The word “troubled” doesn’t even begin to describe the Teamsters’ Central States Pension Fund. “Desperate” is more like it. Last Friday, May 6, the Treasury Department announced that it had rejected a restructuring proposal submitted by plan trustees last September to avert collapse. The proposal, which would have cut benefits on average by 22 percent for about two-thirds of all participants, did not go over well with Teamsters General President James P. Hoffa and other union officials. Yet they are cornered by reality. As of last fall, liabilities exceeded assets by $17.5 billion, a gap widening by $2 billion a year. The plan is projected to go bankrupt in 10 years. A federal bailout likely would make things worse. Central States Executive Director Thomas Nyhan is reviewing alternatives.
When the International Brotherhood of Teamsters and the Justice Department agreed last January to replace the tight government oversight established over 25 years earlier with union self-regulation, the terms called for phasing out the federal role over five years rather than lifting it all at once. Dues-paying members may be grateful for such a precaution. This February 10, the court-approved monitoring agency known as the Independent Review Board (IRB) issued a report charging Northern California Teamster leader Rome Aloise with various acts of corruption, including racketeering and influence-peddling. Nearly two weeks later, Hoffa, after reviewing the report, filed charges against Aloise with the union disciplinary board. Aloise has run for election on the Hoffa slate. But loyalty alone might not be enough to save his job.
As in 2014, union leaders last year directed much of their energies toward maximizing political and legal advantage. And they scored tangible victories. President Barack Obama, now in his last year in office, is without question the best White House friend of organized labor in decades. Among other things, unions won major cases before the National Labor Relations Board (NLRB), with its built-in 3-2 Democratic Party majority. And the Teamsters achieved its long-sought goal of release from federal control established following a 1989 civil racketeering settlement. Yet organized labor also experienced its share of setbacks, especially in the courts. And they received lots of unwanted exposure for embezzlement and fraud. As far as rank and file members are concerned, the most pressing problem is the growing possibility that their pension plans will be depleted.
Decades ago, the Teamsters’ Central States Pension Fund was a project of organized crime. In the future, it may well be a project of Pension Benefit Guaranty Corporation, the federal agency that insures pension plans against insolvency. Ironically, this could put PBGC itself at risk. This September, the troubled fund, which enrolls over 400,000 active and retired union members in 37 states, filed a restructuring plan with the Treasury Department proposing benefit cuts of nearly 23 percent. The action is the first under a new law. Central States Executive Director-General Counsel Thomas Nyhan explains: “The longer we wait to act, the larger the benefit reductions will have to be.” Yet the union, with help from Congress, helped bring about this dilemma.
The good old days of union nepotism never really went away – not in Chicago anyway. According to published sources, International Brotherhood of Teamsters Local 727, long a virtual candy store for boss John Coli Sr. (in photo) and extended family, has been providing lavish compensation for a law firm whose managing partner is one of Coli's sons. The firm has been busy as of late. In July, a Cook County judge ruled that the elder Coli and Teamsters Local 700, of which he is a trustee, were jointly liable for $2.3 million for breaking a building lease. That's not even taking into account a now-dismissed RICO suit charging the Colis and Local 727 with stiffing a funeral employee pension plan out of contributions. If the family needs allies, it knows where to look, especially Teamsters General President James P. Hoffa and Chicago Mayor Rahm Emanuel.
This past January 14, the Justice Department and the International Brotherhood of Teamsters reached an agreement to end a quarter-century of federal oversight. Prosecutors believe a new era is overdue. "While threats persist, the organized crime influence the government found to have reached the highest echelons of IBT leadership in 1988 has long been expunged," announced Southern District of New York U.S. Attorney Preet Bharara. The deal, set for a hearing on February 11 before District Chief Judge Loretta Preska, phases in an autonomy plan over five years and institutes safeguards against corruption.
And now there are two dozen. This Tuesday, December 11, the Michigan House of Representatives passed, and Governor Rick Snyder signed, a pair of laws designed to protect employees from having to pay dues (or "agency fees" in lieu of joining) to a union in order to keep their jobs. The measures, one each applying to the private and public sector, make Michigan the nation's 24th state with "Right to Work" legislation. "We are moving forward on the topic of workplace fairness and equality," stated Gov. Snyder during an evening press conference following passage. Unions are taking the opposite view. About 12,500 opponents showed up at the State Capitol Building in Lansing to protest, with about 2,500, many of them shouting slogans, jamming the interior.
Scandal has a way of following the leadership of the Brotherhood of Locomotive Engineers and Trainmen (BLET) lately. In March 2008, Don Hahs, president of the Cleveland-based International Brotherhood of Teamsters-affiliated labor organization, was removed from his post by the Teamsters for embezzling around $58,000 in BLET funds. Now his replacement, Edward Rodzwicz, is in hot water of his own. On Tuesday, October 13, federal agents arrested Rodzwicz at his Avon, Ohio home on bribery charges. The previous week, prosecutors filed a criminal complaint against him in St. Louis federal court.
Jimmy Hoffa was a union leader who demanded results. And it didn't matter too much how he got them. That style of governance carried over to the people who worked for him, some of whom apparently were prepared to knock off a few law enforcement agents. This past April, U.S. District Judge Todd J. Campbell in Nashville, Tennessee unsealed long-dormant grand jury testimony revealing several Hoffa supporters had planned to ambush and murder a group of FBI agents in that city. The plan never came off. But the details, contained in transcripts released to the public late in July, underscore the fanaticism prevalent among the late Teamster president's loyalists.
Winning a third term in office was the easy part for James P. Hoffa, president of the International Brotherhood of Teamsters.Few observers gave his perennial challenger, Tom Leedham, much of a chance.Aside from the advantages of incumbency and last-name recognition, Hoffa had outspent Leedham $3 million to $300,000, according to campaign forms filed with a federal election supervisor.But keeping corruption out of his union will be the hard part.Edwin Stier, the lawyer who headed the union’s internal reform operation during 1999-2004 believes that as long as Hoffa remains in control, the IBT will be anything but clean.“By the time I left, Hoffa and his people had abandoned its efforts to deal with corruption within their union,” Stier told Union Corruption Update in an exclusive interview.“There have been no Teamster-initiated investigations of wrongdoing since then.”Stier is a partner in the law firm Stier Anderson, LLC, based in Skillman, N.J., with a Washington, D.C. office.