Serial No. 105-146


Printed for the use of the Committee on Education

and the Workforce

Table of Contents *

Statement of the Honorable Harris w. fawell, Chairman, SubCommittee on Employer-Employee Relations, Committee on Education and the Workforce, U.S. House of Representatives *

Statement of the Honorable Donald payne, ranking member, SubCommittee on Employer-Employee Relations, Committee on Education and the Workforce, U.S. House of Representatives *







Appendix a - Written Statement of the Honorable Harris w. fawell, Chairman, SubCommittee on Employer-Employee Relations, Committee on Education and the Workforce, U.S. House of Representatives *

Appendix b - written Statement of the Honorable Donald payne, ranking member, SubCommittee on Employer-Employee Relations, Committee on Education and the Workforce, U.S. House of Representatives *





Thursday, September 24, 1998


The Subcommittee met, pursuant to notice, at 2:42 p.m., in Room 2261, Rayburn House Office Building, Hon. Harris W. Fawell [Chairman of the Subcommittee] presiding.

Present: Representatives Fawell, Talent, Petri, Ballenger, and Payne.

Staff Present: Mark Rodgers, Workforce Policy Coordinator; Lauren Fuller, Professional Member; Peter Gunas, Professional Staff Member; Rob Borden, Professional Staff Member; Deborah Samantar, Office Manager; Marjorie Wasson, Staff Assistant; Peter Rutledge, Senior Legislative Associate/Labor; Brian Kennedy, Labor Counsel/Coordinator; Patricia Crawford, Legislative Associate/Labor; and Shannon McNulty, Staff Assistant Labor.


Statement of the Honorable Harris w. fawell, Chairman, SubCommittee on Employer-Employee Relations, Committee on Education and the Workforce, U.S. House of Representatives

Chairman Fawell.[presiding] The Employer-Employee Relations Subcommittee will come to order.

I am told that my good friend, the ranking member on the minority side, is in transit and will be joining us. But, it has been suggested that we do move ahead.

I welcome everyone, and a special thanks to the witnesses for taking their time to be here today. Today's hearing is a continuation of a hearing held August 4, during which the Subcommittee heard testimony from the rank-and-file members of the American Radio Association, a small union of about 200 radio operators from around the United States, who work on vessels of the United States Merchant Marine.

Due to scheduling problems, brought about by planned bargaining sessions, officials of the ARA were unable to attend the August 4 hearing. Given the schedule and availability, the rank-and-file members, however, the Subcommittee decided to go ahead and receive their testimony at that time. As I said at that time, we would welcome testimony from the ARA officials at the earliest possible date. Let me say that I appreciate the efforts of the Steinbergs, Mr. Schuman, and Mr. Clegg in being here today, and we look forward to hearing their testimony.

Let me also say that I recognize there certainly are two sides to every story, at least I've usually found that to be true. And we look forward to this afternoon to completing as much as we can the picture we began drawing back on August 4. I should also note that since the last hearing, the Subcommittee has received nine unsolicited letters from ARA rank-and-file in support of their leadership. And I think these are very relevant obviously to the issues which are before us.

In addition, the Subcommittee received letters from rank-and-file members in response to my letter requesting information about the NLRB settlement, involving a $1,000 defense fund assessment made on ARA members. I presume more are on the way. Without objection, I intend to place these letters of support and the reply letters into the record. However, we have been contacted by one member asking that his letter not be placed in the record. I will reserve placing any of these letters in the public record for 30 days to give other members the opportunity to contact us as well.

Today's hearing is the fourth in a series of hearings looking at the issue of union democracy and what Congress can do to improve the Labor-Management Reporting and Disclosure Act of 1959, better known as the Landrum/Griffin Act, the law that is supposed to protect and ensure democratic procedures within the unions. That Landrum/Griffin law is the only law that actually protects rank-and-file members vis a vis their union leaders. Landrum/Griffin is meant to grant the rank-and-file union members, among other rights, simple, basic rights of the right to vote at meetings, to express any arguments or opinions, to have access to financial information of their union--in short, to give members the information and the ability to participate in the decisionmaking of their labor organization.

