Wall Street Journal





Tuesday, January 30, 2001



Cleaning Up the Unions


Ron Carey's indictment is only the first step in fighting labor corruption.






Last week's indictment of former Teamster President Ronald Carey is long overdue; the charges concern diverting money from the union treasury to his own re-election campaign back in 1996. Equally overdue is a broader look at the problem of union corruption, which is clearly widespread and probably growing.


In contrast to U.S. Attorney Mary Jo White's glacial pace in the Teamster case, Manhattan District Attorney Robert Morgenthau has been obtaining lots of corruption convictions in an aggressive series of union probes. The benchmark case for good prosecutorial conduct is Mr. Morgenthau's investigation of District Council 37, which represents 125,000 city workers through a collection of locals under Gerald McEntee's politically powerful American Federation of State, County and Municipal Employees.


Mr. Morgenthau's probe of vote-rigging, embezzlement and contract-ratification fraud has resulted in more than two dozen convictions and numerous sudden retirements, including a AFSCME local president. Mr. Morgenthau has undertaken similar prosecutions of union roofers, crooked contractors and garbage haulers with similar results. Organized crime elements played a major role in some of these schemes.


In Washington, D.C., meanwhile, the general secretary of the International Association of Bridge, Structural and Ornamental Iron Workers is indicted for embezzlement of union funds, allegedly including $10,000 to fund a vacation in Scotland. In California, the ex-financial secretary of a Longshoreman's union local faces felony charges in the embezzlement of more than $200,000 in union funds. In Chicago, a local leader is indicted for racketeering in the theft of $473,000 from the Laborers International Union of North America (Liuna).


Liuna represents more than 800,000 workers in construction, clerical work, health care and state and local government. It is a particularly troubled union. Liuna head Arthur Coia was forced out last year after pleading guilty to a felony tax fraud charge, but continues to exert influence. Early in the Clinton Presidency, Mr. Coia ended an investigation of mob influence by reaching a settlement with the Justice Department for a voluntary cleanup. Mr. Coia had close ties to the Clinton White House and former deputy chief of staff Harold Ickes, a longtime union lawyer and the New York mastermind of Hillary Clinton's Senate campaign.


This is the environment in which the Carey case should be seen. He's charged with seven counts of perjury and false statements in connection with the financing of his campaign for re-election to the union presidency. He'd been the reformer, cleaning up the corruption of former President Jimmy Hoffa under a federal oversight board. Mr. Carey won the 1996 election against Mr. Hoffa's son, James P. Hoffa, who later won the presidency after the oversight board stripped Mr. Carey of office and expelled him from the union over his election finances.


In November 1999, Mrs. White's prosecutors convicted former Teamsters political director William Hamilton for fraud and conspiracy to embezzle $850,000 from the union treasury for the Carey re-election campaign. The money was laundered as donations to other unions and political groups, which then returned it in contributions to the Carey campaign. After the verdict, the younger Mr. Hoffa urged further prosecutions, saying that "trial testimony revealed that several other individuals participated in the conspiracy."


Mr. Carey was indicted shortly after Mr. Hamilton's appeal was unanimously dismissed by a three-judge federal appeals panel. Trial testimony indicated that $150,000 of the Teamster money was laundered through the AFL, and that AFL CIO Treasurer Richard Trumka was implicated. Mr. Trumka took the Fifth Amendment when questioned about the matter by federal investigators. AFL-CIO President John Sweeney waived the union's ban on holding office after a self-incrimination plea.


The Carey case, in short, is a dagger pointing to the highest levels of the American labor movement. Other names arising in the testimony about donation swapping included Mr. McEntee of the Municipal Employees and Andy Stern, chief of the Service Employees International Union. Also, by the way, Terry McAuliffe, chairman in 1996 of the Clinton-Gore re-election effort and currently Bill Clinton's nominee to run the Democratic National Committee. None of these men have been charged with any crime.


Of course, in some quarters the donation-swapping scheme is dismissed as "just about politics," as President Clinton's perjury was dismissed as "just about sex." But to repeat: This case is about stealing money from union funds entrusted to union officials. If you can help yourself to your members' money for politics, why not for personal enrichment?


Perceptions of the corruption problem may be more acute on the shop floor than in the elite media. Earlier this month, the Bureau of Labor Statistics reported that union membership dropped to the lowest level in 60 years, only 13.5% of the work force. Last year alone membership declined by 200,000, to 16.3 million. In the private-sector work force, it declined to 9.0% from 9.4%. In 1997 Mr. Sweeney said, "The problem with our political program was there are far too few union members in the United States. Unless we put an emphasis on growth, none of our other strategies will work."


Membership is declining despite the array of privileges unions enjoy under the law. Under the National Labor Relations Act, unions were granted the right to monopoly bargaining power as well as the right to collect compulsory dues from their members. Since the NLRA's passage, the number of laws granting unions a special status has mushroomed.


Unions are exempt from some trespassing laws, given immunity from certain anti-trust laws, and even permitted to engage in some violent acts if they are in the context of "legitimate union objectives." And of course, no one has ever enforced the Supreme Court's Beck decision, saying non-members forced to pay union dues are entitled to a refund of whatever portion is spent for political purposes. We submit that these privileges and immunities under the law are themselves a psychological and legal inducement to corruption.


With the help of a little luck, labor derailed Linda Chavez, a nominee for Labor Secretary it considered especially hostile. Her replacement, Elaine Chao, is friendly with labor leaders, but equally conservative. We hope that Ms. Chao, and the coming new appointees at the Justice Department, turn their minds to ensuring that even unions abide by the law.


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