At the AFL-CIO’s annual meeting in Florida last week, top union officials blasted Labor Secretary Elaine Chao and the Bush administration for their alleged unprecedented hostility toward the union hierarchy. If only it were true.
The many policy concessions administration officials have made to union bosses over the past year were instantly forgotten as Chao stood before the council and defended the Department of Labor’s (DOL) modest plan to impose more stringent financial-disclosure requirements on unions.
Giving rank-and-file union members more information about how their compulsory union dues are used should be considered reasonable reform of an area prone to corruption. So when Teamsters president James P. Hoffa and AFL-CIO president John Sweeney called Chao “insulting” and “anti-labor,” their already dubious credibility as honest advocates for union members vanished.
While screaming about corporate corruption over the past 18 months, union lobbyists and their Democrat friends on Capitol Hill stymied all legislative attempts to rein in Big Labor greed. As an alternative, DOL announced it would use its regulatory power under the 1959 Labor Management Reporting and Disclosure Act (LMRDA) to strengthen union financial-disclosure requirements. This move gives rank-and-file workers a small measure of hope that rampant corruption will diminish.
The need for improved reporting requirements is indisputable. In the past year, America has witnessed the largest union scandals in recent memory. Take the self-dealing by union officials who run the Union Labor Life Insurance Company (ULLICO). A federal grand jury in Washington, D.C., is considering indictments of Carpenters union president Doug McCarron, ULLICO president Robert Georgine, and others who benefited from a multimillion-dollar insider-trading scheme approved by ULLICO’s directors — nearly all of whom are current or former union presidents. The ULLICO scandal, known as “Big Labor’s Enron,” lined the pockets of Big Labor bosses at the expense of ULLICO’s larger investors, mostly through the pension funds established for rank-and-file union members.
A second major scandal broke last summer when Frank Massey, a partner at Thomas Havey, the nation’s largest union accounting firm, pleaded guilty to aiding a conspiracy to defraud the United States. Massey and others at the firm helped Ironworkers president Jake West and his comrades conceal more than $1.5 million spent for personal expenditures on everything from steak dinners to liquor to floozies. Massey helped cook the union’s books by listing the expenditures as “Office and Administrative expenses” or “Education and Publicity” on the union’s federally mandated LM-2 annual financial disclosure forms. The Havey firm currently audits roughly 700 unions nationwide; its actions have prompted further criticism of the inefficacy of the current disclosure requirements.
Sadly, those two scandals are merely the tip of the iceberg. A quick scan of the Department of Labor’s enforcement page reveals hundreds of criminal prosecutions of union officials for embezzlement, fraud, and bribery in the last year alone.
Under the proposed new LMRDA disclosure rules, labor unions with annual gross receipts totaling over $200,000 must file the LM-2 form, outlining in much greater detail how union dues are spent. Expenditures on lobbying, politics, organizing, litigation, and other activities must be identified in functional detail in a way that can actually be meaningful to union members. The proposed changes to the LM-2 reporting requirements would eliminate some of the gray areas disguising the true use of compulsory dues money.
If anything, the regulations should have gone further to require independent audits and even greater itemization. Beyond increasing accountability, more complete disclosure could also aid in the enforcement of the U.S. Supreme Court’s ruling in Communications Workers v. Beck, a decision that forbade the use of the compulsory fees of objecting workers for activities unrelated to collective bargaining — for instance, politics. Unfortunately, aside from the significant efforts of the National Right to Work Legal Defense Foundation to help employees press the issue through hundreds of legal actions, this key ruling has not been vigorously enforced.
The AFL-CIO’s indefensible opposition to very modest disclosure gives momentum to more significant reform. Indeed, courts or lawmakers could solve the root problem by eliminating the government-granted privilege of compulsory unionism under which employees can be fired for refusal to pay union dues.
As the late Sen. John McClellan (D., Ariz.), the original architect of the LMRDA, once said, “Compulsory unionism and corruption go hand in hand.” The fact is that ending compulsory unionism is the only way to introduce real accountability into today’s labor unions. Union officials would have no choice but to keep workers’ interests at heart, because they would be forced to sell union membership on its merits alone.
Meanwhile, the shrill response to these modest reforms clearly shows that the Teamsters’ Hoffa, the AFL-CIO’s Sweeney, and other top union officials have lost their credibility as advocates of workers’ interests. The Bush administration should treat them accordingly.
— Stefan Gleason is vice president of the National Right to Work Legal Defense Foundation.