Unfortunately, this Subcommittee has seen that the goals of Landrum/Griffin are not always reached. In our first two hearings the Subcommittee was privileged to hear from two icons of the union democracy movement. One is Professor Clyde Summers of the University of Pennsylvania Law School; and the other, Herman Benson, founder of the Association for Union Democracy. I call them the George Washington and the Abraham Lincoln of union democracy because they are that important to the movement to secure that unions truly do represent their membership. It was professor Summers who, at Senator John F. Kennedy's request, fashioned a bill of rights for union members, which became Title I of the Landrum/Griffin Act. Last month, I quoted Professor Summers from our first hearing, and I'd like to do so again because he so aptly, I think, sums up what the issue is before us. He said this, and I quote: "Workers gain no voice in the decision of their working life if they have no voice in the decisions of the union which represents them." I think that succinctly sets forth what we're interested in here, not necessarily who's right or wrong in cross allegations that we might hear, but I think and hope that all of us can join together and say we're all for union democracy because unions are having some hard times right now. And there going to be better, more capable, I think, to respond to the challenges if there truly is a democracy within the various unions.

I've asked both Professor Summers and Mr. Benson to assist the Subcommittee in fashioning legislation which will strengthen the ability of union members to have a real voice in the decisions of their union. They have submitted their proposals, and I have mentioned to Representative Payne that I want to share these proposals with him and hope to introduce legislation before the end of this Congress. I know time is short, but I am hopeful that we will have legislation that is so bipartisan, or nonpartisan, such that we can agree that these are elementary steps that union rank-and-file members ought to be able to have. So, I am hopeful that Representative Payne can join me in that co-sponsoring of this legislation. He hasn't had the time to really digest it or look at it, and I'm just--we're trying to put some finishing touches on it. But I want it to be a 110 percent purely from the hand of professor Summers and from Herman Benson, who I think have credibility that perhaps I as a Republican, alas--sometimes we don't have much credit from the labor movement. But I'm really doing all I can to present something here which I think is objective and good.

The Subcommittee is not here to take sides. We're here to take testimony that we hope will help us find a way to make an important law better. With that in mind, there were many issues raised by the ARA rank-and-file last month that we look forward to discussing today with the union's leadership and getting their reaction to it. Some of the concerns that have been raised involved alleged irregularities in union elections, including access to and confirmation of vote counts disclosure to members of financial information, including pension, vacation, and other trust funds; expenditures listed in the LM-2 forms for the union's president emeritus; the possible ownership of certain properties not listed on disclosure forms; and special assessments of union dues, which may or may not have been coerced. There's a general feeling, at least by some--and maybe it's a small minority, maybe it's greater than that, I don't know--that there is a select circle of people who basically are getting the greatest benefit because of the union. And we'll talk about that, and certainly we want the officials to be able to fire away and express themselves, as I'm sure you shall.

And so, I look forward to this meeting, and, regardless of what happens here, I hope that we all can join together in trying to make this Landrum/Griffin legislation a law much better so that it can be helpful. Just today, I received a communication regarding a Chicago Sun Times story and I quote "dues from the some of the lowest paid union workers in the country went for a $3 million jet used by the family of a then president, Edward Teal, a fleet of Cadillacs for union bosses, and a $100,000 motor home park near the president's house." Of course, I'm not saying that ARA is guilty of things like that. But obviously, there was no democracy in this particular union, at least according to this Federal investigation. The president of the ARA has retired, but he keeps his $270,000 per year salary--not bad.

But that doesn't put much confidence in the hearts and the minds of the rank-and-file workers. The gentleman from New Jersey, a very competent Mr. Payne is here, and so I will turn the podium over to him for his opening statement.

