The pattern is at once familiar and depressing.A union boss, employee or contractor has a gambling problem, goes deep in debt, and dips into the till to cover the losses – at least until records reveal a discrepancy and eventually point to the guilty party.The latest example of such self-destruction is Colleen Louise Rieck, a resident of New Prague, Minn., about half-hour’s drive southwest of the Twin Cities suburbs.Rieck, 53, until recently worked as a claims payer for Wilson-McShane Corp., a Bloomington, Minn.-based third-party benefits administrator for unionized employees; the company is certified by the Department of Labor under the Taft-Hartley Act. For more than a year until her arrest this May, Rieck had stolen more than $885,000 from her company, mainly to feed a gambling problem.On October 23, she pleaded guilty in Hennepin County District Court to six counts of felony theft.She is expected to receive a prison sentence of eight years and four months, plus 10 years probation.
For over 40 years, labor unions in this country have had to file annual reports disclosing how they raise and spend money.These requirements are a basic, if too often insufficient, safeguard against corruption by union officials, office employees and anyone on the outside who might do business with them. But one class of unions from the start has been exempt – purely public-sector unions.At least that was the prevailing interpretation.On August 1, the U.S.
Informing members of their rights is not a responsibility from which federal employees’ unions are exempt.That’s a principle on which the Labor Department stands anyway.On June 2, the department issued its final rule changes for Standards of Conduct under the Civil Service Reform Act (CSRA). DOL officials believe that until now federal union members have lacked full protections available to private-sector union employees under the Labor-Management Reporting and Disclosure Act (i.e., Landrum-Griffin Act).Under the rule, which becomes effective July 3, federal sector unions must notify members of their rights by October 2, and at least every three years thereafter.They also must notify new members of those rights within 90 days of joining the union.
The age of transparency for labor unions has arrived, as the real effects of the Department of Labor’s new financial reporting requirements begin to kick in.Over the course of the next few weeks, most unions should have their financial books open for public review on the Web.Rank-and-file members, contractors, state and local officials – for that matter, anyone with a working computer and Internet access will be able to go over any labor organization’s fundraising and spending patterns.Late last spring a U.S. Appeals Court had given DOL the green light for issuing its revised LM-2 form, which imposes greater detail than before on larger unions (smaller unions use the shorter LM-3 or LM-4 forms). “This initiative is about giving union members meaningful information about their own union’s finances, so that they can exercise their democratic rights,” said Labor Secretary Elaine Chao.
When is a union health plan not a health plan?A good guess would be the moment at which its “beneficiaries” discover they’re not covered.Thousands of enrollees in a plan sponsored by a California-based union have been finding out the hard way.This past December the U.S. Department of Labor filed suit against the International Union of Public and Industrial Workers (IUPIW) Canadian Benefit Fund and its trustees for more than $1.2 million.DOL officials say the action was required to cover unpaid health care claims due more than 2,000 workers and family members.
A sweetheart land deal continues to produce heartaches for those involved.On June 30 the U.S. Department of Labor (DOL) sued six persons involved with a decision by the Northwest Indiana Regional Council of Carpenters Trust Fund to invest $10 million in a major real estate development near Chesterton, Ind.Back in 1998 the pension board had voted to approve the purchase, at an inflated price, of a 55-acre tract of land in the 640-acre Coffee Creek planned community in Chesterton, Ind.Now the Labor Department wants Gerry Nannenga and other trustees refund all losses incurred in the deal.The suit also names former Indiana Democratic Chairman Peter Manous, Kevin Pastrick and C. Paul Ihle as defendants.They, along with Nannenga, were convicted last year on federal corruption charges.Nannenga had taken a $45,000 bribe from Pastrick and Manous to vote for the purchase.
A U.S. Appeals Court has served notice to the nation’s organized labor leaders that full financial disclosure is not an option, but a necessity.But in rendering its two decisions on May 31 it appeared to be sending mixed signals.
Organized labor has made little secret of its opposition to the Bush administration’s proposal to reform the Social Security system.The Labor Department and certain ranking members of Congress want to make sure that the unions, led by the AFL-CIO, keep their campaign in bounds.DOL recently issued a reminder; one might not be enough.
The Bush administration has been rapidly expanding its audits of labor unions.Union officials are crying foul, claiming the administration is retaliating against their overwhelming support for Senator John Kerry in last year’s presidential election.But the primary legacy of the recent ramping up of investigations may be a thorough housecleaning of union of their criminal element.
The U.S. Dept. of Labor aims to toughen its regulation of Big Labor greater scrutiny of spending and hiring practices, and will continue to increase sharply the number of financial audits of individual unions, reports Dan Roberts of the London Financial Times. DOL officials say the measures are necessary to make unions more accountable to their members and to root out any corruption or mismanagement.
Despite declining membership, unions continue to be a thorn in the side of big business, orchestrating campaigns against companies such as Wal-Mart and using their influence over pension funds to press for corporate governance reform.