1998: Pittsburgh Post-Gazette
Award for Deadline News Reporting

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Face-off with hatred: KKK visit is met by police presence, thousands praying for peace

AT&T's Walter quits after boardroom rebuff

July 17, 1997

AT&T Corp. President John R. Walter, whose relations with Chairman Robert E. Allen had grown increasingly strained, resigned abruptly after the company's board said it wouldn't name him chief executive as planned by Jan. 1.

The stunning decision by AT&T's board, which hired the former printing-industry executive only last November after a high-profile search, capped an unusually public drama played out in the executive suites of a telecommunications giant struggling with seismic changes. AT&T's board took the extraordinary step of airing its low opinion of Mr. Walter in a conference call with reporters yesterday, during which outside director Walter Elisha declared Mr. Walter lacked "the intellectual leadership" to run AT&T. TD Mr. Walter, 50 years old, was told of the board's decision yesterday morning after an evening of intense talks among outside directors and Chairman Allen. These directors, including Mr. Elisha, will launch yet another search for a successor to the 62-year-old Mr. Allen, an indication that Mr. Allen will have a lesser role in this search than in Mr. Walter's hiring. Mr. Elisha made it clear last night that AT&T is looking for a new CEO.

Mr. Walter's exit seems to leave AT&T adrift at a time when it can least afford to be distracted. The company's core long-distance business continues to erode. AT&T is under intense attack in virtually every one of its markets, including wireless services. And its international strategy is in disarray as competitors such as the team of British Telecommunications PLC and MCI Communications Corp., as well as Sprint Corp. and the Baby Bells lock up key alliances.

AT&T's shares closed yesterday at $36.3125, up $1.3125 in New York Stock Exchange composite trading.

Mr. Walter defended his tenure as president yesterday, in a statement in the very AT&T news release that announced his resignation. "I believe I am perfectly qualified to be CEO of AT&T right now," he stated. "I have worked tirelessly on behalf of the shareholders of AT&T."

Mr. Walter, who declined to comment, will leave the job much richer than he began it. He received a $5 million bonus in October when he left his job as chairman of R.R. Donnelley & Sons to join AT&T. And now he will get $3.8 million in severance, plus $22.8 million to cover what he would have potentially earned at Donnelley had he stayed.

"Mr. Walter's services will be in great demand," said Mr. Walter's attorney Robert Barnett, of the Washington law firm Williams & Connolly. "He is one of the world's experts on information services and communications. John Walter will be just fine."

Now with Mr. Walter gone, scrutiny of Mr. Allen's troubled tenure is certain to intensify. Mr. Elisha acknowledged last night that Mr. Allen has become "a lightning rod" of blame for AT&T's current malaise, but he defended the chairman as "doing a terrific job under very trying circumstances."

Many analysts and AT&T watchers had been skeptical of Mr. Walter's abilities to run AT&T since he had never worked in the telecom industry. "He wasn't even close to the best person that could have been tapped to run this company," said David Beirne, a corporate headhunter who has lured several top AT&T executives to other companies.

However, while some questioned Mr. Walter's capacity to run far-flung AT&T, people close to the company said a bigger reason the telecom novice was dumped might have been Mr. Allen's inability to get along with his No. 2. It is a problem that has plagued AT&T's chairman during his nine years in the top job. Mr. Allen had gradually taken away much of Mr. Walter's responsibilities, including merger talks AT&T had been conducting, while offering only lukewarm public support for his colleague. Mr. Allen wouldn't comment.

People close to AT&T weren't surprised by Mr. Allen's actions. For eight of his years as CEO, he refused to name a president with his board's full compliance. Mr. Walter, brought in under an agreement in which Mr. Allen agreed to retire two years early, is now the second president to quit AT&T in a year. Alex Mandl resigned last summer after Mr. Allen wouldn't designate Mr. Mandl as his heir apparent.

Mr. Walter was tapped in October after a three-month search by AT&T's directors and the recruiting firms Spencer Stuart and Korn Ferry. Among those considered for the job were current Eastman Kodak CEO George Fisher, who turned AT&T down at the time. Mr. Fisher has since been elected to AT&T's board, igniting speculation once again that AT&T will try to offer him the job. Mr. Elisha will only say he admires Mr. Fisher and that he would be an obvious candidate, but he wouldn't say whether AT&T would make him a new offer. Mr. Fisher hasn't commented on such speculation. He has a couple of years left on his contract with Kodak.

Only a few weeks ago, Mr. Allen said he had "full confidence" in Mr. Walter. But AT&T insiders knew differently. "Bob very reluctantly agreed to accelerate his own retirement by two years to get John, but when the day for that to happen got closer he didn't want to give up the reins," said one executive.

