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In western Virginia, far from the limelight, United
States Attorney John L. Brownlee found himself on the telephone last year
with a political and legal superstar, Rudolph W. Giuliani. For years, Mr. Brownlee and his small team had been
building a case that the maker of the painkiller OxyContin had misled the
public when it claimed the drug was less prone to abuse than competing
narcotics. The drug was believed to be a factor in hundreds of deaths
involving its abuse. Mr. Giuliani, celebrated for his stewardship of New
York City after 9/11, soon told the prosecutors they were wrong. In 2002, the drug maker, Purdue Pharma of Stamford,
Conn., hired Mr. Giuliani and his consulting firm, Giuliani Partners, to
help stem the controversy about OxyContin. Among Mr. Giuliani’s missions
was the job of convincing public officials that they could trust Purdue
because they could trust him. So it was no small success when, after the call, Mr.
Brownlee did what many people might have done when confronted with such
celebrity: He went out and bought a copy of Mr. Giuliani’s book, “Leadership.” “I wanted to be prepared for my meetings with
him,” Mr. Brownlee said in a recent interview. Over the past few weeks, Mr. Giuliani’s consulting
business has received increasing scrutiny, at times forcing him to defend
his business as he campaigns for the Republican presidential nomination. But his work for Purdue, the company’s first and
longest-running client, provides a window into how he used his standing as
an eminent lawyer, a Republican insider and a national celebrity to aid a
controversial client and build a business fortune. A former top federal prosecutor, Mr. Giuliani
participated in two meetings between Purdue officials and the head of the
Drug Enforcement Administration, the agency investigating the company.
Giuliani Partners took on the job of monitoring security improvements at
company facilities making OxyContin, an issue of concern to the D.E.A. As a celebrity, Mr. Giuliani helped the company win
several public relations battles, playing a role in an effort by Purdue to
persuade an influential Pennsylvania congressman, Curt Weldon, not to
blame it for OxyContin abuse. Despite these efforts, Purdue suffered a crushing
defeat in May at the hands of Mr. Brownlee when the company and three top
executives pleaded guilty to criminal charges. Mr. Giuliani, who declined to discuss his work for
Purdue for this article, has refused to talk in detail about his firm’s
clients. He has said that he is no longer involved in the day-to-day
management of the firm, which still represents Purdue. Giuliani Partners would not say how much Purdue had
paid it, but one consultant to the drug maker estimated that Mr.
Giuliani’s firm had, in some years, earned several million dollars from
the account. “Everything I did with Giuliani Partners has been
totally legal, totally ethical,” Mr. Giuliani recently told The
Associated Press. “There’s nothing for me to explain about it. We’ve
acted honorably, decently.” In the OxyContin case, Mr. Giuliani’s supporters
suggest that as a cancer survivor himself, he was driven by a noble goal:
to keep the company’s proven pain reliever available to the widest
circle of sufferers. “I understand the pain and distress that
accompanies illness,” Mr. Giuliani said at the time. “I know that
proper medications are necessary for people to treat their sickness and
improve their quality of life.” To drive OxyContin’s sales, Purdue, beginning in
1996, set in motion what D.E.A. officials described as perhaps the most
aggressive promotional campaign for a high-powered narcotic ever
undertaken. It promoted the drug not only to pain specialists, but to
family doctors with little experience in treating serious pain or
recognizing drug abuse. As a result of the expanded access, critics charged,
OxyContin wound up in the high schools and street corners of rural America
where curious teenagers crushed the pill, defeating the time-release
formula, and ended up addicts, or in some cases, dead. Dennis Lee, the Virginia state prosecutor for
Tazewell County, an area hard hit by OxyContin abuse, said he was stunned
several years ago to learn that Mr. Giuliani was working for Purdue. He
had a favorable impression of Mr. Giuliani, he said, and a poor opinion of
the company, which he said had played down and dissembled about its
drug’s problem. “I was shocked,” Mr. Lee said, “that he would
basically become a mouthpiece for Purdue.” Denials and Lobbying
Giuliani Partners served clients with a range of
needs. The firm helped large accounting firms fight computer hackers and
promoted Nextel’s efforts to expand its access to public airwaves. But
some of the 55-person firm’s clients, like Purdue Pharma, were facing
more difficult legal and public relations problems. There were, for instance, the backers of a planned
natural gas terminal in Long Island Sound who were facing stiff
environmental opposition. Another client was a former cocaine smuggler
hoping to win federal contracts for a computer system to track down
terrorists. On the business of these clients and others, Giuliani
Partners carved out a lucrative niche in corporate consulting, crisis
management and security. In the process, Mr. Giuliani, a Brooklyn native whose
legal career had largely been spent in government, became a corporate
trouble-shooter with homes in the Hamptons and on the Upper East Side.
