Exec. Council Meets in Hotel Boondoggle Fed with Union Pensions

What a tangled web they weave — the AFL-CIO’s Executive Council met the last week of Feb. in a Florida hotel that has become a boondoggle funded with union pensions.  And this boondoggle was made possible by the union-pension-owned insurance company now under criminal investigation for insider stock deals that enriched the union presidents sitting on its Board.

In September of last year, the U.S. Dept. of Labor asked a federal judge in Ft. Lauderdale to remove five trustees of the Plumbers & Pipefitters national pension fund.  In its suit, the labor dept. laid out a pattern of poor planning, financial favoritism, and cost overruns surrounding the Diplomat Hotel in Hollywood, Florida, where the Executive Council met.

One of the officials whom Labor Secretary Elaine Chao is seeking to remove is Plumbers union president Martin Maddaloni, already under investigation for participating in insider stock trades involving the pension-funded Ullico, formerly known as the Union Labor Life Insurance Company.  Maddaloni is one of many union presidents who sit on the Ullico board.

Perhaps as the AFL-CIO’s Executive Council meets in that scandal-plagued hotel, they will reflect that it started with a company that is making a mockery of their “No More Enrons” campaign.  In 1999, the union directors of Ullico began to buy and sell their own stock before its value was reset at the beginning of each year.  Thus, with Ullico’s stock highly leveraged on the telecom firm Global Crossing, directors could buy Ullico stock “low,” before its value skyrocketted with Global Crossing’s in 2000.

As the telecom bubble deflated in 2000 and 2001, they were allowed to sell back their Ullico stock “high,” before its price was readjusted downward as Global Crossing spiraled toward the 4th largest bankruptcy in history. But Ullico’s rules only allowed individuals, with a relatively small number of shares, to participate. As a result, the huge union pension funds, which largely own Ullico, were stuck with its falling stock.