The Qatari Connection

In March 2005, a suicide bomber linked to Al Qaeda set off a massive explosion at a British school in Doha, the capital of Qatar. The attack came on the second anniversary of the U.S. invasion of Iraq and stunned officials in the tiny Persian Gulf kingdom. Until then, Qatar, homebase for the U.S. Central Command, had been relatively immune from acts of terror. Not long afterward, the country's emir, Sheikh Hamad bin Khalifa Al-Thani, reached out to an international figure who was just then marketing his record as a fierce foe of terrorists: Rudy Giuliani. That July, Giuliani flew to Doha, visited the emir in his palace and, without a public announcement, entered into an unusual arrangement to provide the Qatari government with "strategic advice" on counterterror issues and protection of the country's oil and gas pipelines, ports and other facilities.

When Giuliani signed the contract with Qatar, he was acting as an international businessman—a role drawing increased scrutiny as he runs for president. After leaving office as New York mayor in 2002, Giuliani and close associates formed Giuliani Partners, a privately owned management-consulting firm that has proven lucrative: Giuliani earned $4.1 million from his firm between January 2006 and May of this year. He has insisted his business dealings are "totally legal, totally ethical." But he has never disclosed all of his clients, raising inevitable questions about financial ties that face all presidential candidates. Some campaign-finance experts say Giuliani's current posture—maintaining a major interest in a privately held international firm while seeking the presidency—is potentially unprecedented. "I can't think of another situation like this," says Kenneth Gross, a Washington lawyer who specializes in campaign finance and ethical issues (and who is not affiliated with a campaign).

So far, most attention has swirled around the Qatar contract. Although the country is now viewed by the White House as a strong ally in the War on Terror, that was not always the case. In 1996, FBI agents tried to arrest a top terror suspect, Khalid Shaikh Mohammed (later mastermind of the 9/11 attacks) who at the time was being employed by the Qatari Water Department. But the bureau's plans fell apart when he suddenly fled; FBI agents were convinced that a member of the royal family tipped him off. The contract between Giuliani Security, a division of Giuliani Partners, and Qatar "is a huge conflict of interest," says Bob Baer, a former CIA officer who tracked Mohammed. "He is metaphorically taking money from the same accounts that paid KSM." Giuliani Security officials involved in the Qatari business say the minister suspected of protecting Mohammed no longer has an active role in running the country.

Since the arrangement began, Giuliani Security has set up an office in Doha headed by Ali Soufan, a former top FBI counterterror investigator. He's hired former FBI agents, Special Forces members and others who train and advise Qatari security forces—an arrangement he believes has helped fend off attacks. "I believe we're helping U.S. citizens," says Pasquale D'Amuro, a former FBI counterterror chief who is president of Giuliani Security.

(Last week, Giuliani faced another potential ethics issue: Politico.com reported that when he was mayor, security expenses for trips to the Hamptons were put on the books of obscure city agencies instead of those of the police. The site suggested he was making at least some of the trips to see Judith Nathan, now his wife. Asked about the issue in last week's debate, Giuliani said that, as far as he knew, the expenses were handled "perfectly appropriately.")

Questions about Giuliani's businesses are likely to persist. D'Amuro confirmed a report in the Chicago Tribune that the security firm last year also provided strategic consulting for a Las Vegas developer who bid—unsuccessfully—to build a casino project in Singapore. One of the investors was the son of Stanley Ho, a controversial gambling tycoon based in Macau with ties to the North Korean government—a connection D'Amuro says he was unaware of when the deal was signed. Giuliani Security also recently received $131,212 from Giuliani's presidential campaign to protect the candidate. Peter Powers, the new chairman of Giuliani Partners, tells NEWSWEEK Giuliani has now given up an active role in his business and that "almost all" of the firm's clients have already been mentioned in media accounts. But he declined to provide a full list or say how much the company is getting paid. "We don't release private information," he says. The question for Giuliani is how long that answer will satisfy voters.