Arguing Amway

November 23, 1998

As strong supporters of the GOP and the principles for which that party stands, Richard and Helen DeVos do not take umbrage with their placement atop your Mother Jones 400 list. The many inaccuracies in “Tough Sell,” however, need to be set straight.

Your reporters’ first error was relying on inaccurate stories that appeared more than a year ago but were later corrected by their original authors. Had your reporters considered all the articles they discovered while doing their research, they should have been able to avoid the following errors:

The lead paragraph—and lynchpin for the entire article—suggests that gifts from the DeVoses to the GOP resulted in a $19 million “tax break” for Amway’s “Asian branches” in 1997. This is blatantly untrue. False reports of this were corrected by several publications later that year. Your reporters must have missed the corrections.

The article also cites a year-old Associated Press story that incorrectly reported that former President Ronald Reagan once called Mr. DeVos from the White House to seek a campaign contribution. A correction revealed that President Reagan had called Mr. DeVos not to seek funds, but to ask him to serve as the Republican National Committee’s finance chairman. Again, your reporters must have missed that one.

While these errors are unfortunate and could have been avoided through more thorough investigation, the misleading excerpt of a Roll Call column by Betsy DeVos, chair of the Michigan Republican Party and daughter-in-law of Mr. and Mrs. DeVos, is blatantly unethical. By including only the first half of a quote on her family’s motivations for political giving, your reporters deliberately misled readers to reach a flawed conclusion.

These inaccuracies—in addition to the the ridiculous proclamation that Mr. DeVos gives “marching orders” to the hundreds of thousands of independent distributors who market Amway’s products—indicate that Mother Jones is not about “independent, analytical, informed” reporting, as described by your board’s chairman. Instead it’s about biased, one-dimensional opinions, published under the guise of journalistic investigation.

Beth Dornan
Public Relations Manager
Amway Corporation
Ada, Mich.

Editors respond:

In addition to Beth Dornan’s letter, Mother Jones received a letter from Betsy DeVos’ attorneys, complaining that we unfairly took out of context the passage from Roll Call about her family’s involvement in politics. DeVos is the daughter-in-law of Amway founder Richard DeVos. The letter stated, “In her Roll Call op-ed, Mrs. DeVos ridiculed and rejected allegations that her family’s contributions to the Republican Party were made in exchange for personal political favors. Mother Jones…mischaracterized her denial as an admission.” In the spirit of full disclosure, we have decided to excerpt for Mother Jones readers the entire passage to which we referred:

“I know a little something about soft money, as my family is the largest single contributor of soft money to the national Republican party. Occasionally a wayward reporter will try to make the charge that we are giving this money to get something in return, or that we must be purchasing influence in some way.

In fact, shortly after this summer’s historic budget agreement, some on the left began shopping a rumor that President Clinton was planning to line-item veto a provision that, they hypothesized, had been somehow sneaked into the agreement to benefit my family’s company, the Amway Corporation.

For a moment, the Democrats got very excited, believing they had an opportunity to claim that we bought access. It was all hogwash, and upon being confronted with the facts, they had to scrap their plan. I have decided, however, to stop taking offense at the suggestion that we are buying influence. Now I simply concede the point. They are right. We do expect some things in return.

We expect to foster a conservative governing philosophy consisting of limited government and respect for traditional American virtues. We expect a return on our investment; we expect a good and honest government. Furthermore, we expect the Republican party to use the money to promote these policies, and yes, to win elections.

People like us must surely be stopped.”
(Roll Call, September 6, 1997)

Amway calls our description of the company’s $19 million tax break “blatantly untrue,” and says that similar reports “were corrected by several publications last year.” When we asked Amway for these corrections, they provided us with a single news story that ran in the Grand Rapids Press which said the tax break was not $200 million, as other news organizations were reporting, but $19 million—as we reported. We should have stated, however, that four other companies shared the tax break with Amway’s Asian affiliates.

