COVER STORY: In concert with controversy (video)

It all started with a New Year’s Eve party.

The cushy gig probably sounded irresistible to singing sensations like Beyoncé, Usher and Mariah Carey: a private concert in the luxurious Caribbean island of St. Barts to ring in a new year before a group of dignitaries who were big fans.

But that was before everything came to light, courtesy of WikiLeaks.

Those artists and others, including Nelly Furtado and rapper 50 Cent, have recently faced sharp criticism for accepting payments for performances from the family of Libyan dictator Moammar Gadhafi.

The scandal highlights how very easily stars can find themselves smack dab in the middle of a major political firestorm for simply doing what they do best: making money for their talents.

In February, it was reported that cables obtained by the secrets-revealing WikiLeaks website detailed lavish spending by Gadhafi’s sons, including large sums of money paid to American singers for performances. Within the past few days, Beyoncé, Usher, Carey and Furtado have announced that they either have donated or plan to donate the money earned to charities.

Carey recently released a statement saying she was embarrassed by the scandal.

“Going forward, this is a lesson for all artists to learn from,” the singer said. “We need to be more aware and take more responsibility regardless of who books our shows. Ultimately we as artists are to be held accountable.”

“You really have to be very careful and do your research,” said Matthew “Mateo” Rajkumar, chief executive officer of the American Talent Agency. “You have to make sure you know where the money is coming from.”

Rajkumar’s company specializes in booking urban American music artists overseas, with a heavy concentration in the markets of Africa, the Middle East and Eastern Europe. His clients have included big names in hip-hop like Fat Joe, Missy Elliott, Wyclef Jean and Busta Rhymes.

Rajkumar said an intense vetting process is crucial to making sure artists don’t find themselves performing for dictators or accepting “blood money.” He said he recently had to turn down gigs in North Africa for artists like singer Chrissette Michele because the deal didn’t meet his standards.

“It’s such a coincidence in that we recently turned down a deal coming from people we have worked with in Uganda, where we had offers in Libya that we turned down,” he said. “When I say recently, I mean before the recent uprising. We do everything we can to make sure we are protecting our artists.”

The CEO said his company was one of the first to see the potential market abroad for celebrity artists and brokered a deal in 2008 for 50 Cent to appear in Angola, which snagged the rapper one of his largest paydays for a concert to date: $1.4 million.

“The money had to play a factor in getting an artist of his stature at that time to go over there, but there were other things that we did,” Rajkumar said of booking 50 Cent for the Angola concert. “We tied in a visit to the embassy and did a huge AIDS awareness event with a bunch of kids, as well as a hospital and orphanage donation, so there was also an element of giving back to the country.”

Fans in the United States and major countries in Europe have better access to concerts by some of their favorite acts, Rajkumar said, but the presence of these same stars in some of the smaller and more far-flung countries generates a great deal of interest that artists can cash in on.

Oil companies, cell phone companies and breweries are usually the three big types of industries that sponsor such shows, as well as local governments, which want to put their country on the map and stimulate tourism. When rapper Snoop Dogg performed in Croatia in 2008, he packed Zagreb’s Dom Sportova arena with 10,000 fans, and the event made the style section of the Croatia Tourist Center website.

But the shows aren’t cheap to produce, with the need for increased security and the fees paid both to the artist and for expenses like flying in the artist’s entourage and equipment needed to mount a concert.

“These events are hardly ever put on for the financial benefit,” said Rajkumar, who added that often, fans in these countries cannot afford expensive tickets. “It’s more for the exposure and publicity it generates

Such appearances can also expand artists’ fan bases and their wallets.

Peter Katsis, a music manager and a senior vice president of music for Prospect Park Entertainment, recently told CNN that the temptation is absolutely there for artists to “just take the check.”

“The attraction is obviously the money,” said Katsis, who has worked with such performers as the Backstreet Boys, Jane’s Addiction and Korn. “You can sometimes make as much as you can in a week on tour by doing one show.”

But Katsis said the recent scandal has some artists thinking twice about where they book their shows.

“I think in light of the current situation, people are going to be asking more questions than ever before,” he said.

Marketing expert Rachel Weingarten said the celebrities are smart to donate the money to charity, though they may want to also consider ways to educate people about world issues and dictatorships.

Such scandals can make consumers feel very uncomfortable, she said.

“It’s someone who is a pop star right now, and you’re thinking, ‘Wait a minute, I’m downloading their music, going to see their concert and supporting them, when a year or so ago, they were performing for a dictator.’ It puts [the fan] in the equation,” Weingarten said. “It suddenly makes people have to question their own politics if they are supporting someone who took this check.”

Rajkumar said his company does massive amounts of due diligence, including flying into the country to meet with the key players, checking the source of wire transfers and meeting with representatives from the U.S. embassy there to make sure that there are no concerns about money being funneled out of the country.

“We have to track and do the research that the government that’s in place is legitimate,” he said. “We talk to the embassy and check out political contacts to make sure our government doesn’t have information that the country is being run by a dictator or that funds are being directed out of the country for the leader’s benefit.”

It is so easy to fall prey to a bad deal, he said, with the use of middlemen and others who may not be very scrupulous.

“You just know that any money coming out of the country is coming from Gadhafi, because he controls the wealth there,” Rajkumar said.

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