[The statement of Mr. Fawell follows:]

written Statement of the Honorable Harris w. fawell, Chairman, SubCommittee on Employer-Employee Relations, Committee on Education and the Workforce, U.S. House of Representatives - see appendix a


Statement of the Honorable Donald payne, ranking member, SubCommittee on Employer-Employee Relations, Committee on Education and the Workforce, U.S. House of Representatives

Mr. Payne. Thank you very much, Mr. Chairman. I'll be very brief, since I was a few minutes late. I'd like to welcome the panelists here. And I am pleased that we're here today to listen to more testimony on the issues discussed at the last meeting of this Subcommittee, on August 3. I continue to approach this series of hearings with an open mind. At this second hearing on the American Radio Association, I hope we will carefully review all the issues, including how the Landrum Griffin Act applies to the rights of modern-day working people.

I want to add that I am particularly pleased that the Chairman has made an effort to provide a balanced presentation of these issues. As I discussed at the last hearing, balance is something that I believe has been missing from this proceeding, and I certainly appreciate him expanding the list of persons to come before us. It is my hope that any future hearings will follow this model; we can call this the Fawell model of balance. And I hope that we will continue to use this model, and that it could be a structure to provide a complete and a fair presentation of the issues before this Subcommittee.

So, once again, thank you, Mr. Chairman. I look forward to the testimony of the witnesses who are here today.

[The statement of Mr. Payne follows:]

written Statement of the Honorable Donald payne, ranking member, SubCommittee on Employer-Employee Relations, Committee on Education and the Workforce, U.S. House of Representatives - see appendix b

Chairman Fawell. And I thank the gentleman from New Jersey.

Our first witness this afternoon will be Mr. John Schalestock of Casanova, Virginia. Mr. Schalestock, a veteran of the United States Marine Corps, is a radio electronics officer in the U.S. Merchant Marine and has been a member of the American Radio Association for the past 25 years. He testified before this Subcommittee on August 4. And we're delighted that he has worked his schedule so that he can be with us today.

Our next witness will be Mr. Norris Sapp, of Tucson, Arizona. Mr. Sapp has been a Master Radio Electronics officer in the U.S. Merchant Marine for the past 31 years. He has been a member of the American Radio Association since 1967.

Our third witness will be Mr. William R. Steinberg. Mr. Steinberg is currently President Emeritus of the American Radio Association. He was elected president of the ARA back in 1948 and served in that capacity until becoming President Emeritus. We thank him and all of the ARA officials and counsel for taking their time to be here today. I understand there's a bit of a wind going on down there in Florida, and you may have to leave us a bit early to catch a plane. But we'll be very interested in receiving your testimony.

Following Mr. Steinberg will be Mr. William Schuman. Mr. Schuman is the current president of the American Radio Association, having been elected to that position in 1992 and reelected in 1996.

The next witness will be Mr. Edwin Steinberg. Mr. Steinberg is ARA's counsel and has served in that capacity for approximately 25 years. I want to thank him, too, for working with the Subcommittee so cooperatively in finding a time that he and the ARA officials could be here.

And our final witness will be Mr. Phillip Clegg. Mr. Clegg is currently secretary-treasurer of the ARA. He has 26 years experience with the union as a rank-and-file member and as an elected official.

So gentlemen, I welcome you all.

I also want to bring out that witnesses appearing before this Committee and its Subcommittees are asked to take an oath and to promise to tell the truth. Witnesses should be aware that under Title 18, Section 1621 of the United States Code, lying to Congress while under oath may be prosecuted under the law.

In light of this, please rise--all of you, if you would--and raise your right hand.

[Witnesses sworn.]

I thank you very much. Please be seated. And we will begin the testimony now with Mr. Schalestock, with your testimony. We do have this little custom here of trying to limit the opening statements. And those lights there, the green light, shows you're in very good condition. The orange light indicates that you're getting near the five-minute time limit. And then the red light says, well, you're there and over. However, we don't take a shepherd's crook and pull you off the stage if you happen to go over a bit. But, please try to keep your testimony down to that time limit. And then after you've all finished, we will begin with questions. I encourage people to have a good exchange of comments. Feel free to raise your hand and answer questions when you think the other person has said something about which you have something of merit to come back and counter. The give and take in other words, I think, of the witnesses after the formal testimony is, I think, some of the most interesting exchanges that we do have because gradually, then, we, who are here to be educated, become more much more knowledgeable and aware when we see the light go on in your eyes and somebody will want us to say, well, you know, I think that Mr. Schuman is wrong here; or Mr. Sapp isn't correct. And that helps us a great deal. So, you'll have time afterwards to take the very important points that you feel are there, and to be able to express them in a give and take, in a very informal way.

