News Intelligence Analysis

This article can be found on the web at RobertBryce.com

http://www.thenation.com/doc.mhtml?i=20041011&s=bryce

It's a Baker Botts World

by ROBERT BRYCE

[from the October 11, 2004 issue of The
Nation]

The induction of George W. Bush into the Texas crony network
can be traced to a precise date: June 6, 1962. On that date,
the gregarious 15-year-old went to work in the mailroom of Houston's
oldest and most prestigious law firm, Baker Botts.

Four decades later, the financial/political symbiosis between
the Bushes and Baker Botts is stronger than ever. Indeed, no
law firm in America has profited more from its association with
the two Bush Administrations than Baker Botts. Much of that influence
stems from the firm's patriarch, the silver-maned, silver-tongued
former Secretary of State, James A. Baker III. And now that Baker
has joined George W. Bush's campaign--he is leading the negotiations
with the Kerry campaign on the presidential debates--it's assured
that he and a battalion of Baker Botts barristers are ready to
man the ramparts in the event of another Florida recount scenario.

Nearly four years have passed since Baker stridently proclaimed
that "the vote in Florida has been counted and then recounted.
Governor George W. Bush was the winner of the vote. He was also
the winner of the recount." It scarcely matters now that
Baker's statement wasn't true: When Baker made that pronouncement,
on November 11, 2000, the recount had not even begun in two of
the four counties the Gore campaign had targeted. The important
thing was that Baker stuck to the script. He also kept the entire
Bush legal team--which included several Baker Botts lawyers--focused
and determined to win at all costs. Shortly after Bush prevailed
at the US Supreme Court in 2000, Baker told an interviewer, "I
think all this talk about legitimacy is way overblown."

James A. Baker III has never doubted that the Bushes deserve
to live in the White House. Their ties go back to the 1950s,
when George H.W. Bush met Baker on the tennis courts at the Houston
Country Club. At about the same time, Baker Botts began handling
the legal work for Bush's company, Zapata Petroleum. It was a
reasonable choice: Baker Botts is the second-oldest law firm
west of the Mississippi. And since its founding, it has consistently
represented the looters, polluters and plutocrats. Baker's great-grandfather
Judge James A. Baker made his reputation by representing the
infamous railroad robber baron Jay Gould, the man who tried to
corner the gold market in 1869. Gould's shenanigans led to "Black
Friday," when gold prices collapsed, financial panic ensued
and the reputation of President Ulysses S. Grant, who had been
duped by Gould, was ruined. After aligning itself with Gould,
the law firm began specializing in railroad law. When oil began
dominating Texas, Baker Botts began working for Big Oil.

In 1957 Baker was prevented from working at the law firm that
employed his father, grandfather and great-grandfather thanks
to the firm's new anti-nepotism rule, a policy adopted during
his father's tenure. But the nepotism policy was rescinded when
the newly out of work former Secretary of State returned to Houston.
In fact, the firm welcomed him--at a salary reported to be $1
million per year. In addition to his job at Baker Botts, Baker
also began selling his influence to select corporations. Just
thirty-three days after Bill Clinton moved into the White House,
Baker, in addition to his duties at Baker Botts, took a job lobbying
for Enron in postwar Kuwait and elsewhere.

Baker's history in the diplomatic arena has apparently helped
Baker Botts land a surfeit of lucrative international deals involving
everything from Russian platinum and Caspian oil to representing
Halliburton and the Saudi royal family. In the past few years,
Baker Botts--which employs about 650 lawyers, has had annual
revenues of about $365 million and operates offices in Austin,
Baku, Dallas, London, Moscow, New York, Riyadh and Washington,
DC--has become a major player in big international energy projects,
on a par with much bigger international firms like White &
Case and Baker & McKenzie.

As soon as George W. Bush got into the White House, a lawyer
from a big international firm told me, Baker Botts went from
"being a well-regarded firm with experience in the United
States and Latin America to being everywhere." That near-omnipresence
includes Russia, where it has snared some powerful clients. Last
year, Baker Botts advised Russian mining giant Norilsk Nickel
MMC in its purchase of Stillwater Mining Company, a Montana-based
producer of palladium and platinum. Controlled by a secretive
Russian oligarch named Vladimir Potanin, Norilsk faced obstacles
at the Treasury Department and Federal Trade Commission. Treasury
had to approve foreign purchases of strategic assets, and the
FTC had to agree that Norilsk's purchase of Stillwater would
not violate antitrust rules--even though it allowed the Russian
firm to control more than 50 percent of the world's market for
palladium and platinum. (The two are vital ingredients in both
catalytic converters, which reduce pollution from automobiles,
and in fuel cells, the pollution-free devices that turn hydrogen
into electricity.)

