An insider reveals how Wal-Mart's favorite campus group curries favor with business while pushing gospel to kids

Cult-like, corrupt and Christian conservative: Inside the campus group creating Wal-Mart managers

By Josh Eidelson

For decades, the campus group Students in Free Enterprise has drawn major funding and leadership from Wal-Mart, and channeled scores of students into the retail giant’s management ranks. Renamed Enactus in 2012, the group calls itself “the world’s best-known and most successful program helping university students to create community empowerment projects …” But California State University, Chico, accounting professor and former SIFE insider Curtis DeBerg told Salon that the well-heeled group served as “really a marketing branch to support business leaders who supported SIFE,” and that his decade as one of SIFE’s Sam Walton fellows was marked by fraud, turf war and falsehood. “There’s something entirely inconsistent about servant leadership as Wal-Mart practices it,” said DeBerg, the founder of the now-rival spinoff Students for the Advancement of Global Entrepreneurship. DeBerg’s memoir, “How High Is Up?: The Rise, Fall, and Redemption of a Sam M. Walton SIFE Fellow,” will be released next month.

Asked about DeBerg’s allegations, Enactus sent a statement from CEO Alvin Rohrs saying that DeBerg “has not been associated with our organization for more than a decade and we are puzzled as to why these complaints would resurface now.” Rohrs told Salon that “we take the integrity of our competitions extremely seriously” and that a three-month investigation by an “independent investigator” into the cheating alleged by DeBerg had “found no impropriety or indication of any unethical behavior.” Rohrs added, “Over the last 11 years we’ve used this incident to continue to improve and strengthen our processes to ensure the highest standards of transparency and accuracy.”

In contrast, University of California, Santa Barbara, labor historian Nelson Lichtenstein, the author of “The Retail Revolution: How Wal-Mart Created a Brave New World of Business,” told Salon over email that DeBerg “offers an inside account of the cultlike character, institutional corruption and corporate conservative ideology of an organization that is a product of the founding generation of Walmart executives,” as well as “part of the cultural apparatus that sustains the entire evangelical capitalist world within which so many retail, hotel, and food processing companies make their way.”

Wal-Mart referred a request for comment to Enactus. Noting that Wal-Mart served as SIFE’s top corporate sponsor and hired over a third of management trainees from SIFE in 2003, the historian Bethany Moreton argued that SIFE, an “economic counterpart” to the right-wing political group Young Americans for Freedom, had been “adopted” by Wal-Mart. Today SIFE has renamed itself Enactus; Wal-Mart’s CEO (SIFE’s most recent past board chair) and its central U.S. vice president sit on Enactus’ board; Wal-Mart and its Sam’s Club subsidiary are seven-figure Enactus donors.

A condensed version of Salon’s interview with DeBerg follows.

What brought you to SIFE, and what kept you there for so many years?

In 1993 … the dean of our college of business got this one-page letter from Rob Walton, who was chairman of the board for Wal-Mart … It explained that [as a Sam Walton fellow] a faculty member would organize a small team of students on campus … teaching community members about free enterprise, and the importance of small business and free enterprise, with their strong bent on reducing the debt …

My natural desire to involve students in real-world problems matched well [with] SIFE’s mission to have university students go out into the community and teach about business.

You note in the book that your team’s mission statement was to “help the citizens in our community become business literate, so that everyone has the opportunity to lead happy and productive lives.” Does becoming “business literate” there effectively mean becoming less critical of companies like Wal-Mart?

I think that’s what SIFE would want us to believe. But … we wrote that with my team leaders at that time because business literacy … was an important initiative of the governor’s office …

A lot of K through 12 educators really detest the fact that business, quote, “sticks its nose into” curricular issues …

“Business literacy” was a softer version, I think, of us saying that we wanted to help students learn about the benefits of free enterprise …  “Business literacy,” to us, was a better entrée into the schools, such that my university students could teach younger kids about the importance of, you know, being creative and innovative, and following their passion — to someday maybe make their own job instead of take somebody else’s job offer.

Bethany Moreton, in her book “To Serve God and Wal-Mart: The Making of Christian Free Enterprise,” described SIFE’s message to schoolchildren as “profits are beneficial; government is wasteful; unions are illegitimate; corporations are natural persons; free markets abhor environmental regulation but not cartels; monopsony contracts, or military-supported access to foreign raw materials.”

Was SIFE really a marketing branch to support business leaders who supported SIFE, to have faculty like me espouse these same values in our university system? Absolutely.

What SIFE didn’t count on is, when they started leaving the Bible Belt … that there might be some faculty advisers like me that didn’t subscribe to that particular value system.

What surprised you over your time at SIFE?

