councilor.org
| Source | Steve Zeltzer |
| Date | 01/02/05/22:37 |
| CHICAGO SUN-TIMES:
Jackson's protests benefit his family, friends February 4, 2001 BY CHUCK NEUBAUER AND ABDON M. PALLASCH STAFF REPORTERS The Rev. Jesse L. Jackson Sr. knows when corporations are at their most generous: when they are seeking federal approval for a merger. Faced with objections and protest threats from Jackson, American multinationals have pledged millions of dollars to Jackson's charities and multimillion-dollar deals for his designated minority businesses. MERGERS AND CONTRIBUTIONS As telecommunications giants prepared to go before the Federal Communications Commission in 1998 to seek approval for their megamergers, Jackson threatened to protest and speak out against the mergers unless those companies promised that minority customers and minority business owners shared in the profits from the mergers. Jackson negotiated with the companies and extracted donations to his charities and multimillion dollar contracts for minority-owned businesses, including contracts with companies that have ties to Jackson family members. Then Jackson endorsed the mergers and they were approved. SBC/AMERITECH 1998 May 14: Jackson urges Pres. Clinton to block the merger. Dec. 7: "We are at the table with the merger giants," Jackson says, warning that he will oppose mergers if the companies do not pledge diversify. Dec. 14: Jackson tells the FCC, "Initially, their proposed merger plan red lines residential customers" in favor of business customers. 1999: SBC and Ameritech give $500,000 to Jackson's CEF. Jan. 15: SBC pledges to hire a minority firm to manage its pension fund. March 29: "The merger is in the public interest," Jackson says in an Ameritech news release touting his endorsement of the merger. April 5: Ameritech announces it will sell its cellular business to a new partnership of GTE and Jackson colleague Chester Davenport. Oct. 6: The FCC approves the merger. 2000/2001 Feb 5-16, 2000: Jackson's son Jonathan, representing Davenport's company, accompanies Jackson on a trip to Africa, PUSH documents show. GTE/BELL ATLANTIC 1998 Dec. 7: Jackson says he wants guarantees from GTE and Bell that minority customers and businesses will profit from the merger. Dec. 14: "The Bell Atlantic/GTE plan must include a stronger commitment to to internet and technology training targeted to the minority community," Jackson tells the FCC. 1999: Bell Atlantic and GTE give $1 million to Jackson's CEF. Jan. 15: Bell Atlantic pledges to hire a minority firm to manage its pension fund. April 5: GTE agrees to pay vast majority of the $3.3 billion purchase price for Ameritech's cellular business, but to give Jackson colleage Chester Davenport a 7 percent stake in the new venture for $60 million. The new venture will be chaired by Davenport, but Davenport will have "No operational responsibility. none." May 17: Jackson endorses the Bell Atlantic/GTE merger. July 17: The FCC endorses the merger. The new company is called Verizon. AT&T/TCI 1998 Dec. 7: Jackson says ATT&T and TCI must include minority business in their merger deal for his support. Dec. 14: TCI has a "questionable employment record and a poor level of public service," Jackson tells the FCC. 1999: AT&T pledges $425,000 to Jackson's CEF. Jan. 15: AT&T Chairman Michael Armstrong tells Jackson's Wall Street conference that his company will hire a minority business to handle a major bond offering. Feb 25: FCC approves merger. March 22: AT&T chooses Blaylock & Partners, L.P., a minority firm with close ties to Jackson, to co-manage an $8 billion bond offering. The deal is worth an estimated $750,000 to the firm. Jan. 2001: AT&T executives address Jackson's Wall Street conference. CBS/VIACOM 1999: Viacom pledges $680,000 to Jackson's CEF. Viacom's UPN donates $50,000. Sept. 20: Jackson blasts CBS's proposed purchase of Viacom, saying it would concentrate ownership in too few hands. It would also violate the federal rule against one company owning two networks -- CBS and the African-American-oriented UPN. Sept. 22: Jackson brings friends Chester Davenport and Percy Sutton to a meeting with CBS Chairman Mel Karmazin urging him to sell UPN to a minority owner such as Davenport or Sutton. Jackson was a founding shareholder in Sutton's Inner City Broadcasting and his wife still may be a shareholder. Sept. 30: Jackson brings Davenport and Sutton to a meeting with FCC Chairman William Kennard to lobby him not to approve the merger unless Viacom sells UPN to a minoity owner such as Davenport or Sutton. Kennard has championed Jackson's arguments about demanding steps toward diversity by companies trying to merge. 