It’s one of the greatest disappearing acts that K Street has ever seen.
The private equity powerhouse Blackstone Group was once among the most lucrative lobbying contracts in all of Washington, generating up to $5 million in yearly fees for Ogilvy Government Relations.
Now Blackstone’s K Street spending tops out at $750,000 — pocket change for one of the titans of high finance.
The change is a case study in how the influence industry has gone underground in the Obama era.
Lobbyists have dropped out of the public disclosure system in droves, moving much of the business of influencing government into the shadows.
Many have opted, when possible, to refrain from registering under the Lobbying Disclosure Act (LDA) to avoid the “Scarlet L” that limits employment at the White House and in the administration.
Blackstone’s drop-off in lobbying spending coincided with a change in registration by Wayne Berman, a prominent Republican lobbyist who is a major player in presidential politics.
Blackstone was Ogilvy’s biggest client, and Berman tended to the account as a registered lobbyist.
Then, in June 2012, Berman left Ogilvy to join Blackstone’s in-house staff.
He is now a senior adviser for global government affairs at Blackstone, but has not registered to lobby at his new job. The result is that less of the firm’s lobbying spending has been made public.
“Wayne has been much more involved in business decisions and less on lobbying. A lot of what we paid Ogilvy for was not pure lobbying but also for advice around our businesses,” said Peter Rose, a Blackstone spokesman. “We have now taken that strategic advice function in-house.”
The drop in reported lobbying spending by Blackstone has been stark.
In 2011, the company spent $5 million on lobbying with Ogilvy — the top outside lobby firm contract for that year, according to the Center for Responsive Politics (CRP).
“Wayne was the big rainmaker at Ogilvy, no doubt. He brought in a number of big clients, including Blackstone, which was the firm’s biggest contract and the biggest contract in Washington,” said a former lobbyist at the firm.
Chris Giblin, a principal at Ogilvy Government Relations, said the firm doesn’t comment on former clients or former partners.
Before Berman’s departure from Ogilvy, Blackstone paid the firm $2.5 million for lobbying in 2012, again making the list of top-earning K Street contracts for the year. Those fees were only for 2012’s first six months.
Shortly after that, Blackstone and Ogilvy cut ties.
The equity fund found new representation on K Street, hiring Capitol Counsel and Tompkins Strategies later that year. Blackstone paid those two shops a total of $520,000 in 2012 and $750,000 for all of 2013.
Rose said Blackstone no longer needs as much representation on Capitol Hill.
“Wayne, since moving in-house, has focused more on business issues and less on lobbying. Finally, in 2013 and 2014, we find ourselves with fewer issues before the Congress,” Rose said.
Early on in the Obama administration, Democrats controlled both Congress and the White House and were crafting the Dodd-Frank financial reform law, as well as proposing a higher tax on carried interest, which would eat into hedge fund profits. Those legislative fights are now over.
So what once was Blackstone’s $1 million — sometimes $2 million or nearly $3 million — per quarter contract at Ogilvy has now become a quarterly payment of $160,000 for Capitol Counsel or $30,000 for Tompkins Strategies last year.
Notably, those two firms have Ogilvy connections. De’Ana Dow and John O’Neill at Capitol Counsel and Elena Tompkins at Tompkins Strategies are all former Ogilvy lobbyists who are registered to lobby for Blackstone at their new employers.
Berman, however, is no longer registered for the investment fund.
“He is yet another self-described government relations professional that is actively dropping off the public record but still seemingly influencing the policy process,” said Sarah Bryner, the CRP’s research director, about Berman.
Rose strongly denied that Berman is hiding his lobbying work by not registering under the LDA.
“Absolutely not. We meticulously follow the advice of counsel as when to register and what to disclose. We err on the side of registration and disclosure,” Rose said.
A report from the CRP this month found that almost 1,800 registered lobbyists in 2012 were no longer registered in 2013.
The number of registered lobbyists continues to drop every year — a trend experts attribute to several reasons, from a struggling economy to anti-K Street rhetoric by President Obama.
“There are a number of factors for the decline in lobbying expenditures — everything from Congress doing less to companies having less to spend to influence policy,” said Tom Susman, director of government affairs for the American Bar Association.
“Plus, obviously the administration’s negative attitude towards lobbyists and the laws and regulations that impose additional burdens on lobbyists do not encourage more registration.”
Some lobbyists have simply stopped registering under the LDA, because it can hinder them from taking administration jobs or serving on federal advisory committees.
The de-registering trend has come at a down time for the influence industry. Lobbying spending fell for the third year in a row in 2013, coming in at a total of $3.21 billion.
“The law business and lobbying business has become a lot more difficult and competitive. It is a tougher life for lobbyists out there,” said Susman, who is co-editor of The Lobbying Manual.