Masters of Lobbying Ply Their Trade in Moscow

By Steve Ginsberg
November 5, 1997

The Wall Street Journal
CA1
(Copyright (c) 1997, Dow Jones & Company, Inc.)

SACRAMENTO — When Peter Necarsulmer was invited two years ago to help write a new law regulating the who, what and how of lobbying, he rounded up some of the usual suspects.

Among those who joined the longtime San Francisco public-relations consultant was Chip Nielsen, the veteran attorney for California Republicans. Mr. Necarsulmer also tapped attorney Joe Remcho, who represents state Democrats, for his ideas.

What made this skull session extraordinary, though, was the venue. These men weren't sitting around some huge conference table in Sacramento or Los Angeles. Instead, they were gathered in a smoke-filled room in Moscow.

Their mission: to help Russian officials draft the first set of proposed lobbying regulations for the toddling democracy.

Today, those proposed regulations are still just that — only proposals. But Mr. Necarsulmer's initial foray into the serpentine world of lobbying post-Soviet government officials has blossomed into a full-time business.

Soon after that drafting session, he and his wife co-founded C.I.S. Strategies Ltd., a Moscow lobbying firm that continues to be buttressed by a brain trust of mostly California consultants, lawyers and governmental-affairs specialists who serve as its advisory council.

"Outside of Washington, D.C., the California governmental-political nexus is the most sophisticated in the world," says Mr. Necarsulmer, who first went to Russia in early 1991 to set up a public-relations shop. "Many of the people who are on the advisory council are literally the fathers of that political-governmental system."

Even so, Mr. Necarsulmer and his wife, Susan Thurman, acknowledge that the council was assembled not just for what they know, but also for whom they know — namely, top executives of major corporations that are potential clients for C.I.S.

Since C.I.S.'s founding in the fall of 1995, its staff in the U.S. and Russia has doubled to 16, and its client list has grown to nine from just two. Included on the roster: Grand Metropolitan PLC, Pierre Smirnoff Co., Alcatel Alsthom SA, Dallas-based Mary Kay Cosmetics Inc., one Eastern European government and two Middle Eastern governments.

Mr. Necarsulmer declines to release specific revenue figures. But he says his operation would "rank in the first tier of California's successful lobbying firms," and those businesses are expected to bring in about $3 million to $4 million this year.

C.I.S.'s lineup of advisers is first-tier as well. As a group, they may be focused on the Duma these days, but they can more than hold their own in the rough-and-tumble corridors of the state Capitol. Among those on the eight-member council:

• Michael Kahl. The founder and chief executive officer of Sacramento-based Kahl Pownall Cos., Mr. Kahl runs one of the state's largest and most profitable lobbying firms. Kahl/Pownall Advocates received a record $873,825 in payments during the first quarter of 1997, according to the Secretary of State's office, nearly $225,000 more than the second-place firm, Carpenter, Snodgrass & Associates.
  
  
• Kenneth Khachigian. A San Clemente-based attorney and Republican political consultant, Mr. Khachigian served as a senior adviser to two presidents, Richard Nixon and Ronald Reagan. He has been a strategist on many recent campaigns, including Bruce Herschensohn's 1992 and Michael Huffington's 1994 bids for the U.S. Senate. And he was part of Gov. Pete Wilson's short-lived 1995 presidential campaign.
  
  
• Charles Manatt. A longtime Californian and onetime chairman of the California Democratic Party, Mr. Manatt was chairman of the Democratic National Committee from 1981 to 1985 and co-chairman of the Clinton-Gore campaign in 1992.
  
  
• Mr. Nielsen. The senior partner in the law firm Nielsen, Merksamer, Parrinello, Mueller & Naylor, Mr. Nielsen is considered an expert in campaign finance, lobbying and political law. He works out of the firm's Mill Valley office.
  
  
• Kirk West. A onetime secretary of business and transportation under former Republican Gov. George Deukmejian, Mr. West is slated to retire in December after 12u years as president of the California Chamber of Commerce.

Strangely enough, despite this cadre of Californians, C.I.S.'s client list so far includes no companies based in the state. But Mr. Necarsulmer is determined to change that.

And Mr. West, for one, would like to lend a hand in helping California companies "find a market" in Russia and Ukraine. "Can we get our semiconductors in there?" he asks. "Can we get our wine in there? Our citrus in there?"

Despite those ambitions, C.I.S. has its work cut out for it. That became clear at a meeting last week between the advisory council and C.I.S. executives at Mr. Necarsulmer's San Francisco office.

At one point, the discussion is led by C.I.S. senior project manager Konstantin Panin, a chain-smoking, 26-year-old Russian with a master's degree in political management from George Washington University. Having just flown in from Moscow with a group of his C.I.S. colleagues, he describes the twists and turns of a proposed bill on foreign investment in Russia.

The authors say the goal is to attract companies from abroad, Mr. Panin explains, but the language prohibits such operations as accounting services, oil exploration and map making.

"This means if you want to make globes in Russia you can't," Mr. Panin tells his bemused audience. The measure would also restrict the importation of television sets, he notes in his slightly broken English, "although it's known to everyone that Russian TV industry does not exist."

During a break in the meeting, Mr. Kahl expresses frustration in dealing with a country where the underpinnings of the economy are still so shaky. "God knows, they're infants in some of these things over there, like property ownership," he says. "You can get screwed over real fast."

It's already apparent, though, that certain issues transcend the thousands of miles and cultural barriers between California and Eastern Europe.

"Our clients are afraid the government will overtax them," Mr. Panin says. "It's our job to tell government that a tax increase will not necessarily increase government revenues."

It's just the sort of talk that would make the late Howard Jarvis and his followers proud.