Former New York mayor Rudy Giuliani was paid millions of dollars under a contract arranged by a Mexican politician who is likely to run for president of Mexico in 2018 on an anti-Trump, Mexico-first platform.
That could be a conflict of interest if Giuliani is named secretary of state and tasked with renegotiating NAFTA and trying to get Mexico to pay for a border wall.
Giuliani's many foreign business entanglements as a private citizen are often cited as the primary reason President-elect Donald Trump's transition team is wary of him being appointed the nation's top diplomat. Giuliani's contracts with the government of Qatar and the Venezuelan-owned state oil company Citgo and his paid speeches for a shady Iranian dissident group that was listed as a foreign terrorist organization have all received attention.
But Giuliani's first foreign contract could be the most relevant if he were in charge of the State Department because that contract involved Mexico's leading leftist, populist and anti-Trump politician.
Giuliani's policies head to Mexico
In 2002, shortly after he stepped down as New York's mayor, Giuliani scored a $4.3 million contract to consult for the government and police force of Mexico City, then led by up-and-coming politician Andrés Manuel López Obrador. The contract was the first big international consulting haul for Giuliani Partners, which at the time included former New York City police commissioner Bernard Kerik.
Giuliani worked personally on the contract, visiting Mexico and meeting regularly with López Obrador and Mexico City Police Chief Marcelo Ebrard, who later succeeded López Obrador as the head of Mexico City's government. The idea was to replicate Giuliani's success in reducing New York City's crime rates in Mexico City.
He recommended policies such as "zero tolerance" for petty crimes and applying "broken windows" policing, which focuses on disorder and vandalism to establish a sense of law and order that, in theory, would reduce the number of more serious crimes.
'What did he deliver'
Now that Giuliani might be Trump's secretary of state, critics of the effort are demanding more information about the contract and the work Giuliani was paid for.
"Mexico City wasted the money," said Sergio Aguayo, a professor at El Colegio de México and a leading activist. "If Giuliani is secretary of state, of course we will look very carefully at the contract. What did he charge, and what did he deliver?"
An odd alliance
Reports at the time noted that the Giuliani-López Orbrador alliance was odd, considering that López Obrador was a left-wing populist and Giuliani a right-wing conservative. Aguayo said López Obrador was looking to draw on Giuliani's star power and Giuliani was looking to get paid.
Many reports said that at least part of the contract likely was paid by Mexican billionaire Carlos Slim. During the campaign, Trump publicly accused Slim of conspiring with the Clinton campaign without offering any evidence.
"They hired a name, they wanted the Guiliani name to guarantee success. They didn't get it," Aguayo said. "He came, he posed for pictures, and everybody was happy for a time. Then reality came back. There is no warranty in consulting."
Giuliani's impact debated
There is still an ongoing debate in Mexico as to whether Giuliani's recommended reforms helped or hurt the situation. While some petty-crime numbers went down after the Mexico City government implemented 137 of the 146 recommendations Giuliani's firm outlined in its consulting report, violent crimes over the following five years in Mexico largely remained the same or went up slightly, according to Mexican government statistics.
Policies that worked against New York organized crime did not always apply to Mexico City, where kidnapping was and remains a huge problem. Mexico City increased arrests by the thousands, but that led to prison overcrowding and what some human rights groups called the criminalization of the city's homeless population.
Regardless, Giuliani returned to Mexico City in 2013 and declared success. Speaking to a convention of insurers there, he said the city was "much more pleasant" and "progressing considerably." He could not have known then that he and López Obrador's paths were set to cross again.
A man on a mission
In 2006, López Obrador lost the Mexican presidency to Felipe Calderon by less than 1 percent of the vote, after which organized large protests against the election. He called the results a fraud and demanded a recount. After losing his appeal, his supporters held an inauguration ceremony anointing him the "Legitimate President" and forming an alternate shadow government.
López Obrador ran again in 2012 and lost by seven points to Enrique Peña Nieto, the current president of Mexico, who met with Trump just before the election. López Obrador again alleged fraud and sought unsuccessfully to invalidate the election results. He then formed a new party called the Movement for National Regeneration.
Duncan Wood, the director of the Mexico Institute at the Wilson Center, said that López Obrador is likely to run for president again in 2018 and is indicating he would run on an anti-Trump platform. At times, López Obrador acts like a pragmatist and may see benefit is working with Washington, but overall he is seen as less U.S.-friendly than the other candidates.
"The public perception is that he is anti-Yankee, that he would stand up to the United States, that in particular he would stand up to a Donald Trump presidency," said Wood. "That's because he is the most nationalistic of the projected candidates, and he talks a lot about defending Mexico's interests for Mexicans."
The anti-Trump candidate
Ironically, Trump's election may bolster López Obrador's chances because there is broad opposition in Mexico to Trump's proposed policies, such as making Mexico pay for a border wall, renegotiating NAFTA and punishing Mexicans in the United States who want to send remittances back home.
"If Trump were to win the U.S. elections, López Obrador would have a field day," Miami Herald columnist Andrés Oppenheimer wrote in June. "López Obrador's fiery speeches against Trump's Mexico-bashing would rally many Mexicans behind him."
Would Giuliani as secretary of state be seen in Mexico as an impartial actor when López Obrador runs for president in 2018? Would their prior financial dealings give Giuliani a stake in the outcome? Would his past relationship with López Obrador color his judgment when dealing with the Mexican government on the Trump agenda?
These are the questions that the Trump transition team is asking itself as Trump hones in on a secretary of state selection — and they are only one part of a web of relationships senators will examine if Giuliani ever makes it to a confirmation hearing.