DEPARTMENT OF LABOR (DOL)/ELECTIONS & POLITICS House Cuts Funding for Union Oversight Agency Those who read this publication soon enough come across the acronym, "OLMS" - as in the Office of Labor-Management Standards.  It's the agency within the U.S. Department of Labor that processes union financial disclosure forms, and where necessary, investigates irregularities.  It's a relatively low-cost way to keep union bosses, employees and associates honest.  But the Democrat-controlled 110th Congress, not unexpectedly, is on the verge of clipping its wings.  Almost all union political spending - and lots of it - goes to Democratic candidates or party committees.  On late Tuesday night, July 17, the House of Representatives voted 237-186 to reject an amendment sponsored by Rep. John Kline, R-Minn., to restore a cut in OLMS funding to the overall Labor, Health & Human Services, and Education fiscal 2008 appropriations bill (H.R. 3043).  The current OLMS budget is $47.8 million; the approved measure would reduce that sum to $45.7 million.  That might not seem much of a cut, but it should be put into context.

The Labor Department created the Office of Labor-Management Standards pursuant to the Labor-Management Reporting and Disclosure Act of 1959, also known as the Landrum-Griffin Act.  That legislation was the result of high-profile hearings headed by Sen. John McClellan, D-Ark., that revealed much of organized labor, particularly the Teamsters, to be under the thumb of organized crime.  OLMS is to unions what the Securities & Exchange Commission (SEC) is to publicly-traded corporations, an oversight agency designed to promote transparency and accountability.  OLMS is authorized to conduct civil and criminal investigations, and refer cases to the Justice Department.  It also enables union members to hold their leaders to account.  Given that DOL now requires annual reports to be submitted and made available for viewing online, transparency would seem to be more within reach than ever. 

But OLMS is an overworked agency.  At present, it has the resources to audit less than 5 percent of the 15,800 labor organizations required to file disclosure forms.  Yet lawmakers proceeded to reject the Kline amendment, which was a good deal more modest than the Bush administration's planned OLMS budget of $56.9 million.  That the proposed nearly $3 trillion federal budget is in need of trimming ought not to be at issue.  Yet the House could have looked elsewhere.  When the Senate meets in September to take up the House-passed spending bills, it should restore OLMS funding.  There are several compelling reasons why.

First, the House singled out the Office of Labor-Management Standards for a spending cut out of all agencies within the Department of Labor.  The Labor portion of the spending bill raises total DOL spending by $935 million over its fiscal 2007 level of $46.7 billion.  Simple math says that OLMS accounts for a mere one-tenth of 1 percent of the departmental budget.  Other portion of the department would appear to be better candidates for the axe.  Indeed, President Bush reportedly plans to veto the Labor/HHS/Education appropriations bill because it would exceed the White House budget request by $11 billion, thus making substantial spending reductions a necessity.      &nb sp;

Second, as OLMS is analogous to the Securities & Exchange Commission, it is noteworthy that the recent House Financial Services appropriations bill increased SEC spending by $15.9 million over the current year.  Labor Secretary Elaine Chao charged that the House action with respect to OLMS would "impede effective enforcement of the law that protects union democracy and financial integrity for rank-and-file members."  Put another way, if going after potential corporate thieves is a worthwhile endeavor, then so is going after potential union thieves. 

Third, OLMS is an agency that delivers tangible results.  Since fiscal 2001, its investigations have increased by 20 percent, and convictions are up 26 percent.  Courts have convicted more than 775 union officials, employees and associates of fraud, embezzlement and other crimes, and ordered about $72 million in restitution payments.  These cases, brought forth with overwhelming evidence of wrongdoing, did not railroad people into a guilty plea or jury conviction.  Nor did they arbitrarily remove union officials from their posts.  With funding restored, the overworked OLMS could pursue more cases where lawbreaking likely has occurred.  During fiscal years 1985-95, the number of full-time employees at OLMS actually fell from 464 to 299 before rising to its present level of 351, still well below the peak.