Baker Botts convinced the Treasury Department to approve the
deal in just one month. The FTC accelerated its approval process
and gave the nod to the deal after just eight months. The speed
of the approval left some FTC watchers agog. But then Baker Botts
had good help. One of the lead lawyers on the deal was Diana
Dietrich, who before working for the law firm had been a lead
litigator in the FTC's antitrust division. It may be pure coincidence,
but the FTC announced approval of the Norilsk deal on June 16,
2003, just one day before Baker gave a speech in Moscow on the
importance of Russian-US relations. The event was co-hosted by
the James A. Baker III Institute for Public Policy.

In 2003 Baker Botts advised Houston-based Marathon Oil on
its acquisition of Khanty Mansiysk Oil Corporation, which produces
oil in western Siberia. The law firm has also carved itself a
foothold in the oil-rich Caspian Sea region. It was lead adviser
to a consortium of oil companies that wrapped up a $3.5 billion
finance package in February for one of the world's biggest energy
projects, the Baku-Tbilisi-Ceyhan pipeline. Critical support
for the pipeline came from two US government-backed agencies,
the Export Import Bank and the Overseas Private Investment Corporation.
The pipeline, which will carry 1 million barrels of oil a day
from the Caspian to the Mediterranean, faced fierce opposition
from environmental groups. But Baker Botts and the oil companies
prevailed. Baker Botts lawyers wrote all the regulations governing
the pipeline, overriding domestic laws, including the environmental
policies of the nations of Azerbaijan, Georgia and Turkey.

In a recent Los Angeles Times story, James A. Baker IV, the
son of the former Secretary of State and a partner in the firm,
was asked if Baker Botts's business in the Caspian was profiting
from his father's connections. The younger Baker replied that
his father had been "reserved in his business development
activities, but it would be disingenuous to say it hasn't been
an asset."

Over the past nine months, George W. Bush has been using the
elder Baker as an asset. Last December, Bush appointed him to
be his personal envoy on the matter of Iraq's huge foreign debt.
Baker has been negotiating with several foreign governments,
including the German and the French. But the key player in the
Iraq debt sweepstakes is Saudi Arabia, which holds more Iraqi
debt than any other country.

Baker has a long history in Riyadh. He started traveling there
while he was Ronald Reagan's Treasury Secretary. As Secretary
of State in the first Bush Administration, he was a regular visitor
to the House of Saud. After that, Baker and the senior Bush both
joined the Carlyle Group, a wealthy merchant bank, which has
become something of a retirement haven for former conservative
bigwigs, including Reagan Defense Secretary Frank Carlucci and
former British Prime Minister John Major. In 1993 Baker joined
Carlyle as an equity partner and senior counselor. Bush joined
later on a consulting basis. One of the primary jobs that Baker
and Bush had at Carlyle was raising cash--and they were particularly
adept at getting it from the Saudis.

Bush and Baker helped convince their pal and hunting buddy
Prince Bandar bin Sultan, the longtime Saudi ambassador to the
United States, to put money into Carlyle. Other Saudis who invested
included two sons of the wealthy Saudi banker Khaled bin Mahfouz.
A few million more came from the family of Osama bin Laden.

Baker doesn't like to discuss his business dealings. I caught
up with him last fall at a high-dollar benefit at Rice University
in Houston for the James A. Baker III Institute for Public Policy.
(Prince Bandar gave $100,000 for the black-tie event, which raised
millions for the Baker Institute). I asked Baker if a published
report--which estimated that his stake in Carlyle was worth $180
million--was accurate. Irritated, he replied, "That's bullshit.
You print that." When asked how much his Carlyle stake was
worth, he replied, yelling, "That's for me to know and you
to not know" and refused further questions. On August 12,
his representative told me that Baker would not be available
to answer questions for this article "due to his travel
commitments."

Although Baker now works as an official representative of
the United States, none of his personal financial information
is available to taxpayers. That's because the White House has
deemed him a "special government employee"--a status
that shields his financial statements. It's up to the White House
general counsel to determine if Baker has any conflicts of interest.
Thus far, Bush Administration lawyers haven't found any--despite
the fact that Baker Botts represents Exxon Mobil, ConocoPhillips
and Occidental, all of which have major business interests in
the Persian Gulf. Nor was it considered a conflict for Baker
to be a partner in Carlyle. For its part, Baker Botts has said
that Baker has forsworn his share of any partnership fees from
firm activities that might pose a conflict with his job as debt
envoy. In other words, Baker and his cronies are telling the
world, "trust us."

