United Bhd. of Carpenters (UBC) President Douglas McCarron finally promised, Oct. 29, to return the insider stock profits he made at the expense of union members’ pensions, which were tied to the insurance company on whose board McCarron sits.
That still leaves Morton Bahr, President of the Communication Wrkrs. of Amer. (CWA), Robert Georgine, frmr. head of the AFL-CIO’s Bldg. & Construction Trades Dept., United Assn. of Plumbers & Pipefitters pres. Martin Maddaloni, and frmr. Intl Assn. of Iron Wrkrs. pres. Jake West, as four of the leading union chiefs still clinging to their stock profits from ULLICO. The union-owned insurance company saw its stock first skyrocket, then plunge, as ULLICO directors bought into Global Crossing, whose stock rose during the telecom bubble, then crashed into bankruptcy in 2001.
The five officials mentioned above, and other ULLICO board members, were allowed to buy and sell ULLICO stock before its value was reset at the beginning of each year. Thus, board members could buy ULLICO stock “low,” before its value rose along with Global Crossing’s in 1999, then sell back their stock “high,” before it was readjusted downward as the telecom bubble burst in 2000 and 2001 and Global Crossing spiraled toward the 4th largest bankruptcy in history. But ULLICO’s rules only allowed individuals, with a relatively small number of shares, to participate. As a result, large pension funds were stuck with ULLICO’s falling stock. ULLICO officials are now under investigation from the U.S. Dept. of Labor and Dept. of Justice.
“I have determined to return to ULLICO all profits received through my participation in the stock-repurchase program,” UBC President McCarron wrote to ULLICO Chairman Georgine. There has been no comment from Georgine or CWA President Bahr as to whether they will follow McCarron. [Wall Street Journal 11/1/02]