Fourth, OLMS is fulfilling its legislative mandate of communicating information about union revenues and spending to members and the public at large.  During a recent 12-month period, the OLMS website (www.unionreports.gov) received nearly 800,000 hits, or more than 2,100 per day.  The mandate for transparency, more than anything else, is what keeps union officials fitfully on their toes.  OLMS reported that last year 93 percent of unions met their reporting requirements.  But even if all of the other 7 percent were not guilty of lawbreaking - highly unlikely - certain union spending patterns ought to be troubling.  Nearly 50 employees at AFL-CIO headquarters in Washington, D.C., for example, received compensation in excess of $130,000.  The National Education Association donated more than $65 million to political advocacy groups bearing no tangible relationship to the interests of school teachers or their students.  With total assets estimated at $22 billion in 2005, America's labor leaders hardly can plead poverty or ignorance if some of their members ask inconvenient questions about where their money is going. 

Unions counter that Congress has been cutting Labor Department funds, but at the expense of unskilled and unemployed workers.  "The department has consistently fought increases in it core enforcement powers while increasing the budget for OLMS," said Deborah Greenfield, associate general counsel to the AFL-CIO.  Greenfield said that the administration reduced the budget for DOL's wage and hour division by 5 percent during fiscal years 2001-07.  She added that funding for the Workforce Investment Act, which houses DOL workforce-training programs, was cut by 21 percent over that period, while the department's employment service was cut by 25 percent.  The department counters that funding for all labor enforcement agencies has increased over the last six years in current dollars.  "Specifically, the wage and hour budget has increased by 12 percent," said a DOL spokesperson. 

Greenfield argues that corruption data are faulty.  "The statistics are cooked," she says of figures for OLMS-generated convictions and restitution.  She notes that Labor Department counts different prosecutions within the same case as though they were different cases in order to inflate the appearance of corruption.  Yet regardless of how the numbers are tallied, the number of corrupt union officers and auxiliary personnel would remain the same.  And if unions these days are less tied to the criminal underworld, that's a product of aggressive investigation, prosecution and monitoring.  The AFL-CIO, meanwhile, appears to have a numbers exaggeration problem of its own.  A few years ago, when the federation went to federal court to rescind the new DOL rule requiring a more detailed LM-2 financial reporting form (the form used by the largest unions), it claimed that compliance would cost all unions a combined "more than $1 billion," and the AFL-CIO alone $1 million.  As it turned out, the AFL-CIO spent a mere $54,150 to comply with the form, the constitutionality of which was upheld in appeals court in May 2005.  

Given all this, the House of Representatives' decision to reduce OLMS funding seems unjustified and even vindictive.  The Senate should correct the problem when it votes on Labor Department appropriations in September.  At least House Democrats know which side their bread is buttered.  During the 2006 election cycle, House Speaker-to-be Nancy Pelosi, D-Calif., collected $260,000 from unions that had contributed at least $10,000 to her re-election campaign.  House Appropriations Labor Subcommittee Chairman David Obey (Wisc.) received more than $100,000 in union donations.  And Education and Labor Committee Chairman George Miller (Calif.) reported getting $191,000.  All three key lawmakers supported cutting the OLMS budget.  Friendship is indeed a two-way street.  (Wall Street Journal, 7/17/07; New York Sun, 7/18/07; Washington Times, 7/18/07; The Hill, 7/19/07; other sources).      &nbs p;         ;      

SERVICE EMPLOYEES (SEIU)
California Health Care-SEIU Contract Rift Widens
Andrew Stern, president of the Service Employees International Union, has a dream:  to make organized labor mighty again.  He views huge increases in membership, most of all in his own 1.8 million-member union, as central to this campaign.  And with a hike in rank and file must come a new approach to collective bargaining, with unions being more businesslike in running their organizations and less adversarial in their negotiations with employers.  The May 7 issue of Union Corruption Update, relying on an earlier story in the San Francisco Bay Area alternative newspaper, SF Weekly, reported that the SEIU, with strong guidance from Stern, has put together sweetheart deals with dozens of California health-care providers.  The result has been severely substandard contracts for workers employed at dozens of health care facilities and a 140,000-member Oakland-based SEIU affiliate, United Healthcare Workers West (UHW), left out in the cold.  UHW chieftain Sal Rosselli already has denounced the agreements as sellouts.  Now he's taken his fight to a higher level.     

