Giuliani Denies Inappropriate Accounting

Republican presidential candidate Rudy Giuliani refutes a news story that while mayor of New York City he used unorthodox accounting practices to hide an extramarital affair. Expenses were billed to obscure city agencies, like the department that regulates loft spaces.

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RENEE MONTAGNE, host:

Rudy Giuliani heads back out on the campaign trail today after spending the last 24 hours refuting a potentially scandalous news story. The story had it that as mayor of New York Rudy Giuliani used unorthodox accounting practices to hide an extramarital affair. The Web site Politico first reported that tens of thousands of dollars of security expenses for trips to the Hamptons were billed to obscure city agencies.

NPR's Robert Smith reports.

ROBERT SMITH: Rudy Giuliani calls the recent report a political dirty trick. He spoke last night to Katie Couric on the "CBS Evening News."

(Soundbite of "CBS Evening News")

Mr. RUDY GIULIANI (Republican Presidential Candidate): This story is five years old. It came out two hours before a debate. It's a typical political hit job.

SMITH: Most of the salacious bits of the story have been talked about for years in New York, the fact the Giuliani was having an extramarital affair with Judith Nathan, who later became his third wife; the fact that taxpayers had to foot the bill for security on trips to see her in the Hamptons; that police protection was provided simultaneously to both Giuliani's wife and his mistress. That's all old news, but no reporter has ever been able to pin down exactly how much this illicit affair cost New York City.

This week's report on Politico.com might explain why. The police protecting Giuliani on these trips billed their expenses to tiny city agencies like the departments that regulated loft spaces and help the disabled. Last night on CBS, Giuliani said that the practice was standard for his administration.

Mr. GIULIANI: The police department paid for all of these expenses. But since the police department would sometimes be slow in payment, City Hall would pay it first and then the police department would reimburse every single penny of it.

SMITH: But the practice was unusual enough that it was flagged in a 2002 audit by New York City Comptroller William Thompson, an elected Democrat. Yesterday, Thompson said he was convinced that there wasn't a misappropriation of funds, but he said the billing was certainly not normal.

Mr. WILLIAM THOMPSON (Comptroller, New York): They don't do that this way. All city agencies reflect their expenditures directly through those agencies, not in other agencies and not in subdivisions.

SMITH: Giuliani argued yesterday that the accounting method was perfectly transparent and on the record, but the city comptroller disagrees.

Mr. THOMPSON: I believe in transparency and openness, and this is a less transparent way of doing business, and one that makes it harder to follow the dollars.

SMITH: Although this is essentially an accounting kerfuffle, it does drag all those stories about Giuliani's personal life back into the news. And it could also undercut one of the cornerstones of the former mayor's campaign. In a TV ad released yesterday, Giuliani bragged that as mayor he made government more accountable.

Robert Smith, NPR News, New York.

MONTAGNE: And next Tuesday, NPR and Iowa Public Radio will host a debate of the Democratic presidential candidates in Des Moines; that's where Steve is now. He'll be a moderator. You can send a question for the candidates. Go to npr.org/debate.

And this is NPR News.

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