Amway says we relied on an Associated Press story that “incorrectly” reported that then-President Reagan called Richard DeVos seeking a campaign contribution, and claims that a mysterious “correction” fixed the story. The Associated Press says no such correction ever ran. We reported a comparison between Bill Clinton, criticized for making fundraising calls from the Oval Office, to Reagan, who also made fundraising calls, including the one to DeVos we cited. According to a 1981 White House memo, obtained by Mother Jones, Reagan was instructed by an aide to call DeVos and “thank him for accepting the position of RNC Finance Chairman, and challenge him to increase the number of Eagles ($10,000-a-year contributors).” Next to Reagan’s name was a handwritten “yes,” which would indicate that Reagan did, indeed, make that call.

Outback attacks

November 4, 1998

I can respect hell-raising, but I can’t say the same for your journalistic standards. Your article regarding Outback’s PAC (“Rough Cuts,” November/December) was based on false premises and incorrect information.

Your false premise is that regional partners and proprietors (general managers) have an incentive to pressure lower-level management to contribute to the PAC to “look better in the eyes of senior management.” Outback is well known for its innovative regional partner and proprietor programs. Regional partners are true owners in every restaurant. Our regional partners and proprietors enjoy substantial incomes (six figures) and have the protection of a five-year employment contract that can only be terminated for cause. By contract, regional partners and proprietors all receive the same base salary (that does not increase) and the same percentage of cash flow from their restaurants. I am in charge of the PAC because as general counsel I do not have line authority over our restaurant management and cannot affect their careers based on PAC contributions.

Where is the incentive?

Perhaps your biggest blunder is your statement that our PAC is primarily funded by our lower-level managers. Not true. If you had counted accurately, you would have found that regional partners, proprietors, and vice presidents contribute 85 percent of all dollars in our PAC. Our lower-level managers and kitchen managers contribute because they receive, in addition to a base salary, a monthly bonus based on the profitability of their restaurants. We educate our management on the impact government policies can have on their business. It is for this reason that we enjoy such strong support for our PAC. Our PAC enrollment form, which each contributor signs, clearly states (1) that contributions are voluntary, (2) that contributions may be stopped at any time, and (3) that managers will not be favored or disadvantaged by contributing or not contributing to the PAC.

Do we encourage (as allowed by law) our management to voluntarily contribute to our PAC? Absolutely and without apology. You state that the Outback PAC received contributions of $565,600 in the first six months of 1998, of which $458,000 (81 percent) were donations of less than $200, which the Federal Election Commission does not require to be itemized. Not one of these numbers is accurate. The contributions of $565,600 on our June 30, 1998 Florida report represent cumulative contributions for the 18 months from January 1, 1997 to June 30, 1998. The $458,000 of contributions you claim are under $200 is unfathomable.

For the first six months and nine months of 1998 our unitemized contributions were 49 percent and 37 percent, respectively, of total contributions. In 1996 and 1997 our unitemized contributions were 27 percent and 29 percent, respectively, of total contributions. As the calendar year progresses, more contributions exceed the $200 level and the percent of unitemized contributions decreases. I expect that our report for the full calendar year of 1998 will again show unitemized contributions of less than 30 percent. FEC rules do not give us the option of itemizing contributions of less than $200. As you know, our Florida reports list every contributor regardless of amount. We have nothing to hide.

If your reporters had been straight with me about the thrust of your story, I could have helped them avoid these errors. Zeal for hell-raising can be quite unfair if not matched by an equal zeal for accuracy.

Joseph J. Kadow
Vice President and General Counsel
Outback Steakhouse, Inc.
Tampa, Fla.

Editors respond:

Kadow is correct in pointing out our incorrect numbers. We relied on flawed data to compute the percentage of Outback’s PAC that is made up of contributions under $200. The passage referring to the depth of contributions to Outback’s PAC from small donors should have read: “Contributions of less than $200 accounted for $104,067 of the $356,368 the Outback PAC received in 1997. Because the FEC does not document sub-$200 PAC donations, 29 percent of the PAC’s receipts last year would be untraceable if not for Florida’s unusual full-disclosure requirements.”