So, Mr. Schalestock, if you will commence.




Mr. Schalestock. Mr. Chairman, honorable members of the Committee, my brothers of the ARA, and distinguished visitors, my name is John Schalestock. I am a graduate of the American University here in Washington, in the Graduate School of Electronics. I am also a veteran of the United States Marine Corps, and a 25-year veteran of the ARA.

I would like to thank the Chairman for his gracious forbearance in allowing me to testify again before this Committee.

The matters before you today and the testimony given are of profound importance to all of us in the ARA. And, I believe, equally important to this Committee in its quest to legislate badly needed protections for all American working men and women.

I believe the testimony you have heard and the document before you paint a sad but undeniable portrait of willful manipulation and corruption of the democratic process within the ARA.

Contrary to popular opinion, union democracy no longer disintegrates at the hands of shattering violence or patently outrageous criminal behavior. That stuff is largely ancient history in this country. A far more subtle and insidious process has replaced it. Union officials of today are much too cautious to visibly and suddenly arrest absolute control of their membership. They do not suddenly wrestle their members to the ground. Instead, they slowly but inexorably dismantle the democratic infrastructure of the union and watch the members paralyzed by political anemia, slowly drop to their knees. The process is virtually imperceptible unless one enjoys a sufficiently long perspective to recognize the entire long, slippery slope.

For example, the current union moguls that are entrenched in the ARA have, by and large, come from white-collar backgrounds and enjoyed substantial education. The current self-anointed ARA despot is Edwin Steinberg, the some of the union founder, William Steinberg, who ensconced his own son as ARA legal counsel, an act that can only be described as the ne plus ultra of nepotism.

Edwin sported a law degree, an engaging appearance and nice suits. He sure didn't look like a thug. Why, then, do so many of us feel that we are living in a 1930's gangster movie where the rank-and-file have no discernable input into the running of their own union?

I believe that the law places grave significance on patterns of behavior. And I submit that the testimony before this Committee demonstrates just such a pattern of ongoing actions by Mr. Steinberg and his National Council.

Arbitrary and capricious rulings have repeatedly been invoked to the detriment of the membership.

Perhaps one of the most insidious examples of democratic disintegration in the ARA is the recent change in our work rules. Without membership approval, the National Council has mandated that members may now work only 120 days before being required to stay on the beach for an equal amount of time.

Mr. Schuman has stated that this is to spread the available work around. Sounds good, but closer examination shows something entirely different. No one is getting more work because of this. What we are getting is a drastic reduction in our pension credits. And I submit this is the real reason behind the National Council's arbitrary decision to change the work rules.

After the horrific sellout contract with American Ship Management recently concluded, overtime has become non-existent. Overtime has traditionally represented a third of our income. Now the hard figures show we have taken a de facto 41 percent pay cut. But more significantly, without the option to convert overtime to pension credits, many, if not the majority, of the members will never be able to realize a regular pension. Even worse, the ARA officials refuse to modify the pension plan to allow five-year vesting. Thus, all the members with less than 10 years of covered employment will never see a rightful return on their investment of time at sea.

The officials might argue that this is actuarially required. Not so in our unique situation. Actuarial tables are based on probabilities. There are no probabilities left for the ARA. Only the absolute certainty that our profession will be terminated by Federal law in approximately 90 days. Our to put it another way, we have one more tile in the mosaic of a subtle, and not so subtle, pattern of abuse suffered by the rank-and-file of the ARA.

Mr. Chairman, I am mindful that the purpose of this Committee is to investigate impediments to union democracy. I suggest that at the end of the day, there can be no greater impediment than a controlled and manipulated election process. The ballot box is the ultimate source of good or evil in the democratic life of a union.

