Jesse Jackson Called the 'Godfather' of Shakedowns

By Marc Morano CNSNews.com Senior Staff Writer October 23, 2001

(This is the second of two articles focusing on Jesse Jackson's business dealings)

(CNSNews.com) - A Washington D.C. public relations executive is warning clients about the consequences of "appeasement" in dealing with Jesse Jackson, and labels Jackson the "godfather" of corporate shakedowns."

Nick Nichols' book, entitled The Rules for Corporate Warriors: How to fight and survive attack group shakedowns, follows a highly publicized deal in August of this year between Jackson and Toyota Motor Sales USA, in which the automaker agreed to spend nearly $8 billion over ten years to increase minority participation in the company. Prior to the agreement, Jackson had threatened to organize a boycott against Toyota.

Toyota is also accused of buckling under Jackson's pressure by diverting a portion of a $300 million bond offering to supporters of the civil rights leader. Toyota claims the bond offering was merely a "coincidence," and unrelated to its agreement with Jackson to boost minority participation at the company.

"We have had protection rackets for several thousand years because they work. The Mafia has made protection an art form. Jackson has taken a lesson from history," Nichols told CNSNews.com.

He defines a shakedown as occurring when a group or individual like Jackson makes "a highly exaggerated or completely bogus allegation and the message to the company is you either do things our way or we are going to take this public, embarrass you, hurt you on Wall Street and do a lot of damage."

The next step, Nichols said, involves the corporation consulting with a public relations firm, which usually recommends that the company meet the demands of the pressure group. But Nichols cautions against taking this advice.

"That is the attitude that was held by [former British Prime Minister] Neville Chamberlain when he tried to do this with Adolf Hitler. It didn't get him anywhere and it's not going to get them anywhere," he stated.

When a company gives into these types of demands, they are open to even more pressure, according to Nichols.

"Once your corporation has been marked as a company that is prepared to pay up and roll over, other groups who also make a living from doing this kind of thing start to go after you," he stated. Nichols cites Starbucks' decision to meet the demands of the organic food industry as a recent example.

"Starbucks rolled over. Now every time you pick up the paper, someone new is attacking the company. It's an easy hit for people who simply want to engage in a protection activity."

Nichols expects more corporations to give in to the demands of Jackson because "a lot of corporate executives are getting counsel from PR flacks and others to basically engage in appeasement. It's a lot easier to do than to fight back."

A Quid Pro Quo?

Critics say Jackson's agreement with Toyota shows a familiar pattern.

Ken Boehm, chairman of the National Legal & Policy Center (NLPC), said Toyota's finance division sold a $300 million bond offering, with a portion going to two financial contributors of Jackson, just one week after Jackson's boycott was delayed. The NLPC filed a complaint with the Internal Revenue Service earlier this year alleging that Jackson's Citizenship Education Fund (CEF) had violated several tax code provisions.

"There is a $300 million security offering that gets farmed out through the underwriter to two of Jackson's biggest supporters on Wall Street," Boehm said, noting it happened just one week after Jackson announced he was delaying the boycott against Toyota.

"Sometimes things are exactly what they look like. This is one of those times," Nichols said. "You have a quid, a pro and a quo."

The New York Post reported that Toyota sold a $300 million issue of medium-term notes through Goldman Sachs, "listing two street firms whose owners are big Jackson supporters - Blaylock & Partners, and Williams Capital - as sellers of the issue."

Blaylock & Partners contributed $30,000 to CEF and also benefited from Jackson's opposition to a merger between AT&T and TCI, Boehm alleged. "[Jackson] dropped his opposition when the companies hired Blaylock & Partners to float an $8 billion bond offering. AT&T then gave [Jackson's] CEF $425,000," according to Boehm.

Williams Capital has given Jackson at least $50 thousand in contributions, Boehm said.

"That would be strictly coincidence and not part of our reason for using them," Mike Michels, a spokesman for Toyota told CNSNews.com, regarding the multi-million dollar medium-term note sale involving the two firms. "There was no quid pro quo," he said.

Boehm counters, "I think it is what is looks like. It is no coincidence at all. It was the payoff."

Jackson's Rainbow/PUSH organization threatened the nationwide boycott of Toyota because of a company ad featuring a black man with a gold tooth reflecting the company's RAV4 sport utility vehicle.

The ad was denounced as racist and Toyota quickly dropped it. But in May, Jackson began his boycott campaign demanding more minority participation in the company.

On June 20th, after a series of meetings with Toyota, Jackson announced he was postponing the boycott and set a deadline of Aug. 1 to resolve the issue. Toyota made it known that it wanted to resolve the boycott threat by working with Jackson to reach an accord. According to Boehm, the stock offering was made at the end of June and Toyota's agreement with Jackson's Rainbow/PUSH coalition to increase minority hiring was finalized Aug. 8.

Michels laments that there is a "lingering perception that our corporate diversity plan was in some way a contract or some kind of agreement with Rev. Jesse Jackson. It is not."

He instead credits Jackson with allowing Toyota "to delve into our diversity programs much more comprehensively than we had in the past" and giving the company "an excellent opportunity to look at it in a holistic fashion."

A Familiar Pattern?

Boehm believes Jackson's threatened Toyota boycott followed a familiar pattern.

"He makes a threat, the corporate folks who are being threatened cave in by giving money to Jackson's groups, or friends, or business associates and then a boycott is averted. That is exactly what happened here. It's a one, two and three that has characterized virtually every one of his boycotts," he said.

Keiana Peyton, a spokeswoman for Operation PUSH, told CNSNews.com that Jackson has been proven financially clean.

"In the probes that have already been completed, they have found no financial improprieties," she said.

Boehm said he is unaware of the "probes" referred to by Peyton. "To say he has been cleared, I would like to know who cleared him and when. Just about anytime he has ever come under official scrutiny, he has never come up clean," Boehm said.

When pressed to name the probes to which she was referring, Peyton would only reference a Jackson media relations effort earlier this year.

"We had a national press conference with CNN, local papers, FOX News. We gave them a tour of our financial records and financial offices and again those accusations that were raised, no evidence was found," she offered.

Boehm explained that "Jackson's entire career has been marked with financial irregularities going back to grant money in the 1970s with federal auditors to the present day use of charitable funds to pay his mistress." The latter accusation refers to a scandal that became public earlier this year when Jackson admitted he had fathered a child out of wedlock with a former employee, Karin Stanford. According to the NLPC, Jackson also may have used funds from his Citizenship Education Fund to help Stanford buy a house in Los Angeles, a charge Jackson's organization denies.

"There is a compelling pattern that Jackson helps those in the minority community that help him first," Boehm noted.

Peyton defended Jackson's tactics and said there was nothing unusual about them.

"There might be persons, that the reverend or our trade bureau members are familiar with their records, their work histories, their ability to provide services. The average person would only want to recommend persons that they have worked with personally or could vouch comfortably for them," she explained.

"But as far as it being exclusively for a particular group of people, that is not the case at all."

'Just Say No'

Nichols, who runs his own PR firm, counsels his clients to fight back against any potential shakedown artists. "The corporations who engage in [fighting back], normally you don't see much coverage of them because the attacker usually goes away once they find out they can't get away with it," he said.

When confronted, he advises clients to "just say no" and "notify federal law enforcement that your company is the potential target of a shakedown on the part of some group or organization." He maintains that reporting the activity to law enforcement would have a chilling effect on the group's pressure tactics.

For corporate executives skittish about such action, Nichols warns that they have no alternative. "You have to stand up and fight even if you do sustain some short term damage because in the long run the damage is going to be far greater," he advised.

-- Anonymous, October 25, 2001