US: Giuliani Had Ties to Company Trying to Sell Border Technology

Publisher Name: 
New York Times
On the presidential campaign trail, former Mayor Rudolph W. Giuliani
often promotes the installation of electronic monitoring devices at
the border to stem illegal immigration, without mentioning that until
a few months ago, he was partner in a company trying to market such
technology.




Mr. Giuliani and his consulting company were part owners of SkyWatch
L.L.C., a closely held start-up company that says it has developed a
sensor capable of monitoring illegal border crossings. SkyWatch, in
collaboration with Raytheon, a large military contractor, is now
looking to market the technology to the federal government and
elsewhere.




Mr. Giuliani's company, Giuliani Partners, was invited to join the
venture more than two years ago by Abdol Moabery, then the chief
executive of SkyWatch's parent company, who went on to help the
Giuliani campaign raise money in Florida.




As part of its work, an executive of Mr. Giuliani's company met
several times with development teams at Raytheon. But the financial
relationship ended in September when Giuliani Partners gave up its
ownership stake in SkyWatch without compensation.




For nearly a year, Mr. Giuliani has extolled the benefits of a
technological approach to border security. Among his efforts has been
a radio advertisement, which went on the air in August, called
"Fence," in which he spoke of the need for a "technological fence"
at the border.




"You stop illegal immigration by building a fence, a physical fence
and then a technological fence," Mr. Giuliani said in the ad. "You
then hire enough border patrol so they can respond in a timely
way."




But neither in the ad, nor in other campaign settings where the issue
has come up, has Mr. Giuliani mentioned his involvement with a company
developing this technological fence.




No one has suggested that Mr. Giuliani adopted his position because of
his relationship with SkyWatch. He has continued to promote the
concept since his relationship with the company ended, including
during recent campaign discussions. A spokeswoman for his campaign
said Mr. Giuliani's longstanding support for a technological fence
was not related to his involvement with SkyWatch. "It's one part
of Rudy's comprehensive plan to end illegal immigration because it
makes sense and is good policy," the spokeswoman, Maria Comella,
said.




Last month, SkyWatch and Raytheon announced that the sensor, capable
of monitoring more than 400 square miles from atop a tower, was
available for sale. Industry analysts say the technology has a
lucrative future, including a possible role in a multibillion-dollar
federal program to help secure the nation's borders.




Gary Reese, the manager of SkyWatch, said the company ended its
involvement with Giuliani Partners when it became clear the consulting
company could not meet its contractual obligations. He said Giuliani
Partners had essentially bartered for a 12.5 percent share of SkyWatch
by committing to develop business and marketing plans and to raise $7
million in capital. But the companies amicably parted ways when those
commitments were not reached, Mr. Reese said.




Mr. Giuliani's company was not paid for the work it performed, other
than to receive a share of the company, which it has since
relinquished, Mr. Reese said.




Pasquale J. D'Amuro, the Giuliani Partners executive who oversaw the
project, explained the split by saying that he had found the
technology promising but did not feel it had progressed to a point
where he could promote it to potential investors.




Mr. Giuliani declined to be interviewed for this article. In response
to a question last summer, he told an interviewer for The New Yorker
that his role with the project would not give it any advantage in
securing a federal contract were he to become president.


Dennis F. Thompson, a professor at Harvard's Kennedy School of
Government who has written extensively on political ethics, said Mr.
Giuliani should have mentioned his ties to SkyWatch when promoting the
fence concept in his campaign.




"We should know as citizens when a candidate makes a proposal of
this sort who stands to benefit," Professor Thompson said. "If the
candidate himself is one of the beneficiaries, we want to take that
into account."




Professor Thompson said the potential conflict is more acute when the
candidate is an active partner in a closely held company, as opposed
to a shareholder in a public corporation.




Mr. Giuliani disclosed his ownership interest in SkyWatch last May in
a federal financial disclosure form that candidates must file. The
listing does not specify the products SkyWatch is developing. For the
three other companies in which Mr. Giuliani's company held an
ownership stake, the form describes the specific products or services
they offer.




The value of the SkyWatch holding is not specified on the form, and is
lumped in with the total value of Mr. Giuliani's consulting work and
other businesses.




Candidates for president often take measures with their investments to
avoid an appearance of conflict of interest. Last June, for example,
Senator Hillary Rodham Clinton sold off the assets of a blind trust
she owned, including shares of Raytheon stock.




Reducing illegal immigration has been a touchstone issue in the race
for the Republican Party's presidential nomination, and Mr. Giuliani
has often been accused by other candidates of having run "a
sanctuary city" as mayor of New York.




A major element of his own position on the issue involves creating
technological fences to block illegal immigrants at the border. On
Feb. 5, 2007, the day he filed his statement of candidacy papers, Mr.
Giuliani pushed the idea during a television appearance on the Fox
News program "Hannity & Colmes."




"I support security at the borders," Mr. Giuliani said. "I do
think that with the fence, the fence honestly has to be a
technological fence."




According to SkyWatch, the new sensor, called the Eagle-300, can
continuously monitor at 360 degrees, even while zooming in to examine
multiple targets. Existing sensors lose the ability to monitor
everything else when they focus on a single object, creating gaps in
the field of view, according to the company.




The Department of Homeland Security expects to spend at least $7.6
billion on its Secure Border Initiative through 2011 and has picked
Boeing to develop a plan that includes technological fence
applications.




Mr. Reese said SkyWatch has pitched its technology to Boeing, the
federal government and other countries.




John Slye, an analyst of federal markets for Input, a Virginia-based
consulting company, said he knew of no other company using such
technology. He called the SkyWatch product a "quantum leap."




"I think you can easily say within the government side you're
looking at the potential market of tens of millions of dollars," he
said.




Last January, Raytheon signed on to build the Eagle-300 for SkyWatch
on a fast track.




Mr. D'Amuro said he, but not Mr. Giuliani, had attended meetings
with Raytheon. He said neither of them had any contact with the
federal government on the project.




Mr. Moabery, a former New Yorker, runs G A Telesis, a Florida
commercial aviation leasing and finance company. He left SkyWatch in
December 2006. Mr. Moabery remains a shareholder in its parent
company, Mr. Reese said.




The Giuliani campaign declined to say how much money Mr. Moabery has
brought into the campaign. Mr. Moabery held a fund-raiser at his
Florida home last March, which Mr. Giuliani attended. G A Telesis
executives and their spouses have given the Giuliani campaign $20,200,
according to federal filings.

"My enthusiasm and
support of RG's campaign results from my having lived in NY during
his tenure as mayor," Mr. Moabery wrote in an e-mail message on
Thursday, in response to questions about his backing of Mr. Giuliani.
"I felt he did a fantastic job."
AMP Section Name:Money & Politics
  • 13 Raytheon
  • 106 Money & Politics
  • 116 Human Rights
  • 204 Manufacturing