However, the premise of the story is not, as Kadow suggests, that the “PAC is primarily funded by our lower-level managers.” The story reported that fully one-third of the 30 current and former Outback managers we interviewed, including lower-level managers making $22,000 a year, say they felt pressured to fund the company’s political action committee through deductions from their paycheck.

When Kadow asks: “Where is the incentive?” he should be directing the question not at us, but to his own management for answers. When anyone in Outback’s senior management—regional partners or proprietors—ask lower-level staff for contributions, it’s easy to see how it can turn into pressure, which is exactly what employees, such as former kitchen manager Andrew Fitzgerald, described to Mother Jones: “Let’s face it. When the big boss asks you to do something—and not doing that may hinder reaching your ultimate goal—you’re going to do it.”

Sierra Club reacts

November 10, 1998

Dear Editors:

Leora Broydo’s attack on the Sierra Club (“Mutiny at the Sierra Club“) was a classic piece of ambush journalism, rife with misleading and unsubtantiated claims.

The fact is that the Club has never in its modern history spent as high a proportion of its resources on grassroots work. More than two thirds of the resources we spent as recently as 1993 in direct lobbying of Congress is now spent on grassroots energizing and engagement with the American public, and this has been supplemented with major new infusions of educational dollars into community engagement programs.

The fact is the Club’s grassroots work has never been more effective. That’s why Green Party gubernatorial candidate Dan Hamburg told MoJo, “Do I wish I’d been endorsed by the Sierra Club? You bet,” or why Chad Hanson was quoted as saying, “You could not get stuff moving nationally without the Sierra Club.” This week’s election results stand as testimony to that truth.

This work is being done by grassroots activists—thousands of them. They are the Sierra Club. They are our board of directors, all 15 of them, as a casual perusal by Leora of any recent ballot would attest. They have different tactical perspectives. Those differences get expressed in our democratic process. The fact that one political faction is choosing to express its dissent externally, or in a hostile fashion, doesn’t mean they are mutineers even if some of them find it romantic to think of themselves that way.

Tomorrow they may be a majority—but today, among our members, they are a strong, vocal, and valuable minority. Candidates supported by John Muir Sierrans received about one-third of the votes cast in last year’s elections. Two-thirds went to other candidates with different points of view.

The tension between visionary goals and incremental progress towards those goals is endemic to the Sierra Club, and it has been since the beginning. (John Muir drew the vision of Sequoia National Park on the back of an envelope in 1912. The Club only completed his vision by adding Mineral King to the park in 1981. Talk about incrementalism!)

As for Broydo’s charge that we only like winners in our political endorsements, what the Club likes to do is make winners out of environmental advocates and environmental issues. We admit it—we favor progress over posturing. We will help elect as governor of California a candidate with an 89 percent environmental voting record running on a platform to defend and strengthen environmental protections, instead of endorsing one with a 91 percent score who’s running as a protest candidate—and we don’t care what party colors the candidate wears. (For the record, I am a long-time registered Republican.)

At the beginning of this campaign season few observers thought that candidates like Mark Udall in Colorado, or John Edwards in North Carolina, were winners. The Sierra Club helped them win, along with 88 percent of the candidates we supported in 43 marginal races, and we believe that helps environmental issues, including ending commercial logging on our national forests.

We would rather make a difference than just make noise.

Broydo’s article is also replete with factual errors, some of which I understand were pointed out to the MoJo Wire’s fact-checker before publication. Rather than spending just $18,000 in the last two years on stopping commercial logging, we’ve spent a lot more than that on printing and distributing a 1997 study on stopping commerical logging, a round of radio commercials, and a New York Times ad promoting No Commerical Logging.

Two months ago we spent $11,000 on focus groups on No Commercial Logging sponsored jointly with the Zero Cut Coalition. The Club just gave its prestigious Edgar Wayburn Award to the two lead sponsors of the no commercial logging bill, Reps. Cynthia McKinney (D-Ga.) and Jim Leach (R-Iowa). Much more needs to be done, and we intend to do it, but the Club has positions in support of over 100 bills in any given Congress and we have done more and spent more on No Commercial Logging than on most bills that we support.

