THE SMITH CENTER

for Private Enterprise Studies

There They Go Again

by

Charles W. Baird

In my February column at this site I wrote about the egregious union scandal involving the Union Labor Life Insurance Company (ULLICO), and in my April column I addressed the equally outrageous scandal at the offices of the Washington (DC) Teachers Union. In both cases rank-and-file union members and "represented" agency fee payers were ripped off by union leaders whose actions put them in the same league as Enron's erstwhile CEO, Ken Lay. Well, another American Federation of Teachers (AFT) local, this time in Miami, Florida, has been taken over by its parent because of allegations of widespread theft and corruption by local union bosses.

Before we get to the Miami case, there have been at least two major developments in the ULLICO story. You may recall that John Sweeney, President of the AFL-CIO, resigned his membership on the ULLICO board last December in protest over the refusal of ULLICO's CEO, Robert Georgine, to release the results of an independent investigation of the stock buyback scheme and to restore the ill-gotten gains to the rank-and-file and their pension funds. On May 8th Georgine was forced to surrender his role as ULLICO Chairman, although he apparently plans to fight to keep his position as CEO.

More interesting is John Sweeney's May 9th public recognition that the ULLICO scandal is on a par with the Enron scandal. According to The Wall Street Journal , Sweeney said that unions "must be just as willing to expose and remedy conflicts at ULLICO as we have been at other companies in corporate America." Some union activists had been openly lamenting that the ULLICO story made it very difficult for them effectively to use Enron in their anti-corporate campaigns. Now even Sweeney recognizes the hypocrisy.

Meanwhile, on April 28 in Miami, federal and state agents raided the offices of the United Teachers of Dade (UTD). It is alleged that UTD's president, Pat Tornillo, had, for several years, used teachers' dues to pay for personal expenses, including hotel bills and the purchase of personal property. Moreover, it is alleged that Tornillo set up a sweetheart deal between UTD and the Dade school board. Specifically it seems that UTD and the school board agreed that only one insurance broker, The Public Employee Services Company (PESCO), to sell its services to school employees. Is it a coincidence that PESCO's offices are located at UTD headquarters and that UTD owns 19,000 shares of PESCO?

Tornillo's agreement with Raul Suarez del Campo to oversee the construction of UTD's $20 million headquarters building is also under suspicion. Last November Tornillo and his wife took up residence in an expensive condominium owned by del Campo. Subsequently, at least two banks called in loans they made to UTD for the construction project. It is not clear why the union is having trouble making loan payments. Could it be that Tornillo used the money for other purposes?

Unlike Georgine, however, Tornillo immediately stepped down as active head of the union. Well, he sort of stepped down. On April 30 he placed himself on indefinite leave ­ paid leave ­ while the investigation goes on. He will continue to be paid $243,000 annually.

As I wrote in my April column, the root cause of union scandals is legislation, both federal and state, that gives unions monopoly bargaining (exclusive representation) privileges over teachers and other workers in all fifty states. In twenty-eight states unions can even force those they represent to pay dues and fees whether they want the representation "services" or not. Fortunately, Florida is a right-to-work state, so although all the teachers in Dade County are forced to have the UTD speak for them, they cannot be forced to pay dues and fees. As a result of this scandal, more and more teachers are resigning union membership and refusing to pay dues and fees. The teachers in Washington DC cannot do that. Guess which union will clean up its act sooner and more completely.

Without exclusive representation, it would be unlikely that any of the three scandals would have taken place. If unions represented their voluntary members, and if any member could resign at any time for any reason, union bosses would be less tempted to try to steal from the rank-and-file. The probability that corruption would be noticed would increase because each union member would have an easy exit option. They could individually decide simply to disassociate from offending unions. People pay attention to things that they can do something about.

Unions are said to give voice to the workers they represent. However, to make that voice actually representative of the workers, each worker must be able simply to say no. The threat of exit is necessary to make unions voice the truth.