has moved between the private sector and various political campaigns, but he has always returned to lobbying. That is why, after helping turn BKSH into a multimillion-dollar lobby firm, his March departure to become a full-time senior adviser to McCain was so surprising.

“I tried to argue with him,” BKSH President and CEO Scott Pastrick said of Black’s decision to cut ties with the firm he founded more than two decades ago. “I told him to take a leave of absence without pay, but he felt very strongly that it was important that he would resign in order to take on the kind of responsibility that he was going to take on.”

Black, 60, retired from BKSH without a compensation package, said Howard Paster, executive vice president of public relations and public affairs at WPP Group, which, along with BKSH, owns such D.C.-based lobby shops as Quinn Gillespie & Associates, Timmons and Co., and Wexler and Walker Public Policy Associates. Black declined to be interviewed for this article.

Since Black’s departure, Pastrick elevated B. Oglesby, a Reagan administration appointee and former tobacco lobbyist who most recently served as chief of staff to U.S. Trade Representative Robert Zoellick, to replace Black as chairman of the firm.

A North Carolina native, Black honed his political chops on the campaign trail, working on every Republican presidential campaign since 1972.

Early on, Black became known for his behind-the-scenes work as the GOP’s go-to message man, a job where he met some of his closest friends, including hardball Republican strategist Lee Atwater.

The pair, who worked together on the 1980 Reagan presidential campaign, came to be like brothers, said Ed Rogers, a Republican lobbyist at BGR Holding. In fact, Atwater, who died in 1991, joined Black’s firm for a time.

Between stints on the campaign trail, Black decided to start a lobby firm. In 1981, along with Republican strategists Paul Manafort and Roger Stone, he opened Black, Manafort & Stone, a Republican lobby shop headquartered in Old Town Alexandria, Va.

Four years later, after the prevailing trend of bipartisan lobby shops, Black brought on former Democratic National Committee treasurer Peter Kelly and Pastrick, who had served as deputy finance director in former Vice President Walter Mondale’s 1984 presidential bid. The additions also led to the first of many name changes for the firm, which then became known as Black, Manafort, Stone & Kelly.

Acquired by the public relations shop Burson-Marsteller in 1991, Black’s firm later merged with Gold & Liebengood, which had been bought by Burson in 1989.

In 1996, Black’s firm and Gold & Liebengood merged, forming Black, Kelly, Scruggs & Healey, a name which later was changed to BKSH after John Scruggs left to become a lobbyist for tobacco giant Philip Morris.

(Burson’s parent, Young & Rubicam, was acquired by WPP in 2000.)

Today, only one of Gold & Liebengood’s original partners, Democratic lobbyist Chuck Merin, is still at the firm; name partner Martin Gold is now at Covington & Burling; former Senate Sergeant-at-Arms Howard Liebengood died in 2005.

Still, turnover at the firm, which has some 20 lobbyists, has been minimal.

Many BKSH lobbyists have been there for a decade or more. On the Democratic side, these include Jim Healey, the former top aide to then-Ways and Means Chairman Dan Rostenkowski (D-Ill.), and Jerry Klepner, a former union official and assistant secretary for legislation in the Clinton administration’s Department of Health and Human Services.

Republican Gardner Peckham was a senior foreign policy aide to then-Speaker Newt Gingrich (R-Ga.), while Mark Disler was former chief counsel to the Senate Judiciary Committee under Sen. Orrin Hatch (R-Utah.).

BKSH has also had many of K Street’s top lobbyists pass through its doors, including Wayne Berman of Ogilvy Government Relations; Rick Davis, a McCain campaign advisor and co-owner of Davis Manafort & Freedman; and Nick Panuzio, a Republican from Connecticut who was chairman of the firm until 1996. He now runs his own lobby shop, Panuzio & Giordano.

More recently, international relations specialist Riva Levinson departed to form her own consulting firm, KRL International, and Jeffrey Weiss exited to join Global Policy Partners.

As BKSH grew, so did Black’s book of businesses. With longtime clients like AT&T, Bethlehem Steel, GTech and the government of Puerto Rico, Black was the firm’s biggest rainmaker, according to several lobbyists with knowledge of its finances.

Using his campaign acumen, Black was also a key strategist for the firm.

“Charlie leads by example,” said Merin of Black’s restrained management style. “Charlie will sit in a meeting and not say a word, but when he finally does open his mouth, people listen.”

Aside from its corporate tax and trade work, by the mid-1980s, the firm started to wade into the sometimes murkier waters of representing foreign governments on retainer.

At the time, Pastrick said, there were already a number of foreign governments lobbying in Washington. And they usually had the same thing in mind.

“It was more about foreign assistance and countries wanting to be more competitive for the pot of foreign assistance money,” Pastrick said.

Although foreign government clients can be quite lucrative, they can be equally controversial. Black has taken heat for his work on behalf of former Angolan rebel leader Jonas Savimbi. For the better part of the 1980s, Black helped set up several meetings to try and garner support and foreign aid for Savimbi, according to records the firm filed with the Department of Justice.

Yet Pastrick contends that not only was Black not the lead consultant for Savimbi, but it was a bipartisan effort.

“As for supporting Savimbi, the politics of it may not be for everybody, but it was a pretty bipartisan effort,” Pastrick said. “It was something the Democrats felt very strongly about in the firm. Collectively, we decided it was the right thing to do.”

In addition to Savimbi, BKSH has represented other foreign clients whose human rights records were criticized, including former Philippine President Ferdinand Marcos, former Somali President Mohamed Siad Barre and former Nigerian Gen. Ibrahim Babangida.

More recently, the firm’s foreign representations have dropped significantly. As of its latest filing with the Department of Justice in December, BKSH was representing three foreign clients: Pakistan, Greece and Cyprus.

Last year, the firm terminated 14 clients, including Lockheed Martin and Hormel Foods, according to lobbying disclosure reports. Those clients accounted for $1.3 million worth of lobbying income in 2006.

The firm reported $7.35 million in federal lobbying fees in 2007.

In the first quarter of 2008, BKSH reported $1.9 million in lobbying fees while terminating seven lobbying contracts for groups like the American Hotel & Lodging Association, the National Association of Passport and Visa Services, and Yukos International. BKSH reported $370,000 in income from those seven clients last year.

Pastrick declined to discuss details of the firm’s lobbying clients, because BKSH is owned by a publicly traded company and any information could be construed as a forward-looking statement. But he said the terminations were not necessarily reflective of what is happening at the firm.

“The firm has had the best year we have ever had,” said Pastrick, who suggested that clients may have not met the threshold necessary for the lobbying disclosures.

He also noted that the amount of Lobbying Disclosure Act work BKSH has done has shrunk while the firm has at the same time increased its strategic consulting services.

So far, the firm’s parent company, WPP, doesn’t appear to be nervous that Black’s departure will affect business.

“Obviously Charlie and Scott have been the bipartisan bookends,” WPP’s Paster said. “Charlie’s retirement is disappointing, but with B. Oglesby I think we’ll be fine.”

This isn’t the first time a WPP subsidiary has gone through the exit of a major firm partner. Paster noted that Quinn Gillespie & Associates’ co-founder and former Republican National Committee Chairman Ed Gillespie left to become a counselor to President Bush, cutting all ties with his old firm in the process.

Paster said he doesn’t expect the media flare-up surrounding Black and the lobby shop’s foreign representations to have a major effect on the firm. “I think the clients who are pretty sophisticated about Washington, it’s no big deal; for others, it might pose more questions or interest.”