In a May 29 letter signed by 15 top officials of United Healthcare Workers West, Rosselli demanded an end to what he sees as undemocratic decision-making by SEIU top brass back in Washington, D.C.  "Some in the national SEIU are negotiating an agreement with nursing home employers - in California and nationally - and have repeatedly excluded UHW nursing home members and elected representatives from the process," he wrote.  "Those agreements could restrict our nursing home members' voices on the job and be implemented without affected members even having the right to vote."  It's not as if he doesn't have a case.  Four years ago the SEIU and major California nursing home operators reportedly reached a secret agreement:  The union would use its Democratic Party connections to expand state MediCal nursing home subsidies, but minus patient quality-of-care requirements - and employee collective-bargaining rights.  Workers no longer could negotiate on their own issues of wages, benefits or working conditions.  Carol Criss, a medical transcription specialist and UHW shop steward at Kaiser Permanente Santa Clara, is leading a petition demanding that Stern scrap a plan to put international union representatives in charge of local bargaining.  "Stern wants working relations with corporate America where they would accept unions, but they would be weak, ineffectual unions," she said.

The UHW at this point appears to have nothing to lose.  The SEIU now has stripped the union of all authority to represent nursing-home employees, reorganizing all affiliated locals into a new bargaining unit to be run by Stern ally Tyrone Freeman, head of Local 434B in Los Angeles.  Still, the union insists it is adhering to democratic process, issuing the following statement:  "SEIU has established a Nursing Home Unity Council where every local union, including UHW, is represented.  Members through their locals on the Unity Council make decisions about any future national and state agreements with nursing home employers, and members will have the opportunity to vote on those agreements."  Neither side, however, appears willing to address a larger long-term obstacle to bargaining power:  the high share of immigrants, especially from Mexico and other Hispanic countries, in the health care work force.  Lacking in education and English-fluency relative to native-born workers, they are unable to press demands in the labor market.  Nursing home operators surely are as aware of this as any union.  That's why they can afford to be stingy, secure in the knowledge that state taxpayers will bear the tab for higher MediCal costs.  (SF Weekly, 6/13/07; other sources).      &nbs p;

California Union Ordered Out of Kaiser Permanente Organizing If the United Healthcare Workers West (UHW) had free reign - that is, freedom to operate independently of its SEIU overlords back east - what would be the result?  Very likely, it would be an expansion of the Service Employees' penchant for aggressive card-check procedures to organize employees.  What Sal Rosselli and UHW organizers weren't counting on was worker resistance, and successful resistance at that.  On July 9, the National Labor Relations Board (NLRB) ruled in favor of four Kaiser Permanente employees in Southern California who had filed unfair labor practice charges against the union only weeks earlier.  The workers alleged that the UHW had engaged in a deceptive card-check campaign, telling nonunion employees that signing a card was merely a request for more information about unionizing rather than a formal endorsement of union recognition.  What's more, UHW-SEIU organizers allegedly engaged in unlawful bargaining over employee wages and working conditions before the employees had a chance to select the union as their representative.

The lead plaintiff, Lisa Eklund, and three co-workers were angry over the formal union recognition last December by Kaiser on the basis of that card check.  They requested that the union identify which employees were inside and outside the collective-bargaining unit.  Organizers were unable to do this.  At that point, the dissenting workers went to the NLRB, whose probe concluded that the union had manipulated the size of the bargaining unit and secured signatures from ineligible employees.

