As reported in the last issue, a federal grand jury in Washington, D.C., is probing stock transactions by directors of a union-dominated insurance firm ULLICO linked to the now bankrupt firm, Global Crossing. The Wall St. Journal reports that internal documents reveal that ULLICO officers and board members cashed in on some 71,000 ULLICO shares between Jan. 2000 and Sept. 2001, possibly at the expense of the very union pension funds to which they owed a fiduciary duty. The profits were potentially huge. For example, Martin J. Maddaloni, president of the United Ass’n of Plumbers & Pipe Fitters, allegedly reaped a $184,000 profit from timely selling of a mere 2,000 shares of his ULLICO stock back to ULLICO in 2000.
The list of union bosses who did sell and who did not sell is growing. ULLICO board chairman and ex-AFL-CIO Building & Construction Trades Dep’t president Robert A. Georgine allegedly sold 4,000 ULLICO shares. William G. Bernard, a ULLICO director and ex-president Int’l Ass’n of Heat & Frost Insulators & Asbestos Workers, allegedly sold 8,664 shares. Indicted Int’l Ass’n of Iron Workers’ ex-president, Jacob “Jake” West, a ULLICO board member, allegedly sold 5,250 shares. Douglas J. McCarron, ULLICO board member and president of the United Bhd. of Carpenters, sold 3,000 shares. Finally, Morton Bahr, ULLICO board member and president of the Communications Workers of Am., sold 300 shares for a $27,000 profit in 2001.
Increasing the pressure on other bosses to come forward are four who have claimed that they did not sell any ULLICO stock: AFL-CIO president John J. Sweeney; Int’l Union of Operating Eng’rs president Frank Hanley; Laborers’ Int’l Union of N. Am. president Terence M. O’Sullivan, and Retail, Wholesale & Dep’t Store Union ex-president Lenore Miller. [WSJ 4/5/02]
The ULLICO scandal is already hurting Big Labor. The AFL-CIO was gearing up to push for corporate-governance reforms and had launched a campaign with the Int’l Ass’n of Machinists to pressure Lockheed Martin not to renominate Enron director Frank Savage to its board. The day the AFL-CIO started getting nasty media calls on ULLICO, AFL-CIO secretary-treasurer Richard L. Trumka (who has pled the Fifth in another union scandal) pulled the plug. “He didn’t want us to look like hypocrites,” says one union official involved. [Business Week 4/8/02]