By Frank Swoboda and Sharon Walsh
Washington Post Staff Writers
Tuesday, January 20, 1998
As chairman of the House subcommittee investigating
last year's Teamsters election, Rep. Peter Hoekstra (R-Mich.)
wants to know how the federal government could spend nearly $20
million to supervise such a mess.
One year after Teamsters President Ron Carey
was declared the winner in a narrow reelection victory over James
P. Hoffa, the federal government appears headed back to square
one in the biggest cleanup effort in U.S. trade union history,
raising the question for Hoekstra and other congressional critics:
Just what were the federal watchdogs watching?
The government has been forced to order a
new election, Carey has been disqualified from running and faces
expulsion from the union, three of his top campaign operatives
have pleaded guilty to criminal fraud charges and a federal grand
jury in New York is pressing its investigation of the election
Over the last four years, the federal government
has spent nearly $20 million to supervise the union elections,
sending teams of monitors to every local union hall across the
nation where there was a contested election to assure that none
of the Teamsters' 1.4 million members was cheated out of a vote.
The government's main charter was to keep
its eye on the balloting every step of the way, from the selection
of delegates to the union's nominating convention, to the actual
counting of the ballots. In between, it adjudicated more than
1,500 election protests from the various candidates, an expensive
and time-consuming legalistic process.
But in the end, some federal officials suggest,
the election office was so busy focusing its efforts on preventing
voter fraud that it failed to pay enough attention to how the
election campaigns were being financed by the candidates. Charges
about campaign financing abuses were what brought down Carey.
"The more you look at it, the more disappointing
the federal oversight really is," Hoekstra said.
But Mary Jo White, the U.S. attorney who
is leading a criminal investigation of the Teamsters elections,
says the fault does not lie with the government officials overseeing
"It's the fault of those who broke the
law," said White, of the Southern District of New York. "No
mechanism can prevent every violation and stop every intentional
violator. By virtue of this process [federal oversight], this
wrongdoing was found. It has worked."
The current government effort to clean up
the Teamsters began in the spring of 1988 when the Justice Department
filed a civil racketeering suit against the union in New York,
charging that the Teamsters leadership had made a "devil's
pact" with organized crime. The lawsuit was part of a 40-year
government campaign to clean up a union in which three of the
last seven presidents have been imprisoned on a variety of charges,
ranging from racketeering to tax evasion (a fourth died in office
while under indictment).
After months of negotiations with the Justice
Department, the Teamsters leadership settled the racketeering
suit in the fall of 1989 by agreeing to hold the first direct
elections of national union officers under strict government supervision.
As part of the consent decree, the union was placed under what
amounted to indefinite federal court control while government-appointed
officers investigated corruption and monitored the internal affairs
of the union.
Under the consent decree, federal oversight
comes under the U.S. District Court in New York and is generally
handled by the U.S. Attorney's Office in New York. Several assistant
U.S. attorneys are responsible for monitoring union activities.
The Office of the Elections Officer in the Justice Department
oversees the elections. It has been the elections office, however,
that has received criticism from Hoekstra, who gives good marks
In December 1991, Carey, along with his entire
slate of reform candidates, was voted into office in an election
the Justice Department hailed as a major victory for union reform.
With the government's help, Carey began to sweep out corrupt union
officials, placing more than 70 local unions under trusteeship.
The new regime sold off the union jets and limousines, and eliminated
multiple salaries for many of the union's top officers.
Ironically, the current scandal involves
Carey, the union reformer on whom the Justice Department had pinned
its hopes to help clean up the Teamsters.
Federal investigators trace the scandal to
the polls by the Carey campaign in the fall of 1996, showing Hoffa
running neck and neck with Carey for the Teamsters presidency.
The polls triggered what federal investigators call a "network
of financial schemes" to illegally pump money into the Carey
campaign, schemes that would lead to the embezzlement of nearly
$1 million from the union's general treasury by the Carey campaign.
