Union Bosses Face Federal Charges in Enron-Style Scandal

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Union Bosses Face Federal Charges in Enron-Style Scandal FoundationFoundation The bi-monthly newsletter of the National Right to Work ActionAction Legal Defense Foundation, Inc. Vol. XXII, No. 5 8001 Braddock Road • Springfield, Virginia 22160 www.nrtw.org September/October 2002 almost exclusively presidents and other Union Bosses Face officials of major unions, are already the targets of a federal grand jury investiga- tion in Washington, DC, which is inves- Federal Charges tigating possible criminal activity. During the late 1990s, ULLICO In Enron-Style bought significant holdings in Global Crossing, which skyrocketed in value. Scandal In late 1999, before ULLICO’s annu- ally adjusted stock price was to be increased, ULLICO President Robert AP/Wide World Photo AP/Wide World Georgine sent a confidential letter to Pension fund scam While union lap dogs like Hillary ULLICO board members encouraging pickpocketed Clinton carry on about corporate responsibility, they have hung millions them to purchase up to 4,000 shares of stock at $53.94. Georgine knew the rank-and-file workers of workers out to dry whose pensions were raided by union bosses. stock’s value would increase significant- ly at the next revaluation. Then, in May WASHINGTON, D.C. — With numer- 2000, ULLICO’s board raised the ous accounting scandals plaguing Wall would only allow larger shareholders— price of company stock to $146 per Street, union power brokers like AFL- such as individual union pension funds share, knowing that the new price was CIO President John Sweeney have set up for the benefit of union members well above its true value, because claimed Big Labor’s high command is and compulsory fee payers—to sell a the best watchdog of corporate corrup- small portion of their stock during the see ULLICO SCANDAL, page 6 tion. However, the union presidents same period. These transactions were who run Union Labor Life Insurance kept secret for nearly two years until Company (ULLICO) have their own they came to light in April. version of Enron on their hands in a “The self-dealing of ULLICO offi- IN THIS ISSUE recently exposed stock fraud scheme cials reveals the corruption that results that may be the biggest union scandal from the numerous special privileges exposed in years. conferred upon union officials by feder- 2 Ban on Discriminatory Union- Last month, National Right to al law,” said Gleason. “While union offi- only PLAs Upheld Work Legal Defense Foundation attor- cials have been talking about corporate 3 Bay State Teachers Win 13-year neys, on behalf of Foundation Vice corruption at firms like Enron, they Legal Battle With NEA President Stefan Gleason as charging have been similarly exploiting rank-and- party, filed federal charges at the file workers.” 4 Graduate Student Sues MSU National Labor Relations Board for Violating Privacy Rights (NLRB) against ULLICO for secretly Public Employers Must Protect and illegally enriching top union offi- ULLICO bosses turn Workers From Union Abuse cials at the expense of ordinary union profits under the table members and compulsory fee payers. 5 Foundation Often Wins The federal unfair labor practice Without Going To Court charges allege that ULLICO directors ULLICO was established in 1925 used their positions to allow themselves and today invests funds from unions, 7 Spotlight On John C. Scully, to sell their entire personal portfolios of labor pension funds, and individual Staff Attorney company stock at a dramatically higher stockholders. It has assets totaling over price than their stock was worth, but $4 billion. ULLICO’s directors, who are 2 Foundation Action September/October 2002 Ban on Discriminatory Union-only PLAs Upheld National Right to Work Foundation helps to defend Presidential Order WASHINGTON, D.C . — In a stinging February 2001, a coalition of union rebuke of the arguments made by Big officials filed Building and Labor’s top lawyers, the U.S. Court Construction Trades Department, AFL- of Appeals for the District of Columbia CIO v. Allbaugh to challenge it. Circuit unanimously upheld Presidential Executive Order 13202, which bans federal agencies and other Unions use federal entities doling out federal funds from dollars to corral workers requiring discriminatory union-only contracts known as project labor agree- ments (PLAs) on federally funded con- Photo AP/Wide World Big Labor was able to score a tem- struction projects. After taking a small step to prohibit porary victory when a U.S. District The three-judge panel agreed with union-only federal construction projects, Court issued an injunction to block the arguments set forth in the the Bush Administration enjoyed legal implementation of the Executive Foundation’s Amicus Curiae (Friend of assistance from Foundation attorneys. Order. After thousands of Foundation the Court) brief that the executive supporters signed petitions to President order was not preempted by the Bush, the Administration appealed the National Labor Relations Act and that ees work for non-union companies. court’s decision. This decision to appeal President George W. Bush acted