Labor's Enron

Labor leaders used insider positions to rake off millions

opinion by Charles Walker

If union members thought that the board of directors of Union LaborLife Insurance Company (ULLICO), a union-owned firm, was merelyresisting washing its dirty laundry in public when it refused toreveal an internal investigative report into its financial dealing,they were only partly right. The board also wanted to cover-up theinvestigative report's conclusion that individual directors, whoprofited big-time from their control of the firm's stock prices,should pay back the millions they ripped-off. Labor unions and theirpension funds own almost all of ULLICO's stock, according to the NewYork Times (April 2, 2002).

The labor leaders' manipulations of the firm's stock prices, usingtheir insider positions, netted them more than $6.5 million dollars. At least five directors have resigned so far. One of the first toleave the board was AFL-CIO president John J. Sweeney, who reportedlydid not take part in the insider trading. Nevertheless, how Sweeneymissed the abuse hasn't been mentioned, let alone explained.

Why has Sweeney failed to scream bloody murder about the corruptinginfluence of such wealth on these self-proclaimed leaders of workingstiffs? The answer lies in the lack of democratic elections at thetop. Not one of these leaders has ever had to explain his actions torank and file union members in a direct, democratic election.

So-called elections in organized labor more closely resembleappointments from the top. Labor leaders who abuse their power areshielded from the indignation of the rank and file.

According to one report, "Virtually all of the union presidents on thecompany's board hold seats on the 54-member AFL-CIO Executive Council,the group that makes decisions affecting 13 million union members andtheir families." (Harry Kelber, www.laboreducator.org )

The details of the scheme didn't take any brainpower. Since the boardmembers themselves annually set and re-set the firm's stock prices,they merely bought or sold in advance of their setting of the stock'sprices. No more difficult than putting a thumb on the meat market'sscale, though certainly far more lucrative.

Surprisingly, the 138-page report concluded that the self-servingdirectors hadn't violated any criminal laws, although they had clearlybreached their fiduciary duties. Whether on-going governmentinvestigations agree with those conclusions remains to be seen; agrand jury in Washington is investigating. Either way, breachingfiduciary duties amounts to betrayal of the rank-and-file, and theperpetrators of the rip-off are surely guilty of that.

The stolen millions may or may not be paid back. The thieves may ormay not be jailed. But there can be no restitution to the ranks forthe damage done to union solidarity. The ranks have lost more thansome money. They have further reasons to oppose organized labor'sleaders.

WWW Washington Free Press