Robert
F. Smith, the businessman, philanthropist and the wealthiest Black
man in America, gained a great deal of attention and accolades when
he pledged to pay off the entire student loan debt of the Morehouse
College class of 2019.
Tweets went out in praise. Memes of Black folk changing their degrees
to “Morehouse ‘19” went up. And a collective sense
of pride filled many chests as they saw the gift as the perfect
example of “taking care of our own.”
Smith
vowed to pay off the college loans incurred by the parents of these
400 young men - up to $50,000 per family - for a total of $34
million. No one needs to tell you that is a lot of money,
particularly for Black folks who pursue education only through great
sacrifice and financial hardship that others in this country cannot
begin to conceive.
When
Smith gave his Morehouse commencement address, what many didn’t
know is that he was being investigated by the Justice Department and
the IRS for possible
tax offenses,
including allegations that he neglected to pay taxes on $200 million
in assets, proceeds from his first private equity fund that moved
through offshore structures in the Caribbean.
Smith
is reportedly attempting to reach a civil settlement with the
government, and previously tried to gain entrance to an IRS
amnesty program
to
avoid prosecution in 2014 when the IRS first investigated him. He was
turned down. Under the program, which provides amnesty to taxpayers
who failed to report offshore accounts, the IRS reportedly turns down
applicants it already knows did not report those assets, according to
Bloomberg. Smith was one of them.
The
investigation against Smith is of a criminal nature. The feds have
focused on the movement of funds from two offshore accounts into
Smith’s charitable foundation in 2014. Investigators have also
zeroed in on the winding down of Smith’s first private equity
fund that year, which also coincided with his divorce.
One
of the many questions Smith’s philanthropy raises is whether he
contributed these millions with the knowledge that news of the tax
allegations would come out. Was there any aspect of these initiatives
that were an effort to fortify his image in the Black community, and
the community at-large? How much did Robert Smith donate to Black
America before he had a severe tax problem in 2014? How should we
view his generous contribution to Morehouse in light of the tax
probe?
While
these questions may seem uncomfortable for some of us to ask, they
challenge us to think about how the wealthy influence many aspects of
our society and the true reasons for their charitable gifts.
As
Jelani
Cobb
suggested,
philanthropy is a “penance mechanism” for those who know
they’ve done wrong, or serves to hide their foibles by causing
people to focus on their charity.
Given
that Smith faces a criminal investigation, a question that remains is
whether he should be criminally charged. Offshore
tax havens
for
corporations and the rich are a real problem, with $36
trillion
and
10%
or more of global GDP
in
untaxed money stashed away each year. By comparison, the U.S.
government takes in $3 trillion in annual revenue. At a time when
millions are suffering financially under the coronavirus pandemic and
governments face economic turmoil, there must be accountability for
those who are hiding vast sums of money that could help people in
need.
Ultimately,
the truth reigns supreme and through time, it comes to light.
But
perhaps the most interesting revelation from this story is that Smith
followed the lead of another billionaire who was convicted of tax
evasion- Ty Warner of Beanie Babies.
After
being convicted of tax evasion and holding offshore accounts worth
104 million dollars, the judge praised Ty Warner for his charitable
gifts and Warner’s legal team was able to get him a plea deal
of only 5 years probation, and no jail time.
Robert
F. Smith has hired one of Warner’s former lawyers and is
campaigning
for a legal settlement
and
no criminal charges.
The
donations. The same lawyer. Is this a coincidence? Or is this a
strategy that reveals the manipulation of Black America to achieve a
legal outcome?
For
the Black community to continue to advance, we must be willing to
celebrate good deeds and gifts, without fear of considering the
context of the giving - whether they be from organizations,
corporations, or individuals who look like us.
The
investigation of Robert F. Smith’s taxes may reveal he’s
a Black man with something to hide - or a target in this nation’s
taking down of another Black man in America. Our willingness to look
at whatever truth may come from it, reveals the price we put on
integrity.
This commentary was originally published by The Grio
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