My first big shock was how conservative and how Christian this organization was, even as it was appealing to secular universities …

The second thing that shocked me is that three people always dominated in the first few years of SIFE. Is was Alvin Rohrs, their CEO … the late [former Wal-Mart COO] Jack Shewmaker … and a guy named Jack Kahl … the CEO [of] … Wal-Mart and Sam Walton’s largest supplier of adhesive duct tape … What we noticed, my students and I, is that Alvin Rohrs, Jack Shewmaker and Jack Kahl were on the stage as much as the students were at these expos in Kansas City — sponsored by Hallmark Cards, OK, another big vendor for Wal-Mart …

It wasn’t necessarily focused on students. It was also focused on Jack Kahl and Jack Shewmaker appealing to business judges, who were invited to be guests, who would fall in love with the university students doing these projects — at which Alvin Rohrs would always end the show, Josh, with this plea … It was like a revival … You’ve seen the wonderful kids, and there’s hope for America — please consider joining our board of directors. And for a seat on the board, Josh, you have to write them a check for $25,000 on your way out, right? So SIFE got all this money from corporate vendors, many of whom were vendors to Wal-Mart …

The third thing that shocked me was in 2003, I discovered that there was cheating going on in the competitions … Four universities won prize money for a competition they hadn’t even entered. The irony there is in SIFE’s mission statement, they talk about all these business leaders, you know, wanting to inculcate corporate social responsibility into these university students …

The chairman of SIFE’s board of directors then was also the vice chairman of Wal-Mart. His name was Tom Coughlin … Just before he retired, it became known within the organization that he was using gift cards to buy personal items, and he was creating fictitious invoices to reimburse himself — for what he later claimed to be anti-union efforts to preclude Las Vegas stores from unionizing … He was convicted of mail fraud and wire fraud [for] having absconded with about $600,000 worth of Wal-Mart merchandise through his scheme …

The year in which we discovered this cheating going on with SIFE, Coughlin was the chairman of the board for SIFE. He commissioned a special investigation to look into this cheating, which ultimately led KPMG to conduct an internal control investigation … Ultimately KPMG said while there were serious problems with SIFE and the judging, they could find no smoking gun that could prove that they deliberately withheld Chico state’s entry from this …

I was fired two weeks before I was to submit my resignation to SIFE as a voluntary Walton fellow. I got a letter from the new … chairman of the board for SIFE … CEO of Rich Products in Buffalo… who sells a lot of product to Wal-Mart.

Robert Rich sent me a one-page letter saying my services are no longer needed at SIFE … He said: You must take care not to defame SIFE in your future as you grow this new organization … Students for the Advancement of Global Entrepreneurship … An offshoot of SIFE that I [had] created, which SIFE now believed was a direct competitor with their university organization.

What do you believe motivated the alleged cheating, and then the decision to kick you out?

One of the competitions was sponsored by the Kauffman Center for Entrepreneurship in Kansas City … So SIFE was earning $50,000 [from Kauffman] … giving away $12,000 in prize money, and pocketing $38K to fund payroll, and fund their ideological whatever. It was very good for [Rohrs mentee] Matt Burton to show there were more entries in the hopper than what there actually were … And in that particular year the year they stuffed the entries …

The entries were being judged ostensibly by business leaders … [But] there were no senior business executives touching these things … They were a cheap way for SIFE to raise a lot of money from founders like Kauffman …

When the error was discovered — quote, “the error” — I would call it gross negligence/fraud – Rohrs, rather than doing anything, covered it up. He called up the four next teams that were judged to be good, and sent them each a $500 check …

In the book I called it a SNAFU — you know, “Situation Normal: All Fucked Up.” So when KPMG was hired to do an investigation, ultimately this was to appease my lawyer and my dean and me … They knew that if there was a smoking gun here, where we could prove they pulled Chico State’s entry, then we could have brought the whole SIFE organization down as being fraudulent.

But we could not prove that they intentionally pulled our [contest] entries. But we could prove they intentionally submitted four entries to a competition for which they never intended …

When my team, my SIFE team, won the whole competition in 1999, and Walton fellows were coming to me, Josh, and saying: Curt, your team is doing an amazing job in California. And in 1999, when my team won it all, there were 15 international guests in the audience … That’s when Alvin Rohrs really began to see me as a threat …

[In 2000] Alvin Rohrs wouldn’t even look at me at this [board] meeting — [I had] convinced Jack Shewmaker, “Mr. Sife,” to move the entire board meeting from New York to L.A. to get more academics in California on board. Well, next thing I know, Jack Shewmaker’s invited my students and me to go to Australia to [address] partners and university presidents there. Huge success. That same year he flew us to Orlando to make a presentation …

Rohrs would not acknowledge me … He wouldn’t acknowledge my students and me, who are being used as pawns. But yet he’s collecting hundreds of thousands of dollars based on our good work …

You compare yourself in the book to [Wal-Mart] workers in Canada whose store was shut down after they had a unionization victory. What’s the comparison there?

I had long argued … that SIFE ought to have at least two voting members of their board of directors from academia … But the board was only men, only retailers.

And I’d say … SIFE fellows like me, and my students who are like associates — you keep changing the rules every year, and we go do them — basically for shit wages, $1,000 a year. And we do all these things, and in the end, management collects bonuses, executives collect bonuses and certainly shareholders collect the benefits of a higher stock price.

