Fwd: AFSCME Report Exposes Systemic Corruption

Doug Henwood dhenwood at panix.com
Sat Jan 22 08:31:52 PST 2000

[A bit late...]

New York Times - January 21, 2000

Report Details Corruption Within Government Union


An internal union report lays out a picture of extensive corruption in the nation's largest union of government workers, the American Federation of State, County and Municipal Employees.

The report, which was made available by a union official eager to have the federation take a tougher stance on corruption, provides an unusual look at a major union's internal problems and describes corruption far beyond the well-known scandal at the union's giant New York City affiliate, District Council 37.

In all, the report describes corrupt activities by 35 union officials, ranging from the $2.2 million known to have been misappropriated by an official at District Council 37, to $96,000 stolen by the treasurer of Local 366 in Milwaukee to $51,000 taken by a senior official at District Council 20 in Washington.

In dry language, the report describes how union officials forged checks, made unauthorized withdrawals from union accounts, siphoned union dues into their personal accounts and used union credit cards for personal expenses.

The report is a comprehensive list detailing the $4.6 million in claims that the union made to its insurance company, seeking reimbursement under a policy that covers fraud by union officials. The report involved claims pending last November.

Since many unions do not release information about internal corruption, it remains unclear how the amount stolen compares with what has happened at other unions, particularly those better known for struggling with corruption. But the report offers an unusually detailed portrait of internal problems at a union that is on the rise in influence and power.

The federation is the nation's second-largest union, a 1.4-million-member organization that recently surpassed the Teamsters in size, while remaining behind the National Education Association. The union's president, Gerald McEntee, heads the A.F.L.-C.I.O.'s political committee. He is one of labor's most prominent backers of Vice President Al Gore and has overseen more than $4 million in contributions to Democratic causes over the last three years.

While acknowledging the accuracy of the information in the report, officials with the American Federation of State, County and Municipal Employees, known as Afscme, insisted that corruption was no worse in their union than in many others. These officials said that the report attested to the success of the union's stepped-up efforts to audit locals and uncover financial wrongdoing.

More than half the claims arise from New York's District Council 37, with 56 union locals, in which two dozen officials have been indicted. Other corruption claims involved locals in Indiana, Massachusetts, Minnesota, Montana, New Jersey, Ohio and Pennsylvania.

"Clearly something has happened to this union in the past five years," said Carl Biers, executive director of the Association for Union Democracy, a watchdog group in New York. "Things have fallen apart in many, many regions. It wasn't always like this. Clearly, whatever McEntee's strengths are, he has been turning a blind eye to a lot of this."

Lawrence Weinberg, the union's general counsel, said that considering how many locals were in the parent union, it was not extraordinary that there were some corruption problems in a dozen or two locals.

"I think Afscme is cleaner than most unions," Mr. Weinberg said. "When you add up all this union's locals and chapters, we have between 7,000 and 8,000 subordinate bodies, and what you're looking at is a pretty small number out of that universe."

In many cases, union-sponsored audits uncovered the thefts detailed in the report. In addition, officials accused of theft have usually been stripped of their jobs, and some have been indicted. Several of the District Council 37 officials involved in the claims have pleaded guilty to embezzlement.

Officials with the union said that in 1998 the union, concerned about spiraling corruption in New York City and elsewhere, adopted tighter auditing procedures, requiring, for instance, annual audits of any union local or district council with more than 2,000 members.

"We have an aggressive auditing program," Mr. Weinberg said. "We have a zero-tolerance policy for wrongdoing. We believe we're more aggressive in cleaning up than any other union. There may be a price to pay for that. This type of information comes out. But we're doing all the right things."

Like most other unions, the federation of state, county and municipal employees has what is known as a fidelity bond insurance policy that provides for reimbursing the union if an official commits dishonest acts that cause the union to lose money.

In the claims processed by the union's insurance company, the St. Paul Companies, from last Oct. 1 to Nov. 22, the report said, the company paid $605,000 of $2.6 million in claims.

The main reason the company paid less than the amount sought was that the union claimed $2.2 million for money it said was stolen by Charles Hughes, the former president of a local in District Council 37, representing New York City's school crossing guards and cafeteria aides. The policy covering Mr. Hughes provided a maximum of $500,000 in reimbursement to the union.

Mr. Hughes has been charged with embezzlement.

Mr. Hughes's lawyer, Sarita Kedia, said yesterday that her client was not guilty of any wrongdoing.

Glenn Twigg, an agent for the St. Paul Companies, said of the union: "I don't know if they have more claims than other unions. I don't find them to be extraordinary or unextraordinary."

Mr. Twigg said his company examined all claims for reimbursement to make sure they were valid.

Some labor experts said that the corruption in the union, while lamentable, did not approach levels seen decades ago in three unions that were controlled or influenced by organized crime: the Teamsters, the International Longshoremen's Association and the Laborers' International Union of North America.

Speaking about the state, county and municipal employees' union, Edward A. McDonald, former director of the Organized Crime Strike Force for Eastern New York, said: "Any time you have multiple acts of corruption in an international labor organization, it doesn't look good, but if there are 3,000, 4,000 locals and you're talking about three dozen people, it's certainly not a crime wave. But the corruption that's reported pales in comparison to the racketeering activities that characterized certain mob-dominated unions throughout the 70's and 80's."

Mr. Weinberg said one explanation for the corruption was that the union was highly decentralized, so that its locals had more financial autonomy than most other unions.

One episode of corruption in the report involves Robert Gordon, who was ousted as treasurer of the Milwaukee local representing 220 sewer workers after a bookkeeper discovered that some money was missing. A union audit reported that Mr. Gordon had apparently embezzled $96,000 by writing 208 checks to himself that were not approved and were not used for union purposes.

Mr. Gordon has not been indicted. His lawyer, Gerald Boyle, said his client was talking to law-enforcement officials and working with union officials. "We will take care of making sure that whatever needs to be put back into the union's coffers is put back," Mr. Boyle said.

Richard Abelson, a top official with the union, said: "We hold ourselves to very high standards, not only in Afscme, but in Wisconsin. Our expectation is things like that don't happen here."

The report said Steven K. Grubb, the treasurer of a municipal workers' local in Elkhart, Ind., wrote $13,500 in union checks for his personal benefit.

Linda Ard, executive director of the council representing all of the union's 8,000 workers in Indiana, said Mr. Grubb had been removed from office when the local's other officers uncovered the theft.

"This is not anybody's personal money," Ms. Ard said. "This money belongs to the members of the union." Mr. Grubb had admitted that he siphoned off the money, she said. He has not been indicated.

Another claim involved the president of a Long Island chapter of the union, who the union said stole $14,870. The official, Pasquale Ferraro, was removed by a union judicial panel, although he has repeatedly denied any wrongdoing. Mr. Ferraro was indicted in the case.

The report did not mention several prominent episodes of corruption not covered by the claims report. In 1998, for example, the secretary-treasurer of the union's district council in Washington, Thomas W. Waters, pleaded guilty to embezzling $761,000, while the council's finance director, Barbara T. Wood, confessed to stealing $73,500.

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