AFL-CIO

Theft within a labor organization, like theft within a corporation, can go undetected for years.  Union officials have become increasingly sophisticated in how they conduct financial transactions.  And like corporate theft, a good portion of union-related criminal activity could have been avoided if potential conflicts of interest were disclosed beforehand.  That’s why the U.S. Department of Labor (DOL), led by Secretary Elaine Chao, during this decade has been trying to inject more detail into union annual financial reports.  The added time and cost of compliance might seem an exercise in needless aggravation, but consider the alternative:  ever higher amounts of funds illegally diverted from union accounts into the pockets of their chieftains, families and associates.  Labor officials – the honest ones included – understandably don’t like the new rules.  Several years ago, the AFL-CIO, incensed over the department’s introduction of a longer Form LM-2 (the one required of larger unions), went to federal court to block its implementation.  It lost on appeal in May 2005.  But the Washington, D.C.-based federation hasn’t lost its taste for battle with the Labor Department.

Experience has shown that America’s labor unions, in absence of mechanisms to enforce accountability, have a penchant for disguising how they derive and spend their money.  The Bush administration, led by Labor Secretary Elaine Chao, from the start has been engaged in an ongoing effort to combat union corruption before it happens.  The centerpiece of that effort for several years has been an expanded, more detailed version of the “LM-2” annual financial reporting form for decades required of larger unions.  The AFL-CIO went to U.S. District Court late in 2003 to block implementation of the new rule, but lost in federal appeals court a year and a half later.  But many have wondered since:  What effect is the new regime having on the way unions operate?  A new report by Hudson Institute scholar Diana Furchtgott-Roth gives more than a few answers.  Using extensive charts as well as narratives, she argues that unions have made some progress in improving their public transparency, but that this is primarily the result of government pressure.

That labor unions have become champions of the right of illegal (“undocumented”) immigrants to remain in this country is hardly news.  In 2000, the AFL-CIO, pushed by President John Sweeney, issued a formal statement supporting unconditional amnesty for illegal workers and their families.  But Sweeney and other federation officials want to do more than issue press statements and pass resolutions.  Last month, they went to federal court in San Francisco to block implementation of a Bush administration plan to enforce the law.  On August 31, they scored an initial victory.  U.S. District Judge Maxine M. Chesney, a Clinton appointee, issued a temporary restraining order barring the Department of Homeland Security (DHS) from mailing notices to 140,000 employers, covering about 8.7 million workers, warning them about suspicious Social Security numbers.  These “no-match” letters, as they are known, would point out the penalties for failing to resolve paperwork discrepancies.

Albuquerque isn’t about to replace Hollywood anytime soon as the nation’s movie and television capital.  But a new studio nearing completion at least should make the fast-growing New Mexico city and surrounding area a major industry presence.  The $74 million, 50-acre facility, by all accounts, is state of the art.  The financing, however, has involved some old-fashioned expense-account fraud – or so certain Los Angeles businessmen allege.  On April 9, Pacific Coast Capital Partners (PCCP), the majority owner of Hollywood’s famed Culver Studios, filed suit in Los Angeles County Superior Court.  The partnership charges that the project’s main financial backer, the Santa Monica, Calif.-based Pacifica Ventures, and its two principal officers, Hal Katersky and Dana Arnold, fraudulently billed Culver Studios more than $1 million for various services.  What makes this action particularly intriguing is that Pacifica received extensive funding from union pensions to get the project off the ground.