Microsoft decision does not compute: after making meager contributions to Jesse Jackson's nonprofit empire in the past, Microsoft now is anteing up in what many suspect is a Silicon Valley shakedown

0 Comments | Insight on the News, May 13, 2002 | by Kenneth R. Timmerman

Despite mounting financial woes and diminishing political clout, the Rev. Jesse Jackson convinced Microsoft Chairman Bill Gates to keynote a Silicon Valley conference on April 24-25 that Jackson hopes will revive his flagging fortunes and revive corporate donations to his nonprofit empire.

Convincing Gates to cohost the event and spend several hundred thousand dollars of corporate treasure on Jackson is a significant coup for the Chicago-based activist. Microsoft has made meager contributions in the past. But does Gates really think commercial opportunities will flow from being seen rubbing shoulders with Jackson? Or is Jackson's frequently alleged trademark "shakedown" once again at work?

"I feel sad when some Silicon Valley CEOs -- ones that have fine diversity records -- validate Jackson's con by putting him in the spotlight," Cypress Semiconductor President and Chief Executive Officer T.J. Rodgers tells INSIGHT. Rodgers is one of a handful of executives who have rejected Jackson's efforts to be paid.

Microsoft spokeswoman Gayle Cruise wouldn't disclose the extent of Microsoft's gifts to Jackson's nonprofit empire, but said it now includes software, cash, training and Microsoft employees who are loaned to the Rainbow/PUSH Coalition.

An examination of Jackson's financial-disclosure forms for the last 10 years turns up just a single contribution by Microsoft, made in 1999. The $25,000 from Microsoft's headquarters in Redmond, Wash., was dwarfed by dozens of Jackson's larger sponsors.

This year, in a clear break from its earlier arms-length relationship to Jackson's groups, Microsoft agreed to play host to a full-day seminar on e-commerce and Internet technologies, as well as a reception for hundreds of conference participants at its Silicon Valley campus in Mountain View, Calif. Microsoft's cash and in-kind contributions could reach several hundred thousand dollars for the event. "This is just part of our effort to partner with African-American, women and Hispanic-owned small businesses," Cruise tells Insight, trying to downplay the contributions.

But the real kicker is the keynote address by Gates, which Jackson is promoting as a consecration of his efforts to "bridge the digital divide." In essence, Gates has signed up to become Jackson's Silicon Valley rainmaker.

Are Gates' motives pure altruism? Does he really believe in what Jackson is doing? According to Cruise, Microsoft suddenly became attracted to a Rainbow/PUSH Coalition program to "provide small-business training" to black communities.

INSIGHT asked what sort of computer training Jackson's groups were providing, noting that neither the Citizenship Education Fund (CEF) nor Jackson's flagship Rainbow/PUSH Coalition claim to be conducting such activities in any of their public-disclosure forms, press releases or Websites. "Well, they are in the process of developing this," Cruise says. "It will be a supplier-diversification program."

"Supplier diversification" is the code name for one of Jackson's modus operandi, where he insists that companies such as Toyota or General Electric hire minority-owned businesses from lists of his friends and financial supporters critics say.

Jackson never has acknowledged taking a fee for these services, but black business owners named on his lists of preferred providers contribute regular -- and sometimes sizable -- amounts to his groups. No one from Jackson's organization would respond to repeated inquiries about this practice.

And the picture gets murkier. In several discussions for this article, a Microsoft spokesman in Washington, D.C., insisted that Microsoft would not disclose how much money it pays Jackson because it "has a policy not to disclose the amount of funding we provide to trade organizations, think tanks or nonprofit organizations."

And yet, when INSIGHT went back to Cruise at Microsoft headquarters in Redmond, Wash., she provided hard-dollar amounts Microsoft had given to the United Negro College Fund ($68.6 million since 1995), the Hispanic Association of Colleges and Universities ($1.2 million in cash and software) and the American Indian Science and Technology Education Consortium ($1.2 million in cash and software). But when asked again how much the firm was giving Rainbow/PUSH and CEF, she replied: "Microsoft's policy is not to disclose."

The real story behind Microsoft's newfound largesse may be discovered in two high-profile, high-stakes lawsuits filed by Jackson allies Johnnie Cochran and Willie Gary.

At a CEF conference in Chicago last May, Cochran gave a rousing speech in favor of class-action legal fishing expeditions against major U.S. corporations. "Once we get the corporate records we begin to see this great disparity in pay, as much as 20 percent. The difference is, the person has a different skin color," Cochran said.

Alleged pay disparities led Coca-Cola to pay out $192 million to clients of Cochran and Gary in a class-action lawsuit settled last year. Now, Cochran said, he has filed a similar lawsuit against Microsoft, which "has less [sic] than 1,000 black employees out of 40,000, and blacks are not getting the same benefits."