According to financial disclosure forms filed in May, his net worth was
more than $30 million. The crisis that brought Purdue to Mr. Giuliani in
2002 involved OxyContin, a time-released form of the narcotic oxycodone,
which had turned into a blockbuster product with annual sales of more than
$1 billion. But along the way, the pain medication had also
become a popular drug for abuse. Among the company’s critics were
officials at the Drug Enforcement Administration who said OxyContin had
been a factor in hundreds of overdose deaths. Some D.E.A. officials and
others also charged that Purdue had hyped the drug’s resistance to abuse
and then failed to act swiftly when its misuse became apparent. Purdue Pharma, which is owned by the Sacklers, a New
York-area family who are known as museum benefactors, denied it had done
anything wrong. But facing a growing number of investigations and
lawsuits, it spent millions on public relations experts, lobbyists and
top-tier law firms. One piece, however, was missing: a highly credible
and well-connected political figure to serve as its point man. Purdue
Pharma executives saw Mr. Giuliani as that person, said a former company
spokesman. “He was just on cover of Time Magazine, Man of the
Year,” that former official, Robin Hogen, said. “Everyone was talking
about his extraordinary leadership in 9/11.” Giuliani Partners became involved in every aspect of
the company’s problems, from the ballooning investigation by Mr.
Brownlee to repairing its battered image. Mr. Giuliani personally took on
some tasks, but a half-dozen members of his firm, including Bernard B.
Kerik, the former New York City police commissioner, were also involved. Mr. Giuliani’s most important liaison to the
company was Daniel S. Connolly, who had been a top lawyer in his
administration. He spent so much time at Purdue that he was issued a
security pass. “His judgment was always sought on almost any
topic,” said Mr. Hogen, who now works for a public relations agency in
San Francisco. Mr. Connolly regularly attended Monday morning crisis
management sessions to develop programs that would shift the public
spotlight away from OxyContin. The issue, the company said, was not its
conduct but the larger question of prescription drug abuse. To help draw attention to that issue, Mr. Giuliani
became the public face of a program called Rx Action Alliance, a
consortium of drug makers, physicians and law enforcement authorities
working to curtail such abuse. “He was America’s mayor,” Mr. Hogen said of Mr.
Giuliani’s role as a catalyst for the company’s efforts. “People
were drawn to him.” One person attracted by Mr. Giuliani’s star power
was Mr. Weldon, who was upset because young people in his Pennsylvania
district were abusing OxyContin. Mr. Weldon, who lost his seat in 2006,
said in a recent interview that he had told the company he planned to
publicly speak out against it. “This is really kind of outrageous,” Mr. Weldon
recalled telling a Purdue representative. “You have got to do something
more than say you are concerned about it.” At Mr. Weldon’s urging, the company agreed to
finance a program aimed at curbing prescription drug abuse. It also sent
Mr. Giuliani to an inaugural press conference for the program, held at a
high school in Mr. Weldon’s district. With Mr. Giuliani at his side, Mr.
Weldon opted not to criticize the company. “I am proud to be in Pennsylvania today standing
with Curt Weldon - a true leader,” Mr. Giuliani said at the event. “I
applaud the efforts of Congressman Weldon and of Purdue Pharma in taking
this battle in the right direction.” Credit for Damage Control
Asa Hutchinson, the director of the Drug Enforcement
Administration in 2002, hardly needed an introduction to Mr. Giuliani. So
it was perhaps not surprising that Purdue chose Mr. Giuliani as the person
to meet with Mr. Hutchinson at a time when the drug maker was under
intense scrutiny by the D.E.A. “You need to have somebody who has clout to get in
the door to legitimately make your presentation,” said Jay P. McCloskey,
a former United States attorney in Maine who until recently worked for
Purdue as a consultant. By 2002, Mr. Giuliani was already helping to raise
money for a D.E.A. museum, and his firm was part of a $1 million Justice
Department consulting contract to advise it on reorganizing its major drug
investigations. The D.E.A. was not only critical of how OxyContin had
been marketed, its inspectors had found widespread security and
record-keeping problems at the company’s manufacturing plants. Several top D.E.A. staffers were recommending that
the agency impose severe sanctions against the drug maker, including
possible restrictions on how much OxyContin it could make. At two meetings, the first at Giuliani Partners in
early 2002, Mr. Giuliani and Purdue’s executives argued that they were
already taking steps to eliminate any problems. Mr. Kerik had been sent to Purdue’s manufacturing
plants to revamp internal security, they assured Mr. Hutchinson. The
federal investigators, they argued, should back down and give them a
chance to prove they could handle the problem on their own. After the meetings, Mr. Hutchinson, who generally did
not get involved in individual investigations, asked D.E.A. officials
several times to brief him on the inquiry, Laura Nagel, the official in
charge of it, has said in previous interviews. She declined to comment for
this article. D.E.A. officials say Mr. Giuliani ultimately did not
affect the inquiry’s course. But Purdue Pharma did succeed in favorably
resolving the matter. In 2004, it paid a $2 million fine to settle the
D.E.A. record-keeping charges without admitting any wrongdoing. The sum
was far smaller than the amount first recommended by Ms. Nagel, which one
former D.E.A. official said was $20 million. By the time of the 2004 settlement, it appeared that
Purdue, with Mr. Giuliani’s help, had averted any significant damage. As
the tide was turning, the drug maker’s top lawyer, Howard R. Udell, gave
credit to Mr. Giuliani. “We believe that government officials are more
comfortable knowing that Giuliani is advising Purdue Pharma,” Mr. Udell
said in a promotional brochure put out by Giuliani Partners. “It is
clear to us, and we hope it is clear to the government, that Giuliani
would not take an assignment with a company that he felt was acting in an
improper way.” Parents Not Persuaded
The limits of stature, though, were evident in Mr.
