Giuliani's protégé accused of tax fraud and corruption

A former political protégé of Rudy Giuliani who rose from being his driver to be chief of the New York Police and nominee to lead the Department of Homeland Security surrendered to the authorities last night to face corruption and tax fraud charges.

The burgeoning criminal case against Bernard Kerik could turn into a running sore for Mr Giuliani, who is striving to hold on to his leader-of-the-pack position among Republican hopefuls in the 2008 presidential race. It has erupted just weeks before the first primary votes are cast in Iowa and New Hampshire.

No other public official was more closely identified with Mr Giuliani during his two terms as New York Mayor than Mr Kerik. He was first rewarded with the post of head of the city's prisons before being tapped by his political sponsor as police commissioner, the job he held when terrorists struck the city in 2001. Both men basked in the common reputation of being tough on crime and corruption.

But Mr Kerik's fall has been as dramatic as his rise. No sooner had President George Bush – on the urging of Mr Giuliani – chosen him as his nominee in 2004 to head the Homeland Security Department than questions about his past began to surface. Mr Kerik created deep embarrassment by withdrawing himself from contention a few days later, citing possible tax problems related to the hiring of a nanny.

Yesterday, Mr Kerik was indicted on 16 counts alleging that he failed to report more than $500,000 (£239,000) in income, did not report on a loan, and failed to pay taxes on the nanny. He pleaded not guilty. Mr Giuliani has been dogged for months about the Kerik case, in particular about the degree to which he was aware of Mr Kerik's ethical difficulties before he promoted him to the jobs in his mayoral administration and recommended him to the White House for Homeland Security.

Certainly, Democrats as well as his rivals for the Republican presidential nomination will try to exploit what is now looks like a considerable chink in the front-runner's armour.

"Voters are going to question Rudy Giuliani's judgement, given that he shepherded Kerik's career while he knew there was an ethical cloud over his head," said Dag Vega, the spokesman for the Democratic National Committee. "Giuliani's tough-on-crime mantra is laughable given that he promoted Bernard Kerik throughout his career."

Senator John McCain, a rival of Mr Giuliani in the presidential race, was the first to step into the fray last night, citing the ex-mayor's relationship with Mr Kerik as a reason to doubt Mr Giuliani's judgement.

After he stepped down as Mayor of New York and began a lucrative business consulting on security affairs and giving lectures, it was Mr Kerik who was brought along as his partner. But loyalty stretches only so far; on the campaign trail in Iowa last week, Mr Giuliani was distancing himself from his old friend. Mr Giuliani conceded to reporters that he had erred in recommending Mr Kerik to President Bush. "I made a mistake," he said. "I made a mistake in not clearing him effectively enough. I take the responsibility for that."

But he said that as mayor, his good decisions far outweighed the bad ones. Voters, he suggested, should, "say to themselves, 'If he makes the same balance of right decisions and incorrect decisions as president, the country would be in pretty good shape'".

Last year, Mr Kerik pleaded guilty to misdemeanour charges in a state court that he had accepted $165,000 (£83,000) worth of free renovations to his apartment from a contracting company with ties to the Mafia which had sought his help in winning city contracts. The deal was not enough to deflect federal prosecutors, who base their charges on wider allegations of wrongdoing.

It is not yet clear just how damaging the Kerik affair might be for Mr Giuliani. "Rudy Giuliani has a few Achilles heels, and Bernard Kerik is definitely one of them," said Tobe Berkovitz, interim dean at Boston University's college of communications. "The question is: can one of his opponents capitalise on it?"

He added: "The mainstream media absolutely will capitalise on it. Then it's really going to demonstrate how good is Rudy Giuliani as a politician, in how he responds to this."