LaborPains.org

The Labor Department heeded union complaints against greater transparency by moving to rescind financial disclosure rules. This was at the top of the AFL-CIO’s “To Do List” for the Obama Administration.

Union officials complain about financial disclosure and transparency requirements. But they have few qualms with imposing those same requirements upon others.

In a January 2009 appearance at the World Economic Forum in Davos, Switzerland, SEIU President Andy Stern called for greater responsibility, transparency, and accountability – for corporations, of course. Stern even participated in a workshop on restoring trust in corporations while in Davos.  He followed up in The Washington Post‘s online forum (ironically, the topic of discussion was leadership) where he criticized executives for not taking “responsibility.” Yet, Stern remains deafeningly silent on demanding the same accountability and transparency for unions.

Union Hypocrisy on Disclosure

The Laborers’ International Union of North America argues that stronger disclosure rules “in no way warrant the violence they will do to the careful balance Congress struck in the LMRDA between the right of union members to have the information necessary to govern the affairs of their unions and the legitimate interest unions have in preventing their confidential information from being readily available to management and its agents.”

It is the same “violence” that unions utilize to criticize corporations. They love to make hay out of executive compensation. Unions would not be able to make their case without the financial disclosure data that is required by law and made available to the public.  That information is available at the Securities and Exchange Commission’s website. If sifting through 10-K’s is unappealing, try Yahoo! Finance.

Sure would be nice to have the same for union officials, right? According to union officials, it’s necessary for corporations to  report their financial practices, but it’s not acceptable for unions to have to disclose financial (mis)management.

Union Hypocrisy on Compliance

Unions also argued that complying with the transparency requirements is difficult and time consuming. It reminds me of watching OJ try to put on the gloves (He just couldn’t do it!).

UNITE HERE used the excuse that disclosing critical financial details “created a serious administrative burden” and imposed a “steep financial cost to our members.”

AFSCME complained that it spends $120,000 to comply with LM-2 disclosure rules, despite the fact that AFSCME reported over $193 million in total receipts in its 2008 LM-2 disclosure. That’s just .06 percent of their annual budget.

This feigned outrage pales in comparison to the billions spent every year by corporations. An AMR Research survey showed that companies spent over $32 billion in 2008 on corporate governance, risk management, and compliance. Spending on Sarbanes-Oxley alone totaled $6.2 billion.

Another survey found that the average annual cost for companies with market capitalization over $75 million to comply with Sarbanes-Oxley was $1.7 million. A different survey found that the average cost of compliance with Sarbanes-Oxley for companies under $1 billion in annual revenue increased by 171 percent to $2.8 million per year between 2001 and 2006.

Incidentally, unions supported Sarbanes-Oxley, which increased and established new accounting and financial reporting standards for corporations. AFL-CIO leader John Sweeney actually led a union rally near the New York Stock Exchange to denounce “corporate pirates” and call for greater responsibility and transparency to the American public. Both are admirable attributes for corporations, but apparently not good enough for unions to practice.

If billions in costs and mountains of paperwork are good enough for corporate America, is it too much to ask for a modicum of accountablity and transparency from unions?

Some Complaints Are Too Good To Be True

If you only listened to the unions, you too might conclude that proper disclosure and accountability were Sisyphean tasks. And maybe that’s not a surprise with the excuses we’ve come across in union-submitted comments to the Federal Register advocating for less transparency.

The United Union of Roofers, Waterproofers, and Allied Workers take home the trophy for best excuse against transparency and disclosure. The union actually suggested that providing additional detailed information “may be too much for the union member to comprehend and may result in misunderstanding.” Their conclusion: union members should hear this information in a meeting with officials. They also assert that it’s merely a “theory of the Department [of Labor]” that stronger disclosure and transparency requirements will discourage embezzlement and financial mismanagement.

See below the fold for the rest.

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The New York Times has a brutally honest headline: “As Detroit Is Remade, the U.A.W. Stands to Gain.”

The article goes onto highlight just how much the UAW stands to gain and its disproportionate influence on automobile policy. A few of the key points to take away from the article:

The UAW will get to sit on both sides of the table.

“According to restructuring plans proposed this week, the union will have more than half the stock in Chrysler and a third of General Motors, meaning it will have tremendous influence, with the government, in determining the future of the companies.”

The UAW made very few concessions in comparison to other unions in industries that faced bankruptcy.

“The U.A.W. members at both automakers stand to lose some of their pay and benefits, but the cuts are not as deep as those faced by airline and steel workers when their companies went bankrupt. Under proposed deals devised by the Treasury Department, U.A.W. pensions and retiree health care benefits would largely be protected.”

The UAW gave up their Easter Monday holiday and agreed to overtime for work exceeding 40 hours per week.

“But many of the U.A.W. members who voted Wednesday on the Chrysler proposal were struggling to see the benefits of the cuts they were agreeing to. The deal suspends cost-of-living pay increases, limits overtime pay and reduces paid time off. It also eliminates dental and vision benefits for retirees.”