The tension at the top of AT&T rose during the recent failed merger talks with Bell giant SBC Communications Inc., when Mr. Walter was cut out of the negotiations by Mr. Allen and AT&T's chief counsel, Vice Chairman John Zeglis. It turned out that it was Mr. Walter who first got the call from SBC Chairman Edward Whitacre to do a deal, angering Mr. Allen. "After that, Bob took the SBC deal over for himself and Zeglis," cutting Mr. Walter out of the loop, said one executive.

And all the time Mr. Allen was critiquing Mr. Walter's performance to Mr. Elisha and other noncompany directors. The increasingly critical reviews came during private sessions between Mr. Allen and the board's outside directors, dating back to mid-April, said Mr. Elisha, who is Chairman of Springs Industries Inc. "Bob talked to us for awhile [at the April meeting] and expressed concerns to us," the director said, but he he wouldn't elaborate on what Mr. Allen told the directors. Later in May at another session, "the caution light was on," Mr. Elisha added.

The AT&T board met in a special executive session late into Tuesday night over the Walter succession issue. The final showdown came yesterday morning in a 90-minute session between Mr. Walter and directors in a small conference room in AT&T's lower Manhattan headquarters where he outlined what he felt were his accomplishments at AT&T. The directors left the room and caucused among themselves. Mr. Elisha later met with Mr. Walter again and told him of the board's decision to refrain from naming him CEO in January. Mr. Walter decided at that point to leave, and later working out a suitable news release with the company.

"John was very able" as an executive, Mr. Elisha said yesterday. But he noted the CEO's job at AT&T requires more than just good management acumen. As Mark Twain used to say, Mr. Elisha recalled, the "difference between president and vice president is like the difference between lightning and a lightning bug."

But it remains to be seen whether the telecom experts who remain at AT&T will be able to dust the company off from the latest brouhaha. AT&T said the company's counsel, Mr. Zeglis, now would assume all of Mr. Walter's responsibilities for operations, while AT&T moved Mr. Zeglis's responsibilities for legal, human resources and public relations under Mr. Allen's direct control.

Mr. Allen's closest confidant, Mr. Zeglis was recently elevated to vice chairman, undercutting Mr. Walter's position significantly. Mr. Zeglis gets high marks for his intelligence, particularly in navigating the current regulatory issues surrounding the competitive telecom market, but his new assignment is bound to cause controversy, since he has never run a business.

Mr. Elisha defended the choice of Mr. Zeglis as operating chief, calling him a "very able, knowledgeable and insightful executive. . . . who's also a lawyer." But he would only endorse him as one of a "final 10" list of executives that might be qualified to someday run AT&T. AT&T will look inside and externally for its next CEO, a search that might necessitate Mr. Allen having to stay on longer than expected, he said.

Mr. Walter had grown popular with the troops and senior managers at AT&T, some of whom called analysts incessantly in recent weeks to see if speculation was true that the new president might soon quit. "There are going to be a lot of executives looking to jump ship after this," said one executive recruiter last night. "People here loved John and hated Allen."

The two executives made for an extremely odd couple. The laconic Mr. Allen rarely meets informally with his top executives and is slow to give praise. Executives close to AT&T said that in the past year he has grown increasingly remote after having endured several years of blistering news coverage over his multibillion-dollar failures in the computer business and other investment misfires.

Mr. Walter, on the other hand, "is a born salesman," noted one AT&T executive. "He's energetic, he has charisma; he takes charge."

Mr. Walter adopted an aggressive tone at AT&T almost from the moment he arrived, telling The Wall Street Journal in a front-page story that he hadn't taken the job at AT&T "to be No. 2."

In only a few months, he took command of AT&T's disparate operations, ordering a wide-scale cost review; survived a showdown with the company's hard-charging former consumer-services president, Joseph Nacchio, who resigned; promoted several senior executives to command AT&T's core businesses; and traveled extensively to meet with corporate customers and AT&T employees.

Those workers must be thinking "what now," said Brian Adamik, a senior analyst at Boston research firm Yankee Group and a former AT&T executive. "Nothing amazes me about AT&T anymore," he added. "The company appears to be out of control with a lot of senior defections, a very publicly failed merger attempt with a Bell and its core long-distance business continues to erode."

A committee of independent directors of AT&T will conduct the new CEO search. The group includes Mr. Elisha; Kenneth Derr, chairman and CEO of Chevron Corp.; Donald McHenry, president of IRC Group; Ralph Larsen, chairman and CEO of Johnson & Johnson; and Thomas Wyman, senior adviser of SBC Warburg Inc.