Hugh Ray, a partner at the Houston law firm of Andrews Kurth,
the firm that employed Baker before he went into politics, says
that Baker Botts lawyers are not doing anything improper. And
they're not bragging about their connections to the Bush Administration
to get new business. Instead, says Ray, they are getting a lot
of their work "by default." He adds, "They are
the only ones I know who have an active energy practice in the
Middle East. They are on the ground in Riyadh, and they have
a huge advantage that way. The reason they have a willingness
to take a leap like that is because of their contacts. They are
connected in the Middle East."

That's a bit of an understatement. Several other big firms,
including White & Case and two huge Texas-based firms--Akin
Gump and Vinson & Elkins--are also active in the Persian
Gulf. But thanks to the Bush-Baker symbiosis, Baker Botts appears
to have closer ties to the Saudi royal family than any of the
other firms. When two of the most powerful members of the House
of Saud--the Saudi defense minister, Prince Sultan bin Abdulaziz
Al-Saud, and his brother, Prince Salman bin Abdulaziz Al-Saud,
the governor of Riyadh--needed lawyers to defend them against
a lawsuit brought against them and other Saudis by survivors
of the 9/11 terrorist attacks, Sultan and Salman hired Baker
Botts. The firm categorically denies that it was hired because
of any political influence it might have.

Nevertheless, Baker Botts is not shy about touting Baker's
experience to clients interested in Saudi Arabia and the Middle
East. On its website, the firm says clients can use Baker as
"an additional resource on which to rely regarding their
activities in the region." Nor is it shy about trying to
cash in on the expertise of Robert Jordan, who is the former
US ambassador to Saudi Arabia. Within a few months of moving
into the White House, George W. Bush named Jordan--the Baker
Botts lawyer who had represented him in the early 1990s while
the Securities and Exchange Commission (SEC) was investigating
Bush's sale of stock in Harken Energy--to be his representative
in Riyadh.

Jordan quit his post in Riyadh earlier this year. When he
returned to Dallas in April, Baker Botts rehired him and promptly
put out a press release saying that Jordan's "wealth of
knowledge relating to international matters and key development
initiatives in the Middle East will be a great asset to our firm."

Meanwhile, back in Houston, Baker Botts is taking care of
another charter member of the Texas crony network: Halliburton.
Unfortunately for the oil services giant, Dick Cheney's ineptitude
as CEO has left it with a panoply of legal problems. These include
allegations that it engaged in improper accounting (Halliburton
recently agreed to pay a $7.5 million fine to the SEC to settle
that problem); ongoing investigations by the Pentagon into apparent
overbilling for its logistics work in Iraq; and a wide-ranging
investigation by French and American authorities into allegations
that Halliburton employees paid bribes to secure a contract for
a liquefied natural gas plant in Nigeria [see Doug Ireland, "Dick
Cheney and the $5 Million Man," posted June 18 at www.thenation.com/doc.mhtml?i=20040705&s=ireland
].

Much of the work for Halliburton is being handled by James
Doty, a partner at Baker Botts's Washington office. During the
first Bush Administration, Doty spent two years as the general
counsel for the SEC. In response to questions about its dealings
with Baker Botts, Halliburton issued a statement that said Baker
Botts is "one of the best firms in the country and, as such,
has a great many exceptional lawyers who, because of their skill,
attract prominent clients, of whom we are proud to be included."

Of course Baker Botts employs excellent lawyers. No doubt
about it. It's also true that Halliburton's alliance with Baker
Botts provides yet another example of how the Texas crony network
looks after its own.

On September 2 the Houston Chronicle was the first to report
that Baker was joining George W. Bush's campaign. Baker--who
has played a key role in six of the last seven presidential elections,
including all four of the races in which a man named Bush has
been a candidate--was chosen to joust with Democrat Vernon Jordan
over the rules and format for the presidential debates.

Now that that job is done, Baker will surely continue being
the Bush family's consigliere . If the younger Bush's campaign
begins to falter, or if there's controversy after the polls close,
count on Baker to re-emerge as Bush's field marshal. And if Baker
can help secure another quadrennium in the White House for the
Bushes, Baker Botts will--once again--reap the benefits.

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