The case will affect up to 400 Kaiser Permanente employees throughout the Southern California area, only a small fraction of the company's total work force.  But it sends a clear message that organizing drives have to stay within reasonable bounds.  That's a safeguard that recent card check legislation in Congress failed to incorporate, a major reason why the Senate on June 26 failed to muster the necessary 60 votes to bring the measure to a full-floor vote.  The Springfield, Va.-based National Right to Work Legal Defense Foundation, which assisted the plaintiffs, sees the decision as a victory for worker freedom.  "SEIU officials have been repeatedly caught red-handed running roughshod over employee rights during these coercive organizing drives," said Stefan Gleason, foundation vice president.  "These campaigns give employees two basic choices - union "yes" or union "yes."  (National Right to Work Legal Defense Foundation, 7/9/07).  

ELEVATOR CONSTRUCTORS/OPERATING ENGINEERS NYC Developer Sentenced, Fined in Mob Kickback Scheme Several years ago Frederick Contini realized that resistance would do him no good.  The developer of the New York City Metropolitan Transit Authority's (MTA) new headquarters, located at 2 Broadway, pleaded guilty to various federal charges in March 2003 and July 2004.  Now he's been handed the tab.  This July 11, Contini was sentenced in U.S. District Court for the Eastern District of New York to five years probation and ordered to make more than $8 million in restitution.  The punishment was based on his guilty plea of March 31, 2003 to conspiracy to receive, possess and dispose of money obtained by fraud and transported across state lines, obstruction of justice, and engaging in unlawful monetary transaction.

Contini had hired employees from International Union of Elevator Constructors (IUEC) Local 1 and International Union of Operating Engineers (IUOE) Local 14.  These "workers" proved to be fictitious.  He billed the MTA for $14.3 million to cover the ghost-worker payroll, nearly $10 million above actual labor costs, and laundered the proceeds through shell companies controlled by the Gambino crime family, in particular soldiers Edward Garafola and his son, Mario Garafola.  The project was part of a large Gambino project network.  Several dozen of its members eventually were indicted for fraud, extortion and kickbacks.  Contini's sentencing follows a joint investigation by the U.S. Labor Department's Office of Labor-Management Standards, the FBI and several officials of IUEC Local 1.  (OLMS, 7/16/07).      &nbs p;         ;      

LONGSHOREMEN (ILA)
Bowers Steps Down as President, No. 2 Man Hughes Takes Over For the last two years the International Longshoremen's Association has been operating under a Justice Department civil racketeering indictment.  But whether the change in leadership at New York City headquarters this month suggests the feds will drop its suit remains to be seen.  As expected, John Bowers resigned on July 26 as president of the ILA at the union's quadrennial convention in Hollywood, Fla., having held the job since 1987.  Bowers, 84, had been indicating for some time that he would not seek re-election.  His close ally, Richard Hughes, Jr., 74, the ILA executive vice president, takes over at the top spot, having run uncontested.  Hughes's replacement is Harold Daggett, assistant general organizer and president of the nearly 2,000-member Local 1804-1 across the river in New Jersey, long under control of the Genovese crime family.  Daggett had been acquitted in November 2005 after an emotionally draining waterfront criminal trial that saw, among other things, the discovery of the dead body of missing witness Lawrence Ricci.  Daggett got his job as a replacement for Albert Cernadas, who retired after pleading guilty in the case. 

