South Carolina Local Accused of Misusing Tax Money

The S.C. Atty. Gen. Office has given the green light to a taxpayer’s suit against United Steelworkers of Am. Local 7898 in Georgetown, S.C., to recover allegedly misused public funds. In a Jan. 19 letter to Georgetown County Council Member Tom L. Swatzel, Asst. Dep Atty. Gen. Robert D. Cook wrote that if Swatzel sues, the Office would join the suit as a friend of the court. Cook’s letter follows S.C. Atty. Gen. Charlie Condon’s Dec. 18 legal opinion to Swatzel stating: “To subsidize a labor union under the guise of a charitable purpose serves no public purpose. Taxpayers have a right to know that their tax dollars are not being spent for private purposes in support of special interests.  Accordingly, if the facts are as you have presented them, those expenditures are unconstitutional.”

The object of this analysis is a $3,000 “contribution” from Georgetown County for a Labor Day parade and rally last year. Local 7898 boss James Sanderson filed an application seeking $50,000 in public funds on May 19, 2000. (Ultimately, Sanderson admits to spending only $15,000.)  On the application, he stated the “group” was a non-profit organization registered with the S.C. Sec. of State’s Office. However, the Sec. of State’s Office later found that it was not so registered. On the application, Sanderson listed a federal employer identification number that belonged to USWA. In addition to the County Council, business and individuals were solicited in early June to support the rally of the “Georgetown County Labor Council” but were told to make their checks out to Local 7898.  These checks were deposited in a bank account opened on July 20 — nearly two months after the solicitations were made.  The name on the account was “USWA Labor Day Fund.”

Aside: donations from an employer to a union raise federal labor law concerns. Under the Nat’l Labor Rel. Act it is “an unfair labor practice for an employer” to “interfere with the . . . administration of any labor organization or contribute financial or other support to it.”

On Aug. 21, the $3,000 check was deposited in this same account.  Condon’s analysis: allegedly the “purported nonprofit corporation involved is, in reality, a sham and . . . the public funds ended up in the account of a labor union . . . if these facts are indeed true, such would surely be an expenditure for a private, not a public purpose.  If a labor union represented itself as a nonprofit association for the purpose of obtaining public funds, such would clearly be an improper use of public funds.”

The parade and rally were held, but according to Swatzel, it was more like a political event than a salute to workers. Reportedly, only a few Republicans were invited and the only one allowed to speak was St. Sen. Arthur Ravenel who was booed as he made his way to the podium. “The most important issue is whether [USWA] received public funds. There is not doubt that that occurred,” said Swatzel. “Whether they gained the money through misrepresentation or not, it doesn’t matter. The union received public funds and that is unconstitutional.” Swatzel is considering the recommended taxpayer suit. [Georgetown Times 2/5/01]