CEF - IRS Complaint

EXHIBIT B

February 04, 2001, SUNDAY, Late Sports Final Edition

SECTION: SUNDAY NEWS; Pg. 2

LENGTH: 1389 words

HEADLINE: Jackson's protests benefit his family, friends

BYLINE: BY CHUCK NEUBAUER AND ABDON M. PALLASCH

BODY:

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.

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.

GRAPHIC: The Rev. Jesse L. Jackson Sr. (from left) shown with his sons Jonathan and Yusef, helped persuade Ameritech to sell some of its cellular business to a colleague, Chester Davenport. See also related stories pages 1, 4. CHART; See roll microfilm page 3.; Ron Edmonds; Associated Press

LOAD-DATE: February 09, 2001