The game of musical chairs that often accompanies the retirement of a top person may or may not affect the ongoing 83-page RICO suit filed in the summer of 2005 in Brooklyn federal court.  Bowers and Daggett were among several union officials named in the indictment.  The suit seeks to place the 65,000-member ILA under federal oversight in an arrangement similar to that governing the Teamsters since 1989.  The case has stalled, as lawyers have debated over such key issues of pretrial depositions and admission of evidence.  The defense plans to file a motion on July 31 to dismiss the case.  The Justice Department in 1990 had filed a RICO suit trying to link Bowers to the mob, producing only several minor consent decrees from New York and New Jersey officials, including Daggett.  This may be a case of aiming too high.  (Journal of Commerce, 7/13/07; Traffic World, 7/23/07).      &nbs p;     

AUTO WORKERS (UAW)
Former Local Financial Secretary in Michigan Pleads Guilty Willie Haynes had enjoyed a three-year streak until he pushed his luck too far.  On Monday, July 9, Haynes, formerly financial secretary of United Auto Workers Local 362 in Bay City, Michigan, pleaded guilty in federal court to falsifying union records.  Prosecutors had not charged him with embezzlement, yet made clear that his alteration of financial reports was intended to cover up thefts.  As such, he faces up to six months in prison, the same sentence he would face if he had been charged with stealing between $5,000 and $10,000. 

During fiscal years 2001, 2002 and 2003, Haynes, now 61, knowingly made false statements on the Department of Labor's LM-2 annual financial reporting form.  His lawyer, Peter Jensen, thinks this is all a misunderstanding.  His client, he argues, had taken about $10,000 over the three-year period, got caught by DOL auditors, and repaid the money by the end of 2004.  Yet in the face of this, Labor Department investigators alerted the Justice Department, which in turn decided to prosecute.  Haynes merely had taken advantage of a system that allowed his to take time off to conduct business for the union, which represents roughly workers at the General Motors Powertrain plant in Bay City; the plant assembles engine and transmission components.  The union was supposed to pay him for the time on the condition that GM would not.  Yet Haynes never took four-hours-per-week time off as he had promised, and collected the money anyway, something even his attorney admitted.  Haynes, unavailable for comment, had denied stealing funds until now.  (Bay City Times, 7/11/07).      &nbs p;  

STEELWORKERS (USWA)
Financial Secretary in Tennessee Sentenced for Embezzlement
On July 7, Larry Haislip, former financial secretary for Local 09-7509-S of the United Steelworkers of America, was sentenced in U.S. District Court for the Eastern District of Tennessee to six months probation for embezzling union funds in the amount of $1,702.97.  His real take, however, was much higher; the court also ordered him to pay $49,428.78 in restitution.  The sentencing comes after a Labor Department investigation.  (OLMS, 7/16/07).  

GOVERNMENT EMPLOYEES (AFGE)
Former President in Oklahoma Charged with Filing False Report
On July 2, Brenda Sue Myers, also known as Brenda Sue Barnett, formerly president of American Federation of Government Employees Local 2282, was charged U.S. District Court for the Western District of Oklahoma with an information count for false reporting.  She had indicated in union records that the Oklahoma City-based union had disbursed $21,500 in loans, knowing that this statement was materially false.  In fact, she had diverted the money to pay for personal expenses.  (OLMS, 7/16/07).    

LONGSHOREMEN (ILA)
Business Manager in Texas Sentenced for Embezzlement On June 22, Anthony Price, former business manager and recording secretary for Local 1316 of the International Longshoremen's Association, was sentenced in U.S. District Court for the Eastern District of Texas to five years probation and ordered to pay $11,804 in restitution and a $100 special assessment.  Price had pleaded guilty in March to embezzlement of funds from the Port of Beaumont-based local.  (OLMS, 7/16/07). 

GLASS WORKERS (GMP)
Texas Secretary-Treasurer Charged with Destroying Records On July 2, James E. Douglas, former secretary-treasurer for Glass, Molders, Pottery, Plastics & Allied Workers International Union Local 220, was charged in an information count in U.S. District Court for the Western District of Texas with concealing, holding and destroying union records.  (OLMS, 7/16/07).

POSTAL WORKERS
Texas Secretary-Treasurer Charged with False Record-Keeping On July 2, Jose Ocasio, former secretary-treasurer of National Association of Letter Carriers Branch 404, was charged in U.S. District Court for the Western District of Texas with making false entries in union records.  The local is based in Waco.  (OLMS, 7/16/07).


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