Giuliani’s dealings with Mr. Brownlee, the federal prosecutor from
Virginia, whose case against Purdue had been viewed by the company more as
a nuisance than a threat. It is easy to see how lawyers for Purdue might have
underestimated the prosecutor. He ran a small office with 24 lawyers to
cover 52 far-flung counties. But two of those lawyers, working out of a
satellite office in the tiny town of Abingdon, Va., near the Tennessee
border, had been investigating Purdue since 2002. They had issued some 600 separate subpoenas and
collected millions of company documents. The case stretched the office’s
resources so thin that state prosecutors had to be deputized to handle
other federal cases. By comparison, Purdue’s defense team comprised
all-stars, including Mr. Giuliani, Mr. Connolly and Mary Jo White, a
former United States attorney in New York. Mr. Giuliani had been advising Purdue about how to
respond to Mr. Brownlee’s inquiry since its start in 2002, including
reviewing documents the company had released in response to his subpoenas.
And he shared the defense team’s view that Mr. Brownlee did not have any
evidence to link the company to crimes, several of those lawyers said. Early last year, however, Mr. Brownlee told Purdue
that he was prepared to indict it and three top executives, including Mr.
Udell, the lawyer. The company then handed Mr. Giuliani his most crucial
assignment, to talk Mr. Brownlee down. His selection was not by chance, company
representatives said. They figured Mr. Brownlee, a younger federal
prosecutor, would look up to Mr. Giuliani, who became a legend as a United
States attorney in New York. Between June and October 2006, Mr. Giuliani met or
spoke with the prosecutor on six occasions. During those conversations,
Mr. Giuliani was cordial but pointed in arguing against what he felt were
flaws in the case. Mr. Brownlee would not change course, though, even
when the Purdue legal team appealed, unsuccessfully, at the 11th
hour to his superiors at the Justice Department in Washington. In October 2006, Mr. Brownlee told Mr. Giuliani and
Purdue that he expected to ask for a grand jury indictment by the end of
the month. Plea discussions ensued and Mr. Brownlee ultimately agreed that
the three executives would not have to do jail time. By this time, Mr. Giuliani was actively planning his
presidential bid, as well as tending to other clients. On the day the
legal team completed the plea deals with Mr. Brownlee, Mr. Giuliani was in
Germany, giving a talk to business leaders. He had a conference call with prosecutors for about a
minute, but there really was not much left to discuss, except the weather. “He said that it was raining,” Mr. Brownlee
recalled. In May, Purdue and its executives, after spending
tens of millions of dollars to repair the company’s image, agreed to
plea deals to avoid a trial. Together, they paid $634.5 million in fines
and payments. After years of denial and a high-profile public
relations campaign, the company was forced to admit that it had misled
doctors and patients. But to the parents of young people who had died
getting high on OxyContin, the absence of jail time was evidence of Mr.
Giuliani’s influence. They voiced that view inside and outside the packed
courtroom in Abingdon where the men were sentenced in July. Mr. Giuliani was 360 miles away at the time,
campaigning in Myrtle Beach, S.C., where he met with local firefighters
and talked about 9/11. But his role in the case had been so substantial
and sustained, the presiding judge felt compelled to address the
parents’ concerns. “It has been implied that because Mr. Giuliani is a
prominent national politician, Purdue may have received a favorable deal
from the government solely because of politics,” said the judge, James
P. Jones of United States District Court. “I completely reject this
claim.” Even today, some of those parents are not persuaded.
Ed Bisch, whose son died of an OxyContin overdose, said that he believed
that Purdue got a free pass for years thanks to Mr. Giuliani. “It was all because of Giuliani,” said Mr. Bisch. “And he got to take the money.” |
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