We — the students, who are like Wal-Mart employees — and me, who is like an assistant manager — have literally walked miles without shoes doing all the stuff for nothing — for nothing — other than the recognition at a SIFE event, where Jack Shewmaker is in the audience, saying what great kids we have, and our future of America is in good hands.

What’s the comparison you’re making in terms of response when you’re pushing for changes?

In May of 2000, I arranged a breakfast meeting with Mr. Shewmaker … I was feeling really good, because since our team had won the whole [competition] event the year before, I thought I was in a position to effect meaningful change…

The [other] Walton fellows … They said, Curt, since you’ve got Mr. Shewmaker there, when you have breakfast with him, will you air some of our grievances?

I was naive … I said: Jack, we would like representation on the board. We would like some say in how the criteria are used. We would love some feedback when we enter these special competitions…

And I said … I wouldn’t mind coming to work for … SIFE for a year [while on sabbatical] … I can help change the direction of this organization. He said: Curt, that’s a great idea; let me talk to the board of directors, the executive committee. Of which Alvin Rohrs was a member.

I go fishing for a week, I come back from a fishing trip, and I get a package from Alvin Rohrs, and I think it’s going to be a job offer for a year. It was not.

And the contents of that letter is what I cannot discuss, because of the confidentiality agreement I signed … There was an allegation made by SIFE at an event against me that I am unable to discuss.

What does Wal-Mart get out of its investment in SIFE?

When you go to a SIFE event … the biggest booth of all is Wal-Mart. All of these young people, dressed in their USA ties and their matching lapel pins, as they’re walking by the booth, [there are] the recruiters for Wal-Mart … [And] all of Wal-Mart’s vendors are there. And instead of them having to go to all of the campuses to recruit, all of the students come to them, at their own expense …

Wal-Mart gets to hand out their business cards, and say, “Hey, stop by our booths and we’ll interview you for a summer internship.” And of course, the teams that win the competition, as the kids leave the stage, the CEO of Wal-Mart … will be handing out his business card …

Walmart recruits so many of its young talent [there], not only the U.S. … these [competitions] are replicated in 39 other countries. It’s the low-cost way to recruit very good managerial talent that has already swallowed the servant leadership Kool-Aid.

Shoot, I’ll take $5,000 less a year, as long as I’m on the track to become the store manager or the district manager. You know, there’s nothing wrong with that — unless Wal-Mart continues to pay shit wages.
And you get Hillary Clinton doing the opening address to [2011’s SIFE] World Cup … She probably doesn’t know … the genesis was … an extremely religious right organization, a Newt Gingrich-type of organization.

In considering “servant leadership,” Bethany Moreton writes that “The feminization of men demanded by the post-1973 economy found in the new Christianity both an ally and an alibi.” And that servant leadership “recast male virtue in feminized terms” and “was how the service economy made patriarchy safe for postindustrial society.” Do you agree?

Absolutely …

Why was Sam Walton able to pay below minimum wages back in Bentonville and Fayetteville and Rogers, Ark.? … The men, as the store managers, were kind of like the head of the farm. They were the breadwinner. And now, if the man is running the store here, that used to be viewed kind of like ladies’ work. But if he could be the manager or the district manager, he was still the boss … He could hire the women to be the clerks, to do the heavy lifting if you will, the stocking of the shelves …

People are coming off the farm after 1973, where you have the industrialization of the farm … That man has to do something, so he migrates to the city. And in the cities now, like Bentonville or Fayetteville, there’s a home for him … He’s managing the store. And the women now are being hired, and they’re part of the flock … Wal-Mart almost became a surrogate church …

How does SIFE help us understand the relationship between Christianity, conservatism and servant leadership in the culture of Wal-Mart?

What drew me to SIFE was service learning … [But] so many people in SIFE serve themselves first, because they’re getting themselves ready to get a good job. And ultimately a lot of these students ultimately see the competition as being more than the service …

In Wal-Mart’s form of servant leadership, you as a manager are empowering your employees, and you as a manager are going to become one of them. You will shave your head if you meet a certain goal, Or you’ll dance the hula on Main Street, if you’re Sam Walton — in a hula dress … So a servant leader like them says, “I’m one of you guys — aw shucks.”

But then, when you do the research, you see that Jack Shewmaker’s net worth [$153 million in Wal-Mart stock as of 2009] … Would a “servant leader” like Jack Shewmaker really believe in servant leadership, if he was making such great profits even though his part-time workers from Wal-Mart are having to draw SNAP, food stamps?

… There’s something entirely inconsistent about servant leadership as Wal-Mart practices it.

How does your experience with SIFE inform the way you look at recent controversies at Wal-Mart?

My experience with SIFE has changed my life dramatically … it prompted me to look deeper at how I approach my profession …

As an educator of tomorrow’s future leaders, I don’t want them to be management leaders for Wal-Mart unless Wal-Mart truly has an epiphany. [Unless] Wal-Mart’s leaders truly — and I say this tongue-in-cheek — find god.