2000 Feb. 5-16: Jackson visits Africa on a telecommunications trade mission. He brings Sutton and his son Jonathan Jackson, who is representing Davenport. May 3: The FCC approves CBS' purchase of Viacom, contingent on Viacom selling off UPN within a year. Some of those deals go to companies with business ties to Jackson's own family, including his son Jonathan, who serves as unpaid president of Jackson's Citizenship Education Fund--the charity that encourages businesses to cut minority businessmen and women in on deals. After first opposing the SBC/Ameritech merger, Jackson helped persuade Ameritech to sell a portion of its cellular business to Jackson colleague Chester Davenport. After Ameritech gave Davenport the contract, Jackson switched his position and blessed the merger. Then Jackson's son Jonathan, a consultant, represented Davenport's company, Georgetown Partners, in a Jackson trade mission to Africa last year. But a Jackson spokesman said the Rainbow/PUSH Coalition mistakenly identified Jonathan as a representative of Georgetown. Jackson's Wall Street and La Salle Street projects--an outgrowth of PUSH's Citizenship Education Fund--aim to open doors for minority business owners who have not traditionally been invited to compete for big money contracts from Fortune 500 companies. Jackson's finances and those of his $15 million-a-year national network of charities have come under scrutiny since revelations two weeks ago that Jackson's Citizenship Education Fund has paid $35,000 or more to a former staffer who bore Jackson an out-of-wedlock child. Rainbow/PUSH officials have offered differing accounts of what the money was for. Jackson is lobbying CBS and Viacom to sell Viacom's UPN network to Davenport or to another minority businessman such as Jackson's close friend Percy Sutton. Jackson brought both men and a Hispanic businessman to a meeting with CBS chairman Mel Karmazin. Jackson and his wife were original investors in Sutton's Inner City Broadcasting. The shares, under his wife Jacqueline's name, were worth $250,000 to $1 million in 1988. She still owned them as recently as a year ago, but the Jackson family declined any comment on this. Jackson also threatened protests against GTE and Bell Atlantic before their merger, and against AT&T and TCI before their merger. He likewise changed his tune after they agreed to his demands by giving contracts to minority business owners--at least some of whom Jackson introduced to the corporate chiefs. They also donated to Jackson's nonprofit groups. It's an evolution of the technique Jackson has used successfully for decades to get minority-owned businesses their slice of the American pie. Doug Whitley, Ameritech's former president of Illinois operations, praised Jackson's Wall Street and La Salle Street projects for coaxing his company and others to make concessions to minority businesses. "Part of the theme of the Wall Street and La Salle Street projects is to make the big corporations, which are primarily controlled by white guys, aware of the need to reach out to minority partners," he said. "I think companies need to be reminded and that's a role Jesse Jackson plays. I don't think any company wants to be extorted and I think there's a difference between being reminded and being extorted." Businessmen less enamored of Jackson's new strategy complain it serves mainly to make rich African-Americans richer and that Jackson leans on minority businesses that hope to benefit from the program to donate heavily, according to published reports. Since Jackson started the Wall Street Project in 1997 as an outgrowth of his Citizenship Education Fund, he has been pulling in $15 million or more a year in donations to his nonprofit groups, according to the most recent public figures available. And the dollar values of the contracts have grown astronomically. The deal to sell Ameritech's cellular business to Davenport and GTE was worth $3.3 billion. Davenport put up $60 million for a 7 percent share of the new company co-owned with GTE. Despite his smaller share, Davenport was named "chairman," though a spokesman said he would have "no operational responsibility. None." Davenport, who had known Jackson about 10 years, had no experience in telecommunications. He formerly owned a company called Envirotest, which tested auto emissions for state governments. Jackson weighed in on Envirotest's behalf with some elected officials, including former Connecticut Gov. Lowell Weicker, according to news accounts. Davenport sold the company in 1998, helping to boost his net worth to close to $100 million. Verizon (formerly GTE) representatives denied a New York Times story saying that GTE executives resented having to cut Davenport in on the deal. "Rainbow/PUSH introduced us to Chester Davenport," Verizon spokeswoman Bobbi Hennessey said. "But it's ultimately our decision who we involve in our business." As CBS sought Federal Communications Commission permission to purchase Viacom, Jackson made loud