Jackson's Corporate Shakedown
Source Steve Zeltzer
Date 01/02/05/22:37


Jackson's protests benefit his family, friends

February 4, 2001


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.

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
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
that have ties to Jackson family members. Then Jackson endorsed the
and they were approved.



May 14: Jackson urges Pres. Clinton to block the merger.
Dec. 7: "We are at the table with the merger giants," Jackson says,
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.
Feb 5-16, 2000: Jackson's son Jonathan, representing Davenport's company,
accompanies Jackson on a trip to Africa, PUSH documents show.


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
April 5: GTE agrees to pay vast majority of the $3.3 billion purchase
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.


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
bond offering.
Feb 25: FCC approves merger.
March 22: AT&T chooses Blaylock & Partners, L.P., a minority firm with
ties to Jackson, to co-manage an $8 billion bond offering. The deal is
an estimated $750,000 to the firm.
Jan. 2001: AT&T executives address Jackson's Wall Street conference.


1999: Viacom pledges $680,000 to Jackson's CEF. Viacom's UPN donates

Sept. 20: Jackson blasts CBS's proposed purchase of Viacom, saying it
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
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
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.
Feb. 5-16: Jackson visits Africa on a telecommunications trade mission. He
brings Sutton and his son Jonathan Jackson, who is representing
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
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
Rainbow/PUSH Coalition mistakenly identified Jonathan as a representative

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
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
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
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
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
according to published reports.

Since Jackson started the Wall Street Project in 1997 as an outgrowth of
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

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
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
the company in 1998, helping to boost his net worth to close to $100

Verizon (formerly GTE) representatives denied a New York Times story
that GTE executives resented having to cut Davenport in on the deal.

"Rainbow/PUSH introduced us to Chester Davenport," Verizon spokeswoman
Hennessey said. "But it's ultimately our decision who we involve in our

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
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

Jackson met with CBS' Karmazin to make his pitch and he brought along
Davenport, Sutton and Spanish Broadcasting Systems Vice President Joe
as examples of minority businessmen who could buy UPN. A week later,
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
owner of radio stations interested in starting cellular telephone
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,
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
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

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


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

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

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
products between Lake Michigan and Harlem Avenue, Irving Park and
Roads. No bar or restaurant in that area can buy Anheuser-Busch products
from anyone but the Jacksons. This includes hotels, nightclubs and Wrigley

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
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
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
a master's degree in business from Northwestern University. He had worked
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
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
the nation's beer, dominating most markets, but in Chicago, the company
second to Miller Brewing Co. Anheuser-Busch's goal is to become the
brand in Chicago, and the Jacksons will play a key role if that is to

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

Anheuser-Busch has 700 distributorships nationwide. Several are owned by
Busch family relatives, including Anheuser-Busch Chairman August Busch
daughter and son-in-law, his half brother Peter Busch and cousins,
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

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

"The wholesalerships are independently owned and operated and don't change
hands frequently. When they do, we work to recruit qualified minority

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
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
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
the River North distributorship without any financial help from

Yusef Jackson refused to divulge the price his company paid for River
but public records show his company got a $6.7 million loan from
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
79,000 square-foot-building.

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