After Salt Lake City lost its bid for the 1998 Winter Olympics by just four votes to Nagano, Japan, Frank Joklik got mad. Then he got even.
At the time of the 1991 bid, Joklik was president and chief executive of Kennecott Corp., the Salt Lake copper-mining giant. Like many chief executives with favorite charities, Joklik -- who later would head the Salt Lake Organizing Committee in charge of putting on the 2002 Winter Games -- called on business associates to contribute to his pet cause.A dozen of Kennecott's suppliers, most of them large, publicly held companies, forked over thousands of dollars. A handful refused.
Two weeks after the loss, Joklik used his post at Kennecott, a unit of publicly traded Rio Tinto PLC of London, to take aim at the companies that spurned him. On Kennecott letterhead, he wrote a memo to eight senior company managers. "A number of people we do business with gave generously to the Olympic bid at our request," he said.
Listing the 12 contributors -- including Bechtel Co., Caterpillar Inc. and Ingersoll-Rand Co. -- he instructed his underlings: "In your future purchases of equipment and services, I would ask you, all other things being equal, to give preference to these companies.
"A number of companies turned us down," the memo continued. That list included such well-known names as Goodyear Tire & Rubber Co. and Denver & Rio Grande Western Railroad. "All other things being equal, bids by these companies should be declined," Joklik concluded, before signing the two-page memo.
The 70-year-old Joklik probably isn't the first chief executive to want to punish a service provider that hasn't given to his cause. But "he's the first I've seen who is brave enough -- or dumb enough -- to put it in a memo," says Sarah Teslik, executive director of the Council of Institutional Investors in Washington, D.C. "A corporation's clout should be used for corporate, not personal, purposes," she said.
"He clearly put the interest of the Olympic committee above the interest of Kennecott," says John Coffee, a professor of securities law at Columbia University's law school. "When you're instructing managers to give preference to a supplier that has given to the Olympics, that is clearly not in the best interest of shareholders."
Joklik already is caught up in the storm surrounding allegations of bribes to International Olympic Committee members in connection with Salt Lake City's bid for the 2002 Games, though that tumult is unrelated to his 1991 memo.
In an interview Monday, Joklik said his memo wasn't an attempt to discriminate against companies that failed to contribute to the 1998 Olympic bid. "If you take the language of 'all things being equal,' there is no attempt to discriminate here," he says. "If it wasn't qualified that way, you might have a case." He says there is "no chance that the financial interests of the corporation were compromised in any way."
What the memo says, he explains, is that "if you have two identical bids, in terms of price, then you give preference to people who saw the Olympic bid as being worth supporting in the interest of the community, the state and the nation."
One of the companies that ended up on Joklik's hit list was Nucor Corp. "We had a tough time getting inroads at Kennecott," says D. Michael Parrish, who was then general manager of Nucor's Brigham City, Utah, operation, which made grinding balls used in copper production. Because his company had a policy of donating only to the local communities in which it had plants, it made no contributions to Salt Lake City, Parrish says. He says he can't ascribe Nucor's difficulties with Kennecott to any unwillingness to pony up for the Olympic cause.
Suppliers who didn't donate say they weren't aware of having been targeted for punishment. "I don't remember being discriminated against," says James Hilton, the former president of Dresser Industries' Marion mining-equipment division. But, he adds, "I also don't remember selling them any equipment at that time."
On the other hand, companies that gave to Joklik's efforts say they don't believe there was any quid pro quo. William Mulligan, a retired executive vice president of Ingersoll-Rand, says his company sold Kennecott equipment before and after the donations were made.
Louie Cononelos, a spokesman for Kennecott Utah Copper Corp., a successor company to the former Kennecott Corp., says the company believes the memo "had no impact on our purchasing decisions." He adds that Rio Tinto, Kennecott's parent, had "absolutely no knowledge of the memo. Neither Rio Tinto nor Kennecott Utah Copper condone or allow preferential treatment regarding suppliers or vendors."
Likewise, those at Kennecott who received Joklik's memo deny that they made business decisions based on it. "That memo doesn't sound good, but Frank is really an ethical guy" who took the loss of the 1998 Games "personally," says P.J. "Jack" Bernhisel, Kennecott's former vice president of finance and law. "He was putting a lot of his personal time into fund raising, and he got mad and said, 'D--- it, you've got to help your friends.' "
Born in Austria and educated as a geologist in Australia, Joklik was an unlikely civic booster for Mormon-dominated Salt Lake City, where he moved in 1973 to work for Kennecott. "He's not a Mormon, but he has won the respect of the Mormon Church hierarchy by doing a lot of things for this city," Bernhisel says.
In October 1991, while still at Kennecott, Joklik became volunteer chairman of the bid committee for the 2002 Winter Games. Thanks in large part to his Olympic efforts, in 1994 Joklik was named "Giant In Our City" by the Salt Lake Area Chamber of Commerce.
In 1995, after Salt Lake won its bid for the 2002 Games, Joklik became volunteer chairman of the board of trustees for the Salt Lake Organizing Committee. Two years later, he was named that committee's president and chief executive, after former head Tom Welch resigned in the wake of a spouse-abuse allegation.
Now, the Justice Department is investigating whether the Salt Lake bid committee bribed some members of the IOC.