Washington Post
Hoekstra
Attacks IBT Oversight
Lawmaker Highlights Blind Spot in Federal
Oversight of Teamsters
By Frank Swoboda and Sharon Walsh
Washington Post Staff Writers
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 campaign.
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 the election.
"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 to White.
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 campaign.
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
members.
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 Company