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UAW Scandal Emphasizes Need for Updated Union Financial Reporting

Yesterday, the Center for Union Facts submitted commentary on a proposed rule from the Department of Labor that would update the way labor unions report financial information to the federal government. The commentary notes that the changes proposed in the Federal Register’s notice of Proposed Rulemaking — published October 13, 2020 — would help weed out corruption in the ranks of union leadership.

As the years-long federal investigation into corruption at the United Auto Workers comes to a close, these updates are a critical way to minimize opportunities for fraud and embezzlement at our country’s labor unions. Former high-ranking officials at the UAW were able to get away with their crimes due, in part, to a lack of reporting standards surrounding union travel. In fact, the Department of Labor has since ​observed​ tha​t “much of the illegal conduct at issue in the UAW scandal was facilitated by or concealed through false and inadequate financial reporting by union officials.

As the ​Wall Street Journaleditorial board​ has pointed out,​ the UAW is not the only union that’s been marked by scandal: “Such corrupt labor practices are widespread. The Labor Department audits unions, and in 2016 nearly one in five such inspections led to a criminal case.” Clearly, the current mechanisms by which union members and government oversight bodies gauge union fiscal health and spending do not go far enough.

Our commentary highlights two proposed updates in particular that would bring more transparency to union finances. The first would require unions to report “indirect disbursements for travel-related expenses when payment is made” directly through a union credit card. Currently, union travel expenses that are paid for directly by the union are not disclosed on LM-2 forms. A second update would alter the language for discovering a shortage of union funds from “discover” to “aware of/discover.” Though small, this change would drive more reporting of questionable union financial activity.

While the DOL’s proposed rule would apply certain reporting changes only to unions with receipts of $8 million or more, CUF recommends applying the suggested changes to all unions with receipts of $250,000 or above. This way, members of mid-level unions will have access to the same information as those at larger unions.

It may be too late for the UAW, but the DOL’s recommended changes should be finalized immediately to mitigate similar corruption schemes from taking place in the future. 


Categories: Crime & CorruptionDOLUAW