Issa: Obama Abetting Union Corruption

Rep. Darrell IssaFrom literally day one, the Obama administration has made clear its intent to back off from investigating corruption within organized labor. At least one member of the House of Representatives has expressed concern over this direction in policy. On June 23, Rep. Darrell Issa, R-Calif., ranking Republican on the House Committee on Oversight and Government Reform, issued a press release highlighting his objection to the ongoing rollback of union financial reporting requirements by the Department of Labor (DOL). His intent was to publicize a letter he’d sent the previous day to Denise Boucher, policy and disclosure director of the department’s Office of Labor-Management Standards (OLMS). 

Issa’s letter was at once gratifying and belated. On January 20, immediately after the Inauguration, Obama’s chief of staff, Rahm Emanuel, signed a memorandum advising all federal agencies to extend by 60 days the effective date of final regulations not yet published in the Federal Register. Included in that list was a Labor Department rule change (RIN: 1215-AB62) appearing in the January 21 Register set to take effect February 20. The regulation, completed during the final days of the Bush administration, would: 1) require disclosure of certain receipts and compensation not covered in changes to Form LM-2 introduced in 2003 and upheld in court in 2005; and 2) authorize the DOL to rescind the right of a large union to file the simpler Form LM-3 if that union has been habitually delinquent or deficient. More itemization, the DOL believed, would lead to easier identification of embezzlement and fraud.

Organized labor, predictably, opposed the regulation. The Labor Department eventually rescinded the rule in April. What’s more, the DOL has been finalizing plans to weaken or rescind Form T-1 (covering union trusts) and LM-30 (covering potential conflicts of interest among union officials and fiduciaries). For good measure, the department also recommended cutting the Office of Labor-Management Standards’ Fiscal 2010 budget from $45 million to $41 million. Taken together, the moves strongly suggest that keeping unions honest isn’t a high priority in this administration. Rep. Issa, whose district encompasses the northern portion of the San Diego metro area, thinks it should be.

In his eight-page letter to OLMS Policy Director Boucher, Issa indicated his belief that her department’s rhetoric doesn’t match reality. He wrote:

While the Administration continues to talk about improving transparency and accountability of government and financial firms, it has taken the opposite tack in seeking to aid and abet criminal wrongdoing by corrupt union bosses. By dismantling reporting requirements and other safeguards meant to stop embezzlement and other illegal activities, these changes would deprive more than 8 million private-sector U.S. workers of the means to effectively and independently monitor their labor organization.

Issa noted that during 2001-08 under Labor Secretary Elaine Chao, OLMS successfully prosecuted more than 900 union officers, employees and representatives, resulting in more than $91 million in restitution paid to defrauded unions and their members. And the incidence of audits increased as well, something that helped keep potentially corrupt union officials on a straight and narrow path. Rep. Issa closed his letter with a call to the administration to implement the final LM-2 rule, which he believes had been based on a realistic assessment of compliance costs.

As the ranking Minority member of the House Oversight Committee, Rep. Issa was doing his job. Unfortunately, the Obama administration is doing its job, too – at least as organized labor sees things. Unions during the 2008 election cycle made a combined $74.5 million in direct campaign contributions, with $68.3 million of that money going to Democrats and related party organizations. These figures do not include individual donations to union leadership PACs. Several leading officials at the current Labor Department, headed by union ally and former California Congresswoman Hilda Solis, are drawn from the ranks of union activism. Issa isn’t the only member of Congress to hold the Labor Department’s feet to the fire – Sen. Orrin Hatch, R-Utah, for example, spoke out forcefully in April – but such lawmakers need reinforcements.