Corporate America Under A Racial Magnifying Glass

After Mitsubishi, Texaco, Jackson pledges broad scrutiny of firms

Jesse Jackson is bullish on Wall Street and its big business friends.

It's not that the charismatic leader is keen to put his money in the market. Instead, he's setting up an office for his Rainbow/Push Coalition only a short distance from the floor of the New York Stock Exchange.

From this office, which will officially open Feb. 15, the Rev. Mr. Jackson says he will monitor corporate racial-diversity plans and search for companies interested in doing business with minority consumers. He plans to rate companies on their employment practices and investments. And he has implied he might publish a list of "fair" and "unfair" companies.

Jackson hopes to be more than just a magnifying glass poised over corporate America. Through the Internet, Jackson says he will organize 1 million minority consumers who can target their spending toward companies that meet his coalition's criteria. "We've come to Wall Street for trading partners, not boycott [targets]," he says.

Among the criteria Jackson will use to judge corporate America are the diversity of the boards of directors, procurement of goods and services from minority firms, and employment practices. He quips: "We're not just looking at people to see if they bought a table at the Martin Luther King annual banquet."

Jackson's new office will be in a tower owned by Donald Trump, the New York real estate mogul. Mr. Trump, who purchased the building for $8 million, is now in the process of renovating the skyscraper. Real estate brokers say it has a 90 percent vacancy rate.

Trump says Jackson called him looking for space in his office building. "Are you willing to pay top dollar?" asked Mr. Trump, who says Jackson replied, "No, more like $1." Trump says he replied, "You've got it."

Aside from Trump's donation, Jackson will need to raise money to fund the effort.

The Wall Street effort follows Jackson's boycott of Mitsubishi Motor Sales of America, which is based in Normal, Ill. On Wednesday, Jackson lifted the boycott after the Japanese car company agreed to spend $200 million over five years to improve minority opportunities, including pay raises and new car dealerships.

The company will also offer to rehire several female employees who are suing the company over sexual harassment charges.

"We think this covenant can be a model," says Patricia Ireland, president of the National Organization for Women.

It's not clear if Jackson's boycott had any impact on Mitsubishi sales. "People don't call you to tell you they are not buying a car because of a boycott," says Richard Recchia, a Mitsubishi executive.

Jackson's move comes at a time when many companies are reexamining their own diversity efforts following Texaco's embarrassing episode with racial discrimination. Some Texaco executives were tape-recorded making insensitive remarks. The company quickly settled a discrimination lawsuit and agreed to increase its hiring of minorities.

This week, Denny's restaurant chain agreed to give $1.5 million to civil rights groups and a "zero tolerance for discrimination" policy, also stemming from a race-discrimination lawsuit.

David Oppenheimer, associate professor of law at Golden Gate University Law School in San Francisco, has observed a growing backlash against race-based preferences, such affirmative action. California voters recently repealed that state's affirmative action laws. However, as this backlash has spread, he believes corporations are increasing their efforts to achieve diversity.

Mr. Oppenheimer, an expert on discrimination law, says companies tend to act out of enlightened self interest and the fear of being sued under a 1991 civil rights law. "One of the ways you educate people is taking money out of their pockets," he says. Texaco has agreed to pay $176 million, most of which goes to 1,377 plaintiffs in a 1994 race-bias case.

More claims are being filed, says Gary Siniscalco, a partner in the San Francisco law firm of Orrick, Herrington & Sutcliffe. Mr. Siniscalco, who represents companies in bias suits, says he does not sense an increase in bias. "What happened at Texaco, I don't find that to be a common practice among companies. I don't see companies even talking about secret discrimination."

Instead, Siniscalco says companies with international operations and sales are hiring minorities because it makes good business sense. "The globalization of the American economy dictates diversity," he says.

He will get no argument from Jackson who will be peering over corporate shoulders from his new Wall Street perch to try to ensure that comes true.

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