By Jared Chausow
By Katie Toth
By Elizabeth Flock
By Albert Samaha
By Anna Merlan
By Jon Campbell
By Jon Campbell
By Albert Samaha
Is Russell Simmons an Uncle Tom?
For several months, the hip hop millionaire has been acting like a black interloper, somewhat like an inquisitive messenger boy for some desperate white politicians trying to get elected. But so far, the influence that Simmons's friends thought he had among African Americans has not translated into a single victory at the polls.
Although Simmons has been dismissed by some black activists as nothing more than a toothless tiger on his own Phat Farm, his bite may yet prove fatal to the black body politic. The former Mark Green supporter, who remained silent as Green exploited white hot fear of Al Sharpton during the mayoral race, is poised to play a major role in infecting next year's gubernatorial contest. He is backing Andrew Cuomo's bid to bar Carl McCall from becoming New York's first black governor.
Cuomo, secretary of Housing and Urban Development in the Clinton administration, has been quoted as saying that McCall is a signatory to a "racial contract" designed to elect minorities. During the mayor's race, McCallthe only black ever elected to statewide office in New Yorkwas among the coalition of African American and Latino leaders who helped Fernando Ferrer force a runoff with Green. McCall has counted on the coalition helping him next yearand that angered Cuomo.
"Carl would be the second installment in that contract, that racial contract, and that can't happen," Cuomo, the son of former governor Mario Cuomo, told several Jewish leaders on the night of Green's loss, according to The Jewish Week. But some of Simmons's critics allege that he has negotiated his own "racial contract" with Cuomo to defeat McCall. (Cuomo did not return repeated Voicecalls for comment. Pressed further, Jennifer Eason, Cuomo's PR person, promised that he would call back, but by late Monday he had not responded.)
Simmons, according to New York magazine writer Michael Wolff, is "a key member of Cuomo's posse." And last month, Cuomo bragged to Wolff that "Russell is more influential than Sharpton," setting the stage for an encore to the ugly racial politics that engulfed the city after the October 11 Democratic mayoral runoff. Cuomo's praise of Simmons infuriated Sharpton aide Dedrick Muhammad.
"Andrew Cuomo confuses Russell's popularity as the hip hop pioneer with Russell's desire to be popular in mainstream politics," said Muhammad. "If 'Russell is more influential than Sharpton,' how come Mark Green couldn't get out the black vote after Sharpton bolted? Mark Green's embarrassment is testimony to the fact that Russell can't deliver the black vote." Muhammad is part of a clique inside Sharpton's National Action Network that is urging the activist to cut his ties to Simmons. Sharpton acknowledged that there is friction in his civil rights group over Simmons. "I respect Russell, but I am getting a lot of questions about him," the reverend said. "I intend to have a serious discussion with him before 2002."
Sharpton, Muhammad said, should confront Simmons about not speaking out against the vilification of him by racists in Green's campaign. "Either you're naive about these things or you're an Uncle Tom," Muhammad said. "He eventually told us that he told Green how despicable the cartoons of Sharpton were. But by the time he decided to reach out to Sharpton, Reverend's relationship with Green was beyond repair."
The aide speculated that Simmons's true aim is to run for political office someday, but in order to attract the white vote he must hobnob with powerful liberals like Cuomo. "He supported Mark Green because he wants to get closer to Cuomo and the Kennedys," Muhammad said. "It looks like his first goal is to be a power broker and then he'd probably leverage that into running for office. The problem is that he's gotta prove that he can shift votes, and he has not proven that yet."
The racial contract to kill Carl McCall's chances of becoming governor was awarded to Russell Simmons 10 months ago.
On February 5, during an interview on NY1, Simmons accused McCall of ignoring minority firms doing business on Wall Street, as well as not hiring enough blacks and Latinos in his own office. Dismissing the New York State Common Retirement Fund, which McCall has transformed from an almost lily-white asset to one that now places 25 percent of its brokerage business with minority firms, Simmons quibbled. "I would guess about less than 1 percent of all that money was given to anyone black to manage," said Simmons, sounding like he understood the complexities of such business dealings. Stunned by Simmons's comments, black business leaders, including David Ormes, president of Ormes Capital Markets, and Ronald Blaylock, president and CEO of Blaylock and Partners, denounced the remarks as "disparaging and grossly inaccurate." All the executives suspected that the script that the self-described "T-shirt salesman" read from may have been written by Cuomo operatives.
