Media Report Uncovers Question Spending in Three Joint Funds

The United Auto Workers and the automakers usually find themselves on opposite sides of the bargaining table. Both are behind the manager’s desk however, at three little-known, but very big nonprofit organizations they run together: UAW-GM Ctr. for Human Resources, UAW-Ford Nat’l Programs Ctr., and UAW-DaimlerChrysler Nat’l Training Ctr. The joint funds began in 1982 to retrain laid-off employees who had little hope of returning to the automakers’ factories. The funds now run child-care, fitness centers, and training centers; they also help members pay college bills, cope with addictions and look after elderly parents. Between 1996-99, the joint funds with Gen. Motors, Ford Motor Co., and DaimlerChrysler AG spent more than $1.3 billion.

Some UAW member and other critics of the joint funds contend they are rife with abuse. They argue that not all the money is well spent. Copies of purchase orders, vouchers, invoices, checks and federal tax returns obtained by the Detroit Free Press show the funds have hefty administrative costs, sponsor stock-car races and teams, host political receptions, rent limousines and private planes for union brass, and throw lavish parties. Further, critics charge that UAW tells members too little about how the money is spent. Members say the only accounting they’ve seen has been on federal tax returns, and those forms have limited information.

The joint funds were the target of a FBI probe into alleged kickbacks from vendors to top UAW bosses and the awarding of contracts to friends and relatives of top bosses. The probe, which began as early as late 1995, ended in mid-2000 and the results were turned over to the Dep’t of Justice’s Organized Crime & Racketeering Section for “review and a prosecutive opinion,” according to FBI letters obtained by the Free Press. Thus far, no indictments have been handed up, leading two unidentified Dep’t of Labor officials told the Free Press that “nothing will likely come” of it.

Allen Nielsen, a UAW member in Lorain, Ohio, and others have been trying since 1997 to pry open the funds’ books. “This is nothing but eat, drink, party, and the membership has a right to know if there’s undue influence, impropriety,” Nielsen said. “We need disclosure on this.”

However, UAW bosses “bristled” when the Free Press sought more information about the funds’ finances. “I don’t know anything that sets you up as the supreme being who has the sole responsibility to make sure the whole world knows about this,” Richard Shoemaker, UAW vice-president, said when asked why the funds don’t provide annual financial reports.

The type spending that raises questions about just how the funds are being managed includes stock-car racing expenses. The UAW-DaimlerChrysler fund is cosponsoring with Dodge Motorsports two Dodge Intrepid R/T race cars in the 2001 NASCAR Winston Cup Series — Bill Elliott’s No. 9 and rookie Casey Atwood’s No. 19. According to unidentified NASCAR officials, sponsoring a car can cost $8 million to $16 million a season. The UAW-GM fund said it has a “growing presence on the motor-sports scene” too, as the official sponsor of the UAW-GM Quality 500 at Lowe’s Motor Speedway in Charlotte, N.C.

The UAW-DaimlerChrysler fund also sponsored the UAW-DaimlerChrysler 400, a NASCAR Winston Cup race at the Las Vegas Motor Speedway on March 4. It reportedly costs about $1 million to sponsor such a race. For this event, the UAW-DaimlerChrysler fund zipped union bosses and their guests to and from the speedway via helicopter, at a cost of $1,250, and spent thousands more for buses and limousines.

Further, during the 2000 Democratic Nat’l Convention in L.A., the UAW-DaimlerChrysler fund transformed a museum into a “Hollywood showcase” to “educate” delegates. Among them: then-President Bill Clinton, Hillary Rodham Clinton and Chelsea Clinton. Also, a purchase order shows UAW-DaimlerChrysler fund ordered 360 bottles of wine ($8,670 including freight) for what was described as “Gooden and Archer receptions” during the Convention. Nate Gooden is director of the UAW’s DaimlerChrysler Dep’t, and Dennis Archer (D) is Mayor of Detroit. The fund says the wine was for several events.

For another party at the N. Am. Int’l Auto Show’s black-tie gala in Jan. 2001, the UAW-DaimlerChrysler fund paid for four buses, a band, a $1,850 dinner and tips of $370. Total cost: $7,338, according to a purchase request. The fund said the dinner was a private, business-related affair for union bosses and corporate officials.

Additionally, the joint funds spend a lot on overhead, although there is a significant difference among the three. The UAW-GM fund reported to the IRS that $85.6 million of the $186.9 million it spent in 1999, or 46%, was for “management,” or overhead, expenses. The UAW-Chrysler fund spent $83.3 million in 1998, including $30.4 million, or 36%, for management expenses. The UAW-Ford fund spent $135 million in 1999, including $23.6 million for management expenses: about 17%.

The UAW-GM fund has a $180 million, 420,000-square-foot headquarters on the Detroit River. Located on 16 acres, the center has a seven-story office tower, a three-story training center, and a 400-seat auditorium with Internet access from every seat.The Ford and Daimler-Chrysler funds also have buildings in Detroit.

Moreover, the funds have sent thousands of people to meetings in Las Vegas. In Mar. 2001, the UAW-Ford fund’s annual joint programs conference reportedly drew about 1,600 delegates and 1,400 guests. A week later, 1,500 delegates attended the UAW-DaimlerChrysler fund’s annual meeting at the Paris Las Vegas. The funds have also taken hundreds of UAW bosses to the Riviera Resort and Racquet Club in Palm Springs, Cal. Hotel officials say UAW members and automaker representatives fill the 475-bed hotel every January, and at least one week a month in Mar.

Union bosses reportedly say there are adequate checks and balances within the centers: No money can be spent without the approval of both union and corporation. [Detroit Free Press 5/18/01]