The UAW has contributed over $25 million to federal candidates, 99 percent to Democrats.

“In the last 20 years, the U.A.W. has donated more than $25.4 million to federal candidates, 99 percent of it to Democrats, according to OpenSecrets.org, a site that tracks campaign contributions.”

The UAW is really good at looking after itself.

The Hill has a piece on the AFL-CIO’s Bill Samuel calling for Congress to act soon on EFCA rather than wait after the 2010 elections.

Samuel: “I think it would be a mistake to wait. We don’t know what the outcome of the 2010 election will be. We don’t know what the political situation is going to be in the Congress or the United States in 2010.”

This should be another notice that the unions do not plan on giving up on EFCA anytime soon and will likely only ratchet up the pressure.

The Wall Street Journal has a scathing editorial today against the government’s restructuring plan for GM.

Under the terms of the debt-for-equity swap, the Treasury will get 50 percent of the stock and $8.1 billion in debt – as much as 87 cents on the dollar. The UAW’s retiree health care trust fund will get half of the stock it is owed, or 40 percent of ownership. That’s supposed to be worth 76 cents on the dollar.

The bondholders? Well, it’s not the best time to be a GM bondholder. Despite holding $27.2 billion in GM debt, bondholders will have to exchange that for 10 percent of GM stock, or about less than five cents on the dollar.

Who wins? Well, as the editorial put it: “Treasury says it would be a hands-off owner, but that hardly seems plausible and in any case that would merely leave the UAW in control. At the next labor contract bargaining session, the union would sit on both sides of the table.”

The SEIU is patting itself on the bank for their supposed role in Ken Lewis’ ouster as chairman of Bank of America yesterday. Lewis still remains President and CEO of the company though. The SEIU has railed on the bank for executive compensation, lending practices, and taking government bailout funds.

But what you won’t hear Andy Stern and the SEIU yell about are the union’s loans from Bank of America. That’s right. The SEIU actually borrows money from Bank of America. Juan Gonzalez at the New York Daily News looked at the SEIU’s financial disclosure reports and found that the SEIU borrowed $10 million from Bank of America last year. The SEIU actually has $87.7 million in loans from Bank of America. It takes a lot of gall to bash the institution that keeps your organization afloat. But consistency doesn’t seem to be a concern for the SEIU.

You can take a look at the SEIU’s LM2 disclosure here.

Another interesting point in the article and LM2 report: SEIU has a $15 million loan from Amalgamated Bank, which is owned by UNITE HERE. Remember that UNITE HERE is embroiled in a nasty civil war right now between its two leaders (Bruce Raynor and John Wilhelm) and their respective factions. Raynor rewrote the banks’ by-laws to take control of the board of directors and depose Wilhelm. Not surprisingly, Raynor is working with Andy Stern and the SEIU to get UNITE HERE members to secede, which we have noted in the past.

What to take away from this episode? It’s important to have transparency for union finances, not less of it, as the Obama Administration has done in recent weeks. Without proper disclosure via LM-2 forms, the public would have been unable to discover SEIU’s $87.7 million debt to Bank of America.

And just for good measure, we are obliged to point out that Bank of America shareholders voted by secret ballot against Ken Lewis for chairman.

According to a recent report by the FEC, unions spent the most on independent expenditures for the 2008 cycle of any interest group. Unions spent $58.6 million to be exact, which was nearly $14 million more than the next group (trade/membership/health) and accounted for 43 percent of total independent expenditures for the cycle. The amount spent should not be a surprise since the unions have made it clear that passing EFCA is a top priority.

Following up on the cartoon we shared yesterday, The Denver Post details Colorado business leaders’ efforts to persuade Sen. Michael Bennet to oppose EFCA.

The president of the Denver Metro Chamber of Commerce and other business officials met with the senator in D.C. this week to detail their opposition and deliver a letter signed by 25 other Colorado business leaders.

The article also mentions their specific objection to binding arbitration, which they say gives unions an incentive to stall negotiations.

Bennet, much to the frustration of the unions, has not taken a definitive position on EFCA.

The Wall Street Journal reports that the United Auto Workers will eventually own 55 percent of Chrysler stock under the terms of a deal reached by the union and company. Fiat SpA will eventually take up 35 percent while the U.S. government and Chrysler’s other lenders will end up with the remaining 10 percent.

According to the terms of the deal, Chrysler will also issue a $4.59 billion note to the UAW-managed health care trust fund for its retired workers. (I believe this technically makes my Jeep Wrangler an Italian sports car!)

During this latest round of talks, the UAW agreed to new “concessions.” Now, “workers will only be paid for overtime after they have worked at least 40 hours in a week. Chrysler workers will also lose their Easter Monday holiday in 2010 and 2011, according to the union summary.”

I had to read that a second and third time to let it sink in. After years of haggling over “concessions,” only now is the UAW willing to give up vacation day after a holiday and overtime for working less than 40 hours. They literally brought Chrysler to the brink of bankruptcy to preserve a vacation day. That should have been off the table in 2007. The hubris of  the UAW is shocking.