By Dr. Benjamin F. Chavis Jr.

Unless you have lived through it, it is easy to dismiss as racial paranoia the wariness and discomfort felt by many successful business leaders of color who have reached the elite ranks of the business world.

To outside observers, modern corporate America appears to be a meritocracy where performance dictates how far an individual can rise. Yet history reveals a far more sobering reality: No matter how much success an outsider of color accumulates, his or her place at the top is often accompanied by a question mark – by a lingering sense that acceptance is fleeting and the status earned over decades is more fragile than it appears.

Nowhere is that more evident than in moments of crisis and failure. When an established company led by white American executives’ falters, media pundits, investors, business analysts, regulators and other stakeholders follow a predictable script. Their failure is framed as the result of harsh economic cycles, bad timing, changing consumer preferences, miscalculation or bad luck. Rarely is the white executive’s integrity put on trial.

But African Americans and other people of color corporate leaders are rarely afforded the same benefit of the doubt when a damaging crisis erupts under their watch. Instead, people are often quick to assume that incompetence, poor work ethic, character flaws, dishonesty, or criminal intent was at the root of the problem.

The 2008 mortgage crisis vividly illustrated this double standard. Wall Street banks made enormous profits from a housing boom built on risky mortgages. When Americans began defaulting in staggering numbers, millions lost their homes, trillions in household wealth vanished, and the global economy neared collapse.

And how many of the overwhelmingly white Wall Street executives behind this scheme were criminally prosecuted? Virtually none. Instead, the financial system received billions in taxpayer bailouts while the institutions at the center of the crisis paid executives lavish bonuses.

The double standard hardly ends there. A few years later, global banking giant HSBC avoided criminal prosecution after admitting that its lax controls allowed Mexican drug cartels to launder hundreds of millions of dollars. Instead, federal prosecutors levied financial penalties against the bank. In the world of high finance, global breakdowns seem to be routinely treated as the cost of doing business.

Contrast this grace with the treatment reserved for outsiders who aren’t in the club, usually African American executives or other business leaders of color whose organizations come under strain — whether in municipal services, finance, or manufacturing. The institutional response is too often vilification, press leaks, and the immediate criminalization of business failure.

Consider a case I wrote about a few years ago involving Jack Brown III, a visionary African American entrepreneur who built CORE Services Group into one of New York City’s most effective social services providers. Yet when CORE demanded tens of millions in overdue payments from the cash-strapped city for services delivered, city officials launched a campaign of press leaks and innuendo, suggesting that Brown’s executive compensation was corrupt. It was a classic example of how leaders of color can be character demonized in an instant.

More recently, there’s a troubling case in the American heartland involving both the forced liquidation of First Brands Group, an auto parts manufacturer that anchored many communities with jobs, and the unfair aggressive prosecution of its founder, Patrick James.

James, an immigrant entrepreneur of color who arrived in Ohio in the 1980s, chose a path modern Wall Street had largely abandoned. Rather than relocating operations and shipping jobs overseas, James entered the struggling world of Midwestern manufacturing and worked to turn it around. Over three decades, he acquired numerous iconic but fading American auto-parts brands — like FRAM, Trico, and Raybestos — bringing them under an industrial giant in a vitally important American industry.

As an industry outsider with limited access to easy credit from giant mainstream banks, James funded this expansion through high-yield, high-risk private lendersthat resemble the payday lenders found in urban neighborhoods. When the economy faltered — driven by historic interest rate hikes, inflation, and pandemic-era shipping bottlenecks — First Brands’ heavy debt burden became unsustainable.

In a fair system, staggering debt during an economic downturn triggers standard Chapter 11 protections: debt is reorganized, ancillary assets are sold, and the company continues to employ thousands. Instead, the private credit lenders who earned lucrative returns worsened the problem. To insulate themselves from their own bad bets, they ran to federal law enforcement, spinning a story of executive fraud out of a complex debt default they helped create.

The response from the U.S. Attorney’s Office for the Southern District of New York was swift. Prosecutors dusted off the “Financial Kingpin” statute, a drug-cartel-era law carrying a mandatory minimum sentence of 10 years to life.

Instead of stabilizing the business, court-appointed restructuring advisors collected large professional fees while liquidating plants, firing thousands of American workers, and selling off specialized manufacturing machinery. At the same time, they worked with the government to build an indictment against James, while prosecutors cut off his access to the corporate documents he needed to defend himself, according to court filings.

In the end, China has been the real beneficiary of this debacle, quickly stepping in to absorb the domestic market share First Brands once held. In that sense, the destruction of First Brands represents another example of Wall Street undermining Main Street by dismantling an effort to rebuild America’s hollowed-out manufacturing base.

Still, there is good reason to believe the ugly facts will finally be heard on the merits rather than through creditor-driven spin.

The James case is before U.S. District Judge Analisa Torres – a trailblazing Latina appointed by President Obama and veteran of the New York bench known for her impartiality, deep respect for working people and labor, and refusal to let institutional power tilt the scales. In a courtroom led by a judge who understands the challenges outsiders face, this corporate undoing may finally get the thorough scrutiny it deserves.

American democracy can only be sustained when African Americans and other people of color are treated fairly, equality, justly, and equitably. The racial targeting of successful corporate leaders of color must be stopped. 

Reverend Dr. Benjamin F. Chavis, Jr. is President and CEO of the National Newspaper Publishers Association (NNPA) and Executive Producer of The Chavis Chronicles on PBS TV network across the nation, and can be reached at dr.chavis@nnpr.org

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