"It is obvious from those remarks that you have a limited knowledge of Comptroller Carl McCall's impact on our business in the financial community," 13 of the executives stated in a letter to Simmons three weeks after his NY1 appearance. They pointed out that prior to McCall taking over as comptroller, "minority and women-owned financial firms were essentially shut out of [doing] business with the New York State Common Retirement Fund." Minority firms suffered, they charged.
"In 1993," they added, "the Fund, which at the time had assets of $56 billion, did not actively seek or encourage minority firms to bid on retirement Fund business. In fact, only a diminutive level of transactions was performed by the Fund with minority firms." But all that, the executives explained, "changed drastically" after McCall gained control of the Fund, which is valued at $130 billion today. How has McCall shared this financial pie with minority firms? The executives asked Simmons to consider that:
McCall, in partnership with Fairview Capital, created the Black Enterprise Fund.
Hamilton Lane, a minority-owned firm, has extensive dealings with the Pension Fund, including the management of a $400 million "fund of funds."
Brown Capital, another minority-owned firm, manages a direct-equity account valued at more than $250 million.
McCall, the executives maintained, steadfastly encouraged minority-owned firms to bid for brokerage business. "He set goals for the Fund's minority business," they insisted. "Today, fully 25 percent of the Common Retirement Fund's brokerage business is with minority firms." In addition, McCall tapped "numerous" minority firms for contracts involving asset management and private equity deals.
"As one example, the Fund has utilized minority firms to provide services for real estate owned by the Fund," the executives said. "[McCall] has contracted with minority law firms for legal work in connection with the Fund. Even when dealing with non-minority-owned firms, Carl has encouraged those firms to assign minority employees to work with the Fund. He has also made tens of millions of dollars worth of loans to minority- and women-owned businesses through the New York Business Development Corporation."
The executives portrayed Simmons as misinformed, and blasted him for claiming that "in his job as State Comptroller, [McCall] didn't change anything" when it came to integrating the mostly white staff in his office. "Carl McCall has changed the management culture of the Common Retirement Fund, not only by enabling African-American firms to do business with the Fund on a competitive basis, but also by hiring a more diverse workforce," they said.
After eight years of working closely with McCall, the black executives have seen their businesses flourish. "The business dealings we have entered into with the Common Retirement Fund have led to other opportunities on Wall Street," they said. "Carl McCall has been an extraordinary leader, committed to giving all qualified firms the opportunity to do business with one of the largest pension funds in America." They ended their letter by urging Simmons "to do a little research before you dismiss the accomplishments of someone like Carl McCall."
In response, the rap mogul lashed out at McCall directly, declaring in an April 12 letter to the comptroller that only two of the 13 executives had signed the letter extolling their relationships with him. "I couldn't help but notice the absence of John Utendahl's signature," Simmons said. "When you visited my office, you described Utendahl Capital Partners as being one of your largest and most significant minority relationships on Wall Street."
Simmons apparently assumed that McCall encouraged the executives to write to himand he blamed the comptroller for ducking his original complaint. "My comments specifically addressed assets under management as opposed to the brokerage relationships that you focused on," he argued. "Your letter mentions that '25 percent of the Common Retirement Fund's brokerage business is with minority firms,' which is commendable. However, dollars provided to asset managers are equally, if not more, important to minority firms in the financial services because it's a viable way for our people to control our own destiny as we create. . . long-term institutions."
Simmons contended that after McCall took over as comptroller he did not see any significant changes in the way the comptroller's office dealt with minority firms clamoring to do business with the state. "Based upon your 1999 annual report, the New York State Common Fund has placed less than 1 percent of its total assets with minority managers," he said. "Additionally, very few of these minority firms are based in New York. This is not the kind of change that I would describe as being 'drastic' or particularly effectual within the minority community."
He challenged McCall to make plain what the executives meant when they described his remarks on NY1 as inaccurate. "My facts and figures are focused specifically on firms that are minority-owned or controlled, rather than firms such as Progress and Alliance Capital which never have been, or no longer are, minority-owned or controlled," Simmons emphasized. He seized on an alleged discrepancy in the claim by the executives that they had been discriminated against by McCall's predecessors. "Carl, it is difficult for me to comprehend how your administration could even begin to have a major impact on minorities in financial services when most of your senior staff members, such as John Hull, the chief investment officer, are holdovers from the previous administration, when little to no business was done with minority firms."
One of Carl McCall's supporters who examined Russell Simmons's letter reiterated that it appeared to be a warning to McCall to bow out to avoid a divisive Democratic primary. "The people who wrote Russell's letter will dredge up every contract that Carl has negotiated with the minority firms," the supporter predicted. "But Russell knows better: In 2002, he will not get away with what he got away with in 2001."
Research assistance: Sarah Park