Publicity-shy Giuliani backer in spotlight

By Michael Cooper and Leslie Wayne

updated 4:14 a.m. ET Nov. 22, 2007

Paul E. Singer is the founding partner of one of the oldest hedge funds around. And while he has become a major donor to Republican and conservative causes in recent years, he has largely managed to stay out of the limelight, even avoiding having his picture appear in newspapers.

But this year Mr. Singer became one of the biggest supporters of Rudolph W. Giuliani’s presidential campaign, making his jet available to Mr. Giuliani, while Mr. Singer and workers at his companies have donated $200,000 to the campaign. And he became the largest individual backer of a California ballot initiative that many Democrats believe could sink their chances of winning the presidency.

Suddenly, the normally low-profile Mr. Singer, a New Yorker, found himself singled out by Democrats intent on beating back the California effort before it gained any steam.

Howard Dean, the chairman of the Democratic Party, questioned “Paul Singer’s involvement in this dirty trick aimed at stealing the White House.” A group of Democrats filed a complaint with the Federal Election Commission charging that Mr. Singer had been acting on behalf of Mr. Giuliani in his efforts to change the California law — which Mr. Singer and the campaign deny. And the Democratic National Committee drew attention to the part of Mr. Singer’s business that involves buying the debt of poor countries at a discount and then seeking repayment in full — prompting an article in The Times of London labeling his firm, Elliott Associates, a “vulture fund.”

Vitriol
The vitriol directed at Mr. Singer reflects the intense passions being stirred by efforts to change the California law, which could alter the nation’s electoral map to favor Republicans and Mr. Giuliani, should he emerge as the party’s candidate. While Mr. Singer is now distancing himself from the effort, another Giuliani fund-raiser has since taken up the cause.

Mr. Singer, 63, who was surprised to be photographed for this article on a Manhattan street, said in an e-mail interview that he had contributed to the California initiative on his own, and that he was not acting on behalf of the Giuliani campaign. He noted that buying what he called “sovereign distressed debt” represented only a tiny fraction of the $9 billion that is under management by his funds, but defended his decision to press for repayment, saying that countries must meet their obligations.

And he lamented what he called “the name-calling against investors who do not just ‘go along’ with cents-on-the-dollar offers for valid sovereign debt,” saying it was primarily generated by ideological groups and debtors who do not want to pay.

Mr. Singer, who has given millions of dollars to Republican candidates and causes over the years, said that he met Mr. Giuliani in 2006 and decided to support him. He signed on as one of the campaign’s earliest major fund-raisers. For months, Mr. Singer made a jet leased by one of his companies available to Mr. Giuliani. This June, he said, he stepped down as the campaign’s Eastern finance chairman to become a policy adviser.

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The role of adviser is one that Mr. Singer unofficially took upon himself a decade ago, when he wrote a letter to Mr. Giuliani as a constituent, praising his work as New York’s mayor but urging him to crack down on excessive horn honking and dangerous bicycle riders.

The following year, Mr. Giuliani did announce a crackdown on quality-of-life infractions, including on speeding cyclists and street noise.

On Wall Street, Mr. Singer, a Harvard Law School graduate, has spent 30 years building up the Elliott funds, which have a reputation for strong-arm tactics in financial battles across the globe, but take a mostly conservative, risk-averse approach to investing that has produced steady returns.

But it is a very small portion of his portfolio that has attracted the most attention recently: the part that invests in the discounted debt of poor countries.

Mr. Singer is perhaps best known for the fight he put up — and the money he made — in his battle over Peruvian debt. In 1996, he paid $11.4 million for $20 million worth of discounted, government-backed Peruvian bank debt. Then, rather than joining with 180 other Peruvian creditors who agreed to a plan using bonds to forgive some of the impoverished country’s debt, Mr. Singer held out for bigger payments.

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