Rudy: Open for Business

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Is Rudy Giuliani, hero of Sept. 11 and a former Mob-busting federal prosecutor, really taking his sterling reputation to—gulp!—WorldCom? The place is a disaster: home to at least $9 billion in accounting fraud, $120 billion in vaporized shareholder wealth and the largest bankruptcy in history. Giuliani is not being asked to run WorldCom (that falls to Michael Capellas, former No. 2 at Hewlett-Packard, who accepted the CEO job last week). But Giuliani has aligned with a group headed by bond investor David Matlin that is trying to seize control of WorldCom in bankruptcy court. Some bondholders want Giuliani to serve as chairman of the board.

Giuliani, who has called WorldCom a big "challenge," apparently has not made up his mind about how involved he would be. But WorldCom is not the only troubled company he has his eye on. Sources tell Time that Giuliani Partners, the ex- mayor's consulting firm, is mapping out a broader role as a consultant to scandal-tarred companies like Adelphia and Tyco. No clients have yet been signed, but a major one will be announced within weeks, a source says. Giuliani Partners is also helping global real estate firm Cushman & Wakefield vet for security problems. And it hopes to work with brokerage firms to resolve problems stemming from conflicts of interest in their stock-research departments. Merrill Lynch is one of several potential clients. "A lot of companies would benefit from working with us on their difficulties," says Bruce Teitelbaum, a Giuliani partner.

But what benefit could "America's Mayor" get from helping rescue WorldCom? For a man with possible presidential aspirations, the move has advantages. It would allow him to stay in the spotlight and, if he helps turn the company around, be a hero again. Yet Giuliani may learn that messing with the debt of bankrupt companies is not necessarily a career-enhancing move. The distressed-debt market is a playground for vulture investors, a place to parlay others' misfortunes into personal wealth. How would that resonate with voters?