within “PLAs are nothing more than a was made before the White House his constitutional authority. shakedown—union officials use them to embarked on its overt strategy in recent “The court’s decision is a tiny, but nec- demand taxpayer handouts and govern- months of cozying up to union officials essary step toward protecting workers and ment-granted special privileges in by compromising its policy positions. taxpayers from higher costs and other exchange for not ordering strikes or caus- Rather than accept defeat, union abuses that flow from compulsory union- ing other disruptions,” said Gleason. bosses are expected to appeal the case ism,” said National Right to Work The appellate court’s ruling is the to the U.S. Supreme Court. If the case Foundation Vice President Stefan Gleason. latest phase of a legal “tug of war” that is heard by the high court, Foundation Big Labor has been waging to protect attorneys will file another amicus brief PLA set-asides. Immediately after the to support the Executive Order. PLAs used by Big Labor president issued the Executive Order in see PLA BAN, page 8 to harm workers and rip off taxpayers Foundation Action A PLA is a scheme that requires all contractors, whether they are unionized or not, to subject themselves and their Rev. Fred Fowler Chairman, Board of Trustees employees to unionization to work on Reed Larson President government-funded construction pro- Mark Mix Executive Vice President jects. PLAs usually require contractors Stefan Gleason Vice President and Editor in Chief Ray LaJeunesse, Jr. Vice President, Legal Director to grant union officials monopoly bar- Alicia Auerswald Vice President gaining privileges over all workers, use Virginia Smith Secretary exclusive union hiring halls, pay above- market prices resulting from wasteful work rules and featherbedding, and Distributed by the force workers to pay union dues as a National Right to Work Legal Defense Foundation, Inc. 8001 Braddock Road, Springfield, Virginia 22160 condition of employment. www.nrtw.org • 1-800-336-3600 PLAs effectively exclude the vast majority of contractors and employees The Foundation is a nonprofit, charitable organization providing free legal aid to employees from government-funded construction whose human or civil rights have been violated by abuses of compulsory unionism. All contributions projects, as more than 80 percent of to the Foundation are tax deductible under Section 501(c)(3) of the Internal Revenue Code. American contractors and their employ- September/October 2002 Foundation Action 3 Bay State Teachers Win 13-Year Legal Battle With NEA Labor commission rules in favor of 350 Massachusetts teachers BOSTON, Mass. — The militant defend his constitution- Massachusetts arm of the National al rights. Teacher union Education Association (NEA) union officials had Belhumeur, has suffered a setback in its attempt to a former president of finance political activities through the Springfield American forced union dues. Federation of Teachers, As a result of a thirteen-year, suspended for refusing Foundation-funded legal battle that to pay union fees. He reached the Massachusetts Supreme then turned to Judicial Court twice, the Massachusetts Foundation attorneys, Labor Relations Commission (MLRC) led the challenge on ordered the Massachusetts Teachers behalf of hundreds of Association (MTA) union and parent Massachusetts teachers, NEA union to allow the return of con- and thus averted being fiscated union fees that union officials suspended each demanded illegally from 350 teachers following year. across the Commonwealth. “It’s definitely a win The MLRC ruling—which ultimately for us,” said Belhumeur resolves the teachers’ long-running in the Springfield Union-News. “We employees and a steady flow of forced case—returns $87,000 in union fees have made our point...” union dues. seized from 1987 to 1992. According to the U.S. Supreme “The decade-long hassle the teachers Not protected by a Right to Work Court, the teacher unions’ actions endured in fighting for their rights law, teachers within the Commonwealth denied constitutional rights recognized proves the great problem workers have who choose not to in the Foundation- stopping unions from using their money join the MTA are won decisions of for politics and other non-bargaining required to pay a fee Abood v. Detroit activities where no Right to Work law that covers collective Board of Education exists,” said Stefan Gleason, vice presi- bargaining activity, “Teacher unions are and Lehnert v. dent of the Foundation. or be suspended all about politics — Ferris Faculty Union barons have learned from expe- or fired. Association. These In the course of they constantly take rulings stated that see TEACHERS WIN, page 7 this thirteen-year a union may not struggle, stands on hot spend compulsory Foundation attor- dues on politics, Newsclips Requested button issues,” said neys were able to lobbying, organiz- The Foundation asks supporters show that the ing, public rela- the Foundation’s to keep their eyes peeled teacher union was tions, or any other for news items exposing cooking the books activity unrelated Dan Cronin.
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