Former ULLICO chief Robert Georgine refused to testify twice last week before House and Senate committees. In the Senate hearing, frmr. IL governor James Thompson said there was “no question” that Georgine and other directors violated their fiduciary duty to the union workers whose dues and pensions bankroll ULLICO when they bought and sold their own stock for huge profits while that stock plummeted in 2000 and 2001.
In that hearing before the Senate Governmental Affairs Cmte., Thompson also said on June 19 that he did not examine whether the directors — mostly union officials — who made the stock profits, violated federal pension and labor laws. He claimed that to have examined the directors’ culpability under those statutes would have “prolonged” his investigation. It was more important, Thompson said, to make public the fact of how the directors engaged in “self-interested transactions that disproportionally benefited the insiders” on the board at the expense of the union pension funds that were unable to participate in the same transactions.
After Thompson, Laborers’ chieftain Terence O’Sullivan, ULLICO’s new president, claimed that he was a new member of the bd. of directors when Georgine proposed that ULLICO buy back its own stock from those directors who had bought it when its value, tied to the telecom firm Global Crossing, was set to rise in price. O’Sullivan claimed that he did not realize that Georgine had set the rules of the buyback so that only small shareholders, such as the individual directors, could sell back the stock before its price fell along with Global Crossing’s stock.
But O’Sullivan was on the bd. in May 2002, when the insider trades had been subjected to media coverage, and Thompson had been retained to conduct an internal investigation of the deals. At that bd. meeting, Georgine proposed that ULLICO buy back still more stock under the same rules. According to Thompson, only AFL-CIO vice president Linda Chevez-Thompson raised any objection to the buyback.
Committee chair Susan Collins (R-Maine) also asked O’Sullivan why the committee had not received the names of the 8 bd. members who had voted against requiring those directors who profited from the stock trades to return their gains. O’Sullivan promised to provide those names once the minutes of the May bd. meeting are approved. She also asked if Georgine would be allowed to use his claimed “severance” pay to cover his repayments and that of those of five other directors. O’Sullivan did not say whether that would be allowed.
The ULLICO scandal is still being investigated by the U.S. Dept. of Labor and a federal grand jury in Washington, D.C., which helps explain why Georgine refused to testify before the Senate cmte. and the House Educ. and Workforce Cmte. on June 17.