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Unity thrived at Market Square

Banners fluttered, voices boomed and unity thrived yesterday afternoon in Market Square as about 50 speakers denounced racism and preached tolerance during a tranquil anti-Ku Klux Klan rally that drew about 3,000 people.

Contrasted with the charged atmosphere on Grant Street where the Klan rallied, and that on Cherry Way and Fourth Avenue, where a scuffle broke out and tensions ran high, Market Square was the picture of serenity and as festive as a country fair.

There were blacks, whites, Puerto Ricans, Sikhs, Muslims and Jews standing side by side. Priests dressed in collars stood watching the panorama unfold along with families, white bikers and spikey-haired punks.

A group of young black men with faces partially covered by black bandannas who joined the rally toward the end identified themselves as gang members, said Barney Oursler, a rally organizer.

Peppered by a spring drizzle for much of the four-hour gathering, the diverse crowd of all ages, races and ethnicities cheered, held signs aloft, clapped and yelled anti-racist slogans as speaker after speaker ascended to a stage in the square’s northwest corner, drawing roars of approval from the crowd.

"Hate and bigotry does not create one job," said Lou Gerard, secretary treasurer of the United Steelworkers of America.

"If what they stood for wasn’t so serious, they’d be humorous," said Allegheny County Commissioner Bob Cranmer, who called the Klan a "last gasp."

"They are dead, but racism and hatred aren’t," Cranmer said.

"The message today is to reject the message of that crowd up on Grant Street," said Congressman William Coyne, D-Oakland. "They are spewers of hate, bigotry, intolerance. That’s their heritage, all they know."

A banner strung behind the stage read "Not in Our Town" - the slogan of the Pittsburgh Coalition to Counter Hate Groups - and it was accompanied by others with messages such as "Peace," "Rx: Justice," "Don’t Hate, Relate," and "In the Dark We All Look the Same."

From Mayor Murphy to local politicians, clergy members to academics, special interest activists to community leaders, each of the speakers stepped beneath a white canopy and fed the hungry crowd with words that galvanized. Their speeches lasted several minutes and ranged from messages of tolerance to political rhetoric.

They challenged the crowd, and themselves, to not be satisfied with speaking out against racism only during the rally, but to carry on the struggle in the future.

"What you say here today, you have to take it into tomorrow and the next tomorrow and the next tomorrow, and don’t forget, because the Klan won’t," said Lavera Brown, one of the rally’s organizers. City police blocked off all entrances to Market Square and kept an eye on the crowd, stepping in only a few times to calm down a drunk man and stave off a beggar from harassing Murphy as he went to speak.

"The hard part is to change this city," said Murphy, guarded by two plainclothes police officers. "The boardrooms and the political power structure, the universities and the employers."

Then Murphy asked everyone in the crowd to say hello to a stranger standing nearby. Everyone did, black and white people shaking hands, greeting one another and breaking out into broad smiles.

There were other politicians in the crowd, including City Council President Jim Ferlo and council members Sala Udin and Valerie McDonald.

Chancellor Mark Nordenberg of the University of Pittsburgh was there, as was Tim Stevens, president of the local branch of the National Association for the Advancement of Colored People.

But easily recognizable names and faces were only a component of the crowd. From the Hill District, the North Side, Penn Hills and neighborhoods throughout Pittsburgh and beyond, demonstrators and everyday people straggled into Market Square.

About 2 p.m. a white man with long hair and a black man with a colorful knit cap climbed up on a pair of planters near the stage and hoisted a banner that read, "New Kensington, Pa./Give Peace a Chance."

"He’s a white biker. I’m a black Muslim. I didn’t like whites and he didn’t like blacks, and we grew to love each other in two years," said Charles Turner, 47. "My car broke down," he said, starting to explain how the two met.

"I took him home," said his friend, Gary Walker, 32, finishing the sentence.

One of the last - and most dynamic - speakers was Carnell Womack, spokesman for the Campus Coalition for Peace and Justice.

"We want, as an organized body, to demand that this Klan mentality be wiped out from our city!" Womack thundered.

"White sheets only do not a Klan member make!" Womack shouted. "They can lurk in the shadows of respectability, and in the name of public safety, destroy the fabric of community life!"

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Citizens' groups fight against hate: Despite racial incidents, anti-hate Organizations in region have arisen in their wake

The region’s fight against hate groups didn’t begin when white men came to town dressed in bed sheets.

In Monroeville, a racial hate flier circulating at Gateway High School two years ago prompted formation of a local group that tries to fight racism at its roots.