Federal prosecutors and other government
investigators have outlined a series of transactions in which
the union money was donated to various political groups for use
in the 1996 federal election with the understanding that those
groups then would arrange for donations to the Carey campaign.
In other cases, prosecutors said the union would contract with
vendors to have work performed and then would overpay the vendor
with the understanding that the excess money would go to the Carey
It was such a vending arrangement that appears
to have triggered the government's initial investigation into
the financing of Carey's campaign.
Both the government and the Hoffa campaign
claim to have discovered the financial schemes. But both sides
agree that the first real clue that something might be wrong with
Carey's campaign finances was a campaign expense report, filed
shortly after the election, which showed that Barbara Arnold,
who listed her occupation as "student," had made two
large contributions to a committee supporting Carey in the waning
days of the election.
The expense report from the Carey campaign
was filed with federal officials overseeing the elections on Jan.
2, 1997, nearly three weeks after the vote counting was completed
for the Carey-Hoffa race. The report covered the period from Nov.
21 through Dec. 20, 1996, and federal officials claim the scheme
would have been caught before the election if it had shown up
on earlier campaign expense reports.
According to the report, a committee called
the Teamsters for a Corruption Free Union received two checks
totaling $95,000 from Arnold. Arnold, it turns out, is the wife
of Michael Ansara, the founder and chairman of the Share Group,
a Boston telemarketing firm that did business with the Teamsters.
Not long after Arnold made her contribution to the TCFU, the union
sent a check for $97,000 to a business called Share Consulting,
which Ansara also owned. Soon after, according to court documents,
Arnold got her money back.
Hoekstra's committee wants to take a look
at all of the financial transactions involved in the Carey campaign,
including contributions to various groups in last year's federal
elections that might have been involved in contribution swap schemes
with the Teamsters. Hoekstra originally had hoped to hold hearings
this month, but they have been put off until at least February
and no new date has been set.
Hoekstra, who has hired former U.S. attorney
Joseph E. diGenova to help his committee investigate the Teamsters
election, said he doesn't buy the notion that a few people panicked
in the waning days of the Carey campaign and suddenly cooked up
the illegal financing schemes.
"You don't build that kind of strategy
in 48 hours. I tend to be suspicious that this was going on for
a longer period of time," Hoekstra said. "It causes
us to really reassess the effectiveness of the whole [oversight]
process. To me it doesn't appear that this was a last two week
election push. The problems may have been deeper, and if they
were deeper and systematic, why didn't they catch this earlier?"
Justice Department officials, however, say
the government oversight has made a substantial difference in
the union. And White calls the government cleanup effort a success.
"The real challenge now is to continue
an extraordinarily successful [cleanup] effort and not let the
current problems derail the forward progress made under the consent
decree," White said.
"Although very serious, these are not
the crimes of the past," White said. "I think there's
been a positive sea change [in the union]. But the process of
reform must continue. I would be naive to think that all of the
union's problems have been completely eradicated."
A Justice Department official assessing the
impact of the government's involvement said that even with the
current scandal, "compare this election to where the Teamsters
were 10 years ago."
As a result of the financing scandals, Congress
has voted for a ban on government spending for future Teamsters
elections and the courts have ordered the union to pay the estimated
$7.4 million cost of the re-run election. In explaining his decision
to force the union to pay, U.S. District Judge David Edelstein
said, "They made the mess. It is their job to clean it up
at any price."
In the meantime, the federal elections officer
appointed by the courts to oversee the new balloting is taking
a long, hard look at Hoffa's campaign finances. Michael Cherkasky,
a former mob-busting prosecutor from New York City, has been appointed
to conduct the Hoffa investigation and supervise the re-run election,
which probably will not be completed until late this year.
Carey and his former chief of government
affairs, William W. Hamilton Jr., appear today before the Independent
Review Board in U.S. District Court here to appeal board charges
that could bar them from the union. The government-appointed board
was set up to consider violations of the consent decree by union
And for her part, White said the government
will continue its criminal investigation of the Teamsters. "There's
a lot of work to do and you see us doing it," she said.
© Copyright 1998 The Washington Post