Feathers Fly At Tyson Political Blunders Damage Giant Chicken Processor’s Reputation

Tyson Foods Inc. looks forward to the day when there is not an Arkansan in the White House. Then perhaps it can return to the political obscurity in which it flourished for so many years.

Back in the late 1960s, long before Bill Clinton began his political rise to the White House, Tyson Foods was launching a revolution of its own in the food-processing industry.

It had been just another chicken slaughterhouse when founder John Tyson was killed by a train on the first Super Bowl Sunday in 1967.

But his son, Don Tyson, took over with a new idea: He would cut and cook chickens in his factories, so that customers could reheat the pre-packaged portions. The new version would sell for much more than raw chicken, and Tyson would profit from the difference.

Tyson’s timing couldn’t have been better. American women were beginning to move into the work force in large numbers, and the fast-food industry was ready to expand beyond burgers and fries. Along came the Tyson-prepared Chicken McNugget, the Burger King chicken sandwich and thousands of other factory-prepared chicken items for home and restaurant consumption.

“The genius of Don Tyson is that he saw the power of the food-service industry - the power of McDonald’s,” said John McMillin, an industry analyst with PrudentialBache Capital Funding.

The visionaries from northwest Arkansas changed America’s eating habits by creating an endless supply of easy-to-prepare white meat. Tyson bought other companies to meet exploding demand from restaurants, prisons, schools and the airline industry. Today, Tyson is the world’s leading poultry producer, controlling about one-fourth of the U.S. market.

Now, having conquered chicken, Tyson is expanding into the fish and pork businesses. The company raises more than 1 million hogs a year, and it recently bought a big fish company based in Seattle.

Could McPork sandwiches or KFC fishburgers be around the corner? “We feel we can certainly do some things in those areas,” said Buddy Wray, Tyson’s chief operating officer.

The company’s bold strategy has paid off financially. Sales have grown from $750 million in 1984 to more than $5 billion last year. Profits also increased steadily through the 1980s and early ‘90s, peaking at $180 million in 1993. Investors have prospered: A $100 investment in Tyson stock in 1972 was worth $17,955 in 1992.

“They make money in an industry not known for making money,” said analyst John Bierbusse with A.G. Edwards & Sons Inc. of St. Louis.

But Tyson Foods does make mistakes, especially when it ventures outside the business of poultry. Company officials concede that in 1993 they paid $200 million too much for Arctic Alaska Fisheries. As a result, Tyson took a 1994 write-off that produced a net loss of $2.1 million in spite of robust chicken profits.

Tyson Foods’ biggest problems lately have been political. When Don Tyson’s friend Clinton was elected president in 1992, the company’s Washington profile suddenly increased. The chicken processor received some unwelcome publicity in 1994, when first lady Hillary Rodham Clinton disclosed that she had profited handsomely on commodities trades made in the late ‘70s, thanks partly to advice from her friend Jim Blair, an experienced futures trader who nows serves as Tyson’s in-house counsel.

The feathers really began to fly last year with the disclosure that Tyson had provided free football tickets, travel and lodging to Mike Espy, the Clinton administration’s agriculture secretary.

The Justice Department appointed an independent counsel to conduct a criminal investigation of Espy, who resigned. A grand jury has heard from witnesses over the past seven months, including Tyson executives, current and former officials of the Agriculture Department and even former Tyson pilots who reportedly have said they delivered envelopes of cash intended for Clinton when he was governor of Arkansas.

The probe continues.

The federal investigation also has focused attention on Don Tyson himself, who was an early “Friend of Bill” and helped finance Clinton’s campaigns. The corporation appears to be putting distance between itself and its chairman, with executives stressing that the company is bigger than any one person. Meanwhile, Don’s son, John, 41, is apprenticing under the watchful eyes of Wray and chief executive Leland Tollett.

“We want to be known as a national food-processing company, not an Arkansas chicken company (that) is a friend of Bill Clinton’s,” said company spokesman Archie Schaffer.

Shareholders, too, may be taking a closer look at Don Tyson. He’s a billionaire now, and according to the company’s proxy statement, he earns about $5 million a year through dividends, salary, bonus and other arrangements with the company.

According to the proxy statement, Tyson Foods also picks up the tab for his aircraft and yacht. And last year it paid him more than $700,000 to cover “travel and entertainment costs.”

McMillin, the Prudential Bache analyst, noted that if the company has more bad years like 1994, “it gets harder to justify these payments” to Don Tyson.

Don Tyson retired from active management in April, but he still holds enough stock to control the company and he personally oversees its vast political, charitable and lobbying efforts.

Here in Arkansas, Tyson’s recent troubles have caused some concern. After all, Tyson helped invent an industry that fills 22,000 jobs in this state. “These guys are gods around here,” said Brownie Ledbetter, a Little Rock public-interest activist.

The company wins some praise here as a corporate citizen. State and national environmental regulators give it pretty good marks, and Tyson is a leader in workplace safety, according to the Occupational Safety and Health Administration.

Tyson’s prosperity improves the life of many Southern communities where it has facilities. The company distributes about $4 million to charities. There’s a Tyson Foundation, Tyson scholarships, Little League teams, bike-a-thons and a thousand other causes.

It donated $2 million to the University of Arkansas last year for a new poultry center.

The Tyson Political Action Committee and company employees contribute about $200,000 a year to various federal, state and local candidates. The company is a big contributor to interest groups, associations and causes that further its agenda.

Don Tyson personally lent his name and cash to a successful attempt to tighten worker-compensation laws a couple of years ago. The effort made it more difficult for workers at Tyson Foods and other companies to collect injury benefits.

“It’s an advantage for them to be in a state with a narrow economic base and an underdeveloped public-interest segment,” said lawyer Bruce McMath, son of a former governor.

A state senator sits on the Tyson board of directors. Half of the dues to the Arkansas Poultry Federation come from Tyson. Next year Tollett will head the National Broiler Council, the industry’s chief lobbying arm.

But even in this company town, you can hear some complaints. Critics note that Tyson Foods has no black or female senior executives among its 55,000 employees. And labor union officials complain that by recruiting unskilled Mexican workers, Tyson keeps wages low.

MEMO: This sidebar appeared with the story: FRIENDS IN WRONG PLACES Tyson Foods Inc. has come under scrutiny because of its close association with members of the Clinton administration. Some examples: President Clinton is a longtime friend of Don Tyson, who recently retired as Tyson Foods chairman and still is the largest shareholders. Allegations have been raised about the propriety of some of Tyson’s campaign contributions to Clinton. Hillary Clinton earned thousands of dollars almost overnight on commodities trades made with the help and advice of a futures trader who now is Tyson’s chief lawyer. Mike Espy resigned as Secretary of Agriculture in the midst of controversy over alleged gifts he received from Tyson. Staff graphic