I understand Carl Pope never told Ms. Broydo that the Club does not fund work on specific legislation. He told MoJo Wire’s fact-checker repeatedly that we spend millions of dollars on legislation—we simply don’t have a line item for each bill in our budget.

We’d like to think that if Mother Jones were around today, she would be “fighting like hell” as a Sierra Club activist. I’m very sure she would be aiming her polemics at the timber and mining companies, not an organization whose own internal dissidents recognize is indispensable to national progress on the environment. Mother Jones should be ashamed.

Sincerely yours,

Chuck McGrady
President, Sierra Club
San Francisco, Calif.

Leora Broydo responds:

Chuck McGrady’s response to my article is rife with misleading and unsubstantiated claims.

The article repeatedly credits the Sierra Club with being a potent political force capable of mobilizing voters, influencing key elections, and making the environment a major campaign issue. The article also notes that no other environmental group has the Sierra Club’s legislative influence; McGrady even pulls quotes directly from the story to make this point himself.

The fact remains, however, that there is a small but powerful segment of the Sierra Club’s membership that feels the club is not using its clout to support grassroots campaigns that its members support. These are not your average card-carrying members. They hold seats on the board of directors, they are chapter chairs, they are paid staff. McGrady can cite the efforts the club has made to support grassroots work until he is blue in the face, but, like it or not, many influential members believe the Sierra Club is not doing enough. Perhaps if McGrady could offer a monetary figure for the amount spent on such grassroots efforts, along with a detailed description of what those efforts are, the club’s critics would pipe down.

McGrady offers two examples to support his assertion that the article is “replete with factual errors.” First, he says the club has spent way more than $18,000 on stopping commercial logging in the last two years—though he does not provide a dollar amount to back up his claim. The $18,000 figure was given, as noted in the article, by Chad Hanson, a Sierra Club director, finance committee member, and John Muir Sierran. Efforts were made to get a second source: When I asked Sierra Club’s executive director, Carl Pope, for a figure, he said it’s impossible to say how much is spent because there is no line-item in the budget for the No Commercial Logging campaign. When the MoJo Wire’s fact-checker contacted Dan Weiss, the Sierra Club’s national political director, Weiss told us to check the figure with Hanson. Obviously Weiss felt Hanson a credible source. Why shouldn’t we?

McGrady also denies that Pope said that “the club does not fund specific legislation.” I have it on tape, and in the article Pope even elaborates on what he meant by this statement.

The article is supported by stacks of documents, dozens of interviews, and rigorous fact-checking. If this is a “piece of ambush journalism,” it sure took a lot of work.

Microsoft sabotage

November 15, 1998

The DRD’s case in 1991 was not the first Microsoft sabotage incident reported. Microsoft has also reengineered OS software to undermine competition in application software.

Mainstream news magazines like Time and Newsweek in the 1980s were reporting allegations that a version of MSD’s was rigged to crash when Lotus 123 was being used. I seem to recall seeing reports that Gates had admitted that Microsoft had done so.

I happened to read these accounts in the late ’80s while I was researching another tawdry episode in the life of Microsoft, the OS2/Windows snafu. Microsoft was involved in the development of both these operating systems concurrently. Leading application software competitors of the day like Borland and Lotus charged that Microsoft misled them into believing OS2 would be the platform of choice in the near future, so they supposedly spent fabulous sums in OS2 application development. Microsoft, meanwhile, spent its fabulous sums in Windows applications development.

History, of course, has shown that Windows became Microsoft’s choice. They dumped OS2.

Ellis Heckman

Redesign hate crime?

November 13, 1998

To the Webmaster-

Your Web site design is one of the worst I have seen. Not only is it hideously ugly, it loads incredibly slowly and provides a staggeringly ineffective way of navigating your magazine. Every member of the firm that designed your site should be taken out and shot.

Jesse Costello-Good
New York, N.Y.