noises about the snag the deal was headed for because federal law prohibits one company from owning two networks, and Viacom's UPN is considered a network. The rules also prohibit one company from serving more than 35 percent of the U.S. population. CBS and UPN would reach about 41 percent of the nation. Jackson's prescription for relief was simple: CBS should sell UPN--which aims much of its programming at African-American viewers--to a minority owner. Jackson met with CBS' Karmazin to make his pitch and he brought along Davenport, Sutton and Spanish Broadcasting Systems Vice President Joe Garcia as examples of minority businessmen who could buy UPN. A week later, Jackson made the same pitch to then-FCC Chairman William Kennard. Kennard has spoken at Jackson's Wall Street conferences and has backed Jackson's arguments that the FCC should consider the impact on minority customers and businesses in deciding whether to approve mergers. Kennard's critics have said that the former chairman, who left office in January, helped Jackson's strategy of holding companies' feet to the fire. A year ago, Jackson led a delegation of African-American businessmen, including Sutton and Jackson's son Jonathan, on a trip to three African countries to promote telecommunications partnerships. Rainbow/PUSH passed out brochures introducing Jackson's friend Sutton as an owner of radio stations interested in starting cellular telephone businesses in Africa. The brochures introduced Jonathan Jackson as the representative of Davenport's company, Georgetown Partners. Asked what his relationship to Georgetown Partners was, Jonathan would say only, "Look it up." A receptionist at Georgetown offered to take a message for Jonathan, though Davenport later said Jackson did not work for him. A Jackson family spokesman said late Friday that Jackson does not work for Georgetown and the PUSH brochure with Jonathan Jackson's photo introducing him as Georgetown's representative on the trip and listing the vital stats for Jackson and Georgetown must have been in error. Sutton, a former Manhattan borough president, is a longtime friend of the Jackson family. Sutton's Inner City Broadcasting owns radio stations in New York City and around the country, and he was finance chairman of Jackson's 1988 run for president. At that time, Jackson said his wife's shares in Inner City Broadcasting were worth more than $250,000. Sutton said the shares were worth $1 million. Jackson has not disclosed his holdings since. As recently as 1996, the Suttons told the Associated Press that Mrs. Jackson owned the stock, and other stock owners said last week she still owns stock. The Rev. Jackson and Sutton declined to answer questions about how much the Jacksons stand to gain if Inner City lands UPN or if the company, as expected, goes public soon. Inner City benefitted after Jackson raised questions about the merger of Clear Channel Communications and AMFM Inc. Jackson said minorities should have a chance to buy the radio stations in major cities that would become available if the merger went through. Sutton's Inner City bought nine of those stations. *** Jackson sons quiet on hiring BY TIM NOVAK AND CHUCK NEUBAUER STAFF REPORTERS For decades, the Rev. Jesse L. Jackson Sr. has threatened companies with boycotts for failing to have minority employees, but Jackson's sons refuse to say how many minority employees work at their Chicago beer distributorship. It's one of many questions Jackson's sons Yusef and Jonathan refuse to answer about the lucrative deal they got from Anheuser-Busch Inc. in 1998. The deal came 16 years after their father boycotted the world's largest brewer because only three of its 900 distributorships were owned by minorities. Neither Anheuser-Busch nor the Jacksons would say how many of the distributorships are owned by minorities today. The Jackson brothers own River North Sales & Service, which annually distributes between $30 million and $40 million worth of Budweiser and other products between Lake Michigan and Harlem Avenue, Irving Park and Roosevelt Roads. No bar or restaurant in that area can buy Anheuser-Busch products from anyone but the Jacksons. This includes hotels, nightclubs and Wrigley Field. The Jacksons reportedly have as many as 100 drivers and sales representatives, but they refuse to say how many are minorities. "River North Sales and Services is . . . a private business," according to a statement from Yusef Jackson, the company's president. "All of our actions in acquiring and operating this business have been ethical and proper. As for your questions, much of the information involved is either proprietary or personal. Our choice is to keep it private." Yusef Jackson said in a later statement that his "management team has developed an inclusive workplace environment which reflects the