In the Allegheny Valley, an incident in which a black teen-ager was beaten by white thugs in Harrison brought the Alle-Kiski Community Relations Council into existence.

Some Washington County residents formed a task force in 1989 when racial incidents erupted around the Mel Blount youth home in Buffalo.  The Washington-based Committee for Racial Equality continues to operate, one of the oldest groups of its type in the state, said William Lacey, one of the group’s founders.

"Our mission is to eradicate racism within ourselves and within our community," Lacey said. "It is a 24-hour job."

Out of both subtle and blatant incidents of discrimination and hatred across Western Pennsylvania, citizens’ groups have sprung up to sponsor seminars, education programs and church services. They bring in speakers and try to encourage dialogue.

Yesterday, members of some of these groups, under the banner of the Pittsburgh Coalition to Counter Hate Groups, gathered in Market Square to hold a rally to counteract the Ku Klux Klan rally at the City-County building on Grant Street.

Leaders of the groups say that standing up against the Klan is an easier mission than getting people who don’t consider themselves biased or who don’t think about the issue to acknowledge and deal with their own prejudices.

"As long as we talk about this guy from Punxsutawney, we don’t have to make excuses for our own biases," said Ray Firth of the Monroeville Race Unity Forum.

Firth was referring to C. Edward Foster, a grand dragon in the American Knights of the Ku Klux Klan, who lives in Walton, near Punxsutawney, Jefferson County, and was to lead the Klan in its first Pittsburgh rally in about 70 years.

The Pittsburgh Coalition to Counter Hate Groups, the umbrella organization that organized yesterday’s counter demonstration in Market Square, has been fighting all kinds of hatred for about 19 years, said Barney Oursler, a co-founder.

The coalition passed out banners and signs saying "Not in Our Town." That theme is based on a video that tells the story of residents in Billings, Mont., who joined together when their neighbors were under attack by white supremacists.

In Western Pennsylvania, hate does talk in isolated incidents that continue to plague communities and erupt in school districts, where the young have learned hatred from the adults around them.

Last fall, six students were suspended from Slippery Rock High School in Butler for using racial slurs and for harassing the half dozen black students who attend school there.

In October, a Derry couple was forced off the road and their car was damaged in what police said was a racial attack. In November, volunteers joined in to repaint the Resurrection Church in West Mifflin after satanic obscenities, swastikas and white power symbols were painted on the church.

In 1995, a teacher at Trinity Middle School in Washington County received a 20-day suspension on charges that he used a racial slur referring to a black student. That same year, some schools in Washington County were plagued by racist incidents, including black puppets with nooses around their necks and Ku Klux Klan cards slipped into student locker vents. Firth said the flier circulated at Gateway High School in March 1995 prompted high school students to demand that adults in the community take some action.

The flyer included a copy of a Pennsylvania Game Commission logo and a message calling for hunting minorities.

Firth praised the school district for its quick response to the incident. Four white Gateway students were suspended and the school district outlined plans for programs to heighten sensitivity to racial issues.

Those programs could be tested: Foster has said he wants to hold a Klan rally at the Gateway School District later this year.

In northern Allegheny County, the Pittsburgh North Anti-Racism Coalition was formed after a local peace group decided to explore relationships between economic downturns and racial problems.

What the group found was that blacks didn’t feel entirely welcome in the predominantly white North Hills. At the same time, whites feared that life in the North Hills wasn’t typical of what their children would experience when they moved to areas with more diverse populations.

"Our concerns are that as things go, (racism) in the North Hills is more covert than overt," said Mary Sheehan of McCandless, a spokesperson for the Pittsburgh North Anti-Racism Coalition.

The coalition recently confronted the North Hills school board when it passed a resolution asking the government to pay for the cost of educating children who live in homes owned by the U.S. Department of Housing and Urban Development.

The coalition believes schools should support a mandated HUD plan that would create housing opportunities in Allegheny County’s suburbs for people who used to live in a Braddock housing project.

"When hate talks, we have the right to say no," said Anita Fine of New Kensington, a spokeswoman  for the Alle-Kiski Community Relations Council.

Fine said the council, which sponsors seminars and educational programs on all forms of discrimination in the Allegheny Valley, came into existence after a 14-year-old black youth was attacked in Harrison in 1992. She said his jaw was fractured and he was blinded in one eye.

The attack was so "horrific," Fine said, that a group of residents placed an advertisement in the local newspaper vowing not to tolerate racial hatred in their community. She said so many people wanted their names printed on the ad that the group had to place a second ad to accommodate the signers.

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