09.03.2010 0

Obama is pulling down the shades on union financial disclosure

The below piece was featured in today’s Washington Examiner.

By Don Todd

Should a union officer be able to keep his full compensation from the union treasury secret from the members?

Should a union officer be able to accept personal payments from businesses the union has dealings with and then keep such dealings confidential?

Most would think the answer to these questions is an obvious “no.”

Union management does not agree and they are willing to spend hundreds of thousands of dollars from their members’ dues to prevent any such reporting and disclosure.

The reason I know this is that I spent eight years at the U.S. Department of Labor attempting to get unions to comply with such reporting requirements and they fought us every step on the way.

With the arrival of President Obama, all such requirements are being rolled back or the Labor Department is refusing to enforce them until such a time as they can be rolled back.

Meaningful financial disclosure is to the union leaders as a cross is to a vampire.  It is no wonder that they are willing to spend themselves into financial ruin to put their friends in charge of the department that is supposed to oversee them.

The intensity of union management feeling on this issue was demonstrated at a “stake holders” meeting at the Department of Labor in early 2001.  The purpose of the meeting was to explain to the officers of a number of international unions the thrust of new regulations that when implemented would lead to disclosure of how union officers were spending their members’ dues.

One of the officers in attendance said after the presentation of the planned regulations, “if you implement this, we can just forget the National Labor Relations Board (NLRB) and the courts and go back to baseball bats!”

The law requiring union financial transparency, the Landrum-Griffin Labor Management Reporting Act, was passed on a bi-partisan basis in 1959.  Passage was preceded by months of televised hearings on union corruption and mismanagement.   One of the chief sponsors of the bill who carried it to the Senate Floor was Sen. John F. Kennedy, D-MA.

After Senator Kennedy was elected president, he appointed Arthur Goldberg as Secretary of Labor and tasked him with writing the initial regulations that implemented the law.  Secretary Goldberg was a labor lawyer who had previously served as General Counsel to United Steelworkers Union.

It is not at all surprising the regulations promulgated by Goldberg did not provide full disclosure. And that is where things stood between 1961 and 2001, through both Republican and Democratic presidential administrations.

But President George W. Bush tasked his Secretary of Labor, Elaine Chao, to take a long overdue look at these regulations in 2001. She assigned me to do it.

One of the items in the law that was never implanted in any meaningful way was the disclosure of the finances of trusts in which unions have an interest, such as  strike funds, building  funds, training funds and numerous other money pots.

The unions had never been required to report in detail to their members how the billions of dollars in these trusts were being spent.  In many cases, they were not even required to be audited by an outside CPA.

Naturally, the union leadership was horrified and launched a multi-year legal assault on the rule.  In the end, the Labor Department successfully implemented a disclosure regulation for these trusts.

But now, as with the other disclosure reforms, the unions have won. Obama and his labor chief, Secretary Hilda Solis, are pulling down the window shades on disclosure.  Now the people who paid the money will not know the details of how it is being spent.

On the bright side, at least they won’t have to go back to the baseball bats.

Don Todd is director of research at Americans for Limited Government.  He previously served as Deputy Assistant Secretary of Labor for Labor-Management Programs from 2001-2009.

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