ethnically diverse area we serve." Under laws dating back to Prohibition, most states, including Illinois, generally forbid alcohol manufacturers from selling directly to consumers. The manufacturers must sell their products to distributors, who then sell it to bars, restaurants and stores. Anheuser-Busch, like many brewers, has enormous control over who can distribute its products. When Anheuser-Busch sold the River North distributorship to Jackson's sons, they had no experience selling beer or running a mid-size company. Yusef, River North's president, was 28 and working at Mayer Brown & Platt, a major Chicago law firm. Jonathan, River North's vice president, was 32 with a master's degree in business from Northwestern University. He had worked as a consultant and developer. Jonathan Jackson also is president of the Citizenship Education Fund, the group his father uses to encourage corporations, such as AT&T, to do business with minorities. Yusef Jackson is a board member and attorney for the group. Yusef owns 67 percent of River North and Jonathan owns 23 percent. The remaining 10 percent is owned by Donald Niestrom Jr. He and his father were longtime Anheuser-Busch employees who worked at the River North distributorship before the Jacksons bought it. Niestrom Jr. is now River North's vice president of operations, according to state records. Chicago is a major focus for Anheuser-Busch. The company sells 47 percent of the nation's beer, dominating most markets, but in Chicago, the company runs second to Miller Brewing Co. Anheuser-Busch's goal is to become the dominant brand in Chicago, and the Jacksons will play a key role if that is to happen. An Anheuser-Busch distributorship is a gold mine, industry experts say. It gives the owner a monopoly to sell the brewery's products in a specific area. Anheuser-Busch has 700 distributorships nationwide. Several are owned by Busch family relatives, including Anheuser-Busch Chairman August Busch III's daughter and son-in-law, his half brother Peter Busch and cousins, according to reports the company filed with the U.S. Securities and Exchange Commission. Others are owned by the children of Anheuser-Busch directors. "Most distributorships are family owned and have been for generations," according to a distributor who asked to remain anonymous so he could keep selling Anheuser-Busch products. "Because they're family-held businesses, they don't turn over that frequently." The Jacksons bought the distributorship in late 1998 from Anheuser-Busch. Neither the Jacksons nor Anheuser-Busch officials would discuss details of the Jackson brothers' purchase. "We negotiated a straightforward deal and paid a competitive price for the company along with its property," Yusef Jackson said in a written statement. Anheuser-Busch, according to the Jacksons, calls the Jackson brothers and Niestrom "exactly the kind of people we look for to be wholesalers representing our company in the community. . . . They have the added advantage of being in the age demographic we describe as `contemporary adults,' the key beer-purchasing segment. . . . This is a very strong management team." Anheuser-Busch said in a statement to the Chicago Sun-Times that it has "several minority owners" of distributorships, but it refused to say how many. "The wholesalerships are independently owned and operated and don't change hands frequently. When they do, we work to recruit qualified minority owners." Anheuser-Busch created a $5 million program to help minorities buy distributorships in September 1982 amid Jackson's threats that Operation PUSH would boycott the company. The brewer had three distributorships owned by minorities at that time. A black-owned paper in St. Louis, where Anheuser-Busch is based, reported that Jackson had demanded $500 each from black businessmen to support the boycott. Jackson sued the paper, but he dropped the suit after a judge ruled that the newspaper could inspect Operation PUSH's financial records. Jackson went ahead with the boycott in October 1982, proclaiming, "This Bud's a dud." A year later, Anheuser-Busch added another $5 million to the minority financing program, one of several moves that Jackson endorsed. Yusef Jackson said in his statement that he, his brother and Niestrom bought the River North distributorship without any financial help from Anheuser-Busch. Yusef Jackson refused to divulge the price his company paid for River North, but public records show his company got a $6.7 million loan from NationsBank to pay Anheuser-Busch for the assets, equipment and the distributorship's building and warehouse on Goose Island. Anheuser-Busch, however, had spent $10.5 million, including $2.6 million from the City of Chicago, seven years earlier to buy the land and build the 79,000 square-foot-building. |
Copyright (c) 1998, Joongpil Cho