Rudy bids farewell to Command…

June 28, 2007

images-16.jpegThe last time we footnoted Command Security (MOC), we were surprised how a company with a market cap of around $19 million could afford to hire Giuliani Partners, the firm started by former NYC Mayor (and now Presidential contender) Rudy Giuliani. At the time, Command’s stock was still trading around $2.15 a share on the Bulletin Boards under the ticker CMMD.OB. Earlier this month, Command made the move to Amex where it now trades at around $2.81 a share.

But the consulting agreement with Giuliani is now a thing of the past, judging by the 10-K that Command filed yesterday. As the filing notes, the consulting agreement, which was costing Command a whopping $175,000 a month (not including expenses), expired at the end of December, though Command never noted this in earlier filings. The relationship between Giuliani and Command received scrutiny from the WSJ last month over questions of disclosure in bankruptcy filings. There was also this story that ran in the NY Post last November about a new security contract that Giuliani had set up at troubled St. Vincent’s Hospital in Greenwich Village. So perhaps the hefty fees weren’t worth the bad PR.

In yesterday’s filing, Command says that it spent $1.64 million on the contract, or about 25% more than the $1.2 million in earnings the company reported last year. True, revenues were up about 10% during the term of the contract, but it’s hard to say how much of that was due to Giuliani’s high-priced consulting. In comparison, revenues climbed by 7% between 2005 and 2006. During the term of the contract, Command’s stock price increase about 33%, but again it’s hard to tie that directly to Giuliani’s work.

As we wondered at the time, what sorts of legal consulting services does one provide that are worth $175,000 a month? And, perhaps more importantly, why would anyone who was getting that kind of money to consult, allow the contract to expire? Aren’t there always new projects to advise on? Then again, being paid $175,000 a month to consult would likely bring up even more interesting questions as campaign season starts to heat up.

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