As I testified previously, the Department of Labor has been sadly instrumental in subverting justice in our repeated and meticulously documented charges of election fraud in the ARA.

For example, during previous testimony, the distinguished Representative from North Carolina, Mr. Ballenger, read verbatim from a section of the LMRDA that states unequivocally that a candidate or observer is entitled to note the names on the ballots actually counted. It further states that the purpose of this section is, and I quote, "so that the candidates may be able to ascertain whether unauthorized persons voted in the election."

When my fellow candidates and I attempted to exercise this right, Mr. Steinberg, Esquire, refused to allow it. Indeed, he caused the room to be cleared of everyone except the balloting Committee and his hired vote counters, the Honest Ballot Association.

In the ensuring confrontation, Mr. Steinberg admitted they had sent out 500 ballots. This was a stunning revelation that amazed even the Honest Ballot representative. My recollection is that fewer than 300 ballots were returned. Mr. Steinberg refused to reveal the disposition of the remaining ballots and refused to name the printer. This same obstruction was repeated in the following election.

Voter eligibility was crucial, especially in light of the fact that the incumbents had allowed new members to vote in direct violation of the ARA constitution. Thus, an examination of the names was not only essential to the democratic process, it was mandated by law. The DOL refused to enforce this provision.

And these two examples are only the tip of a very large iceberg. We daily receive horror stories from our sea-going brothers of non-response from the leadership and non-enforcement of our contracts. Indeed, no one has even seen Mr. Schuman for months, and his phone number is unavailable.

I submit that this pattern of impeding the democratic process if irrefutable. And it is my fervent hope that this Committee in its experience and wisdom will see fit to recommend that the appropriate agencies of the Federal Government place the ARA under Federal trusteeship, remove the incumbents, and mandate a Federally supervised election.

Federal law and international treaty will terminate our once proud profession on February 1, 1999. We would like to leave the world's maritime stage with honor, dignity, and most importantly our just and rightful pension benefits.

Ours is an arcane life at sea that most people find hard to relate to. And despite its moments of undeniable beauty and romance, it is a hard, lonely, and often dangerous life.

While our retired officials and their counsel enjoy Manhattan apartments, Florida mansions and sunny days on the gulf course, our brothers labor in an ever-disintegrating environment. Now, even financial security at the end of the line is in jeopardy.

It has been--


Chairman Fawell. If you could bring it to a close, please. The red light is on, if you could bring it to a close? I didn't mean to cut you right off at the pass, but I'm--


Mr. Schalestock. I'm almost finished, Mr. Chairman.

It has been said that poetry is the natural language of mankind. Thus, I would like to leave you with a verse written in honor of those who spend their lives at sea. Perhaps it can convey some small essence of this other world that few people experience.

"I shall tell you then of storms at sea and bitter frozen nights within that realm of roaring gloom and in Nature's darkest heart. Where a steel ship is laid hull down far beneath the waves and china cups and containers lashed teeter four rows high. While in the radio room the lights grow dim and Sparks is bathed in sweat. A soldier at a ruined wall with only three rounds left. He feels the ghosts of Phillips near and Smith and Albion Lane. Steady old man, steady, they whisper and send the SOS. His fist upon the brass-found key, he pounds the lightening free. The blue spark flies across the room and over the darkling sea. Come quick, old man, we're going down at latitude 53."

Mr. Chairman, we have sent our final SOS. I pray it will be received in time, and I sincerely thank you and this Committee on behalf of all my union brothers.


[The statement of Mr. Schalestock follows:]



Chairman Fawell. If we could hold back our applause or non-applause, or whatever, it would be appreciated. And thank you, Mr. Schalestock. I appreciate your testimony. Mr. Sapp.




Mr. Sapp. Thank you.

Mr. Chairman, Honorable Representatives, my name is Norris Sapp. I'm a Master Radio Electronics Officer in the U.S. Merchant Marine and have been for the past 31 years. I've been a member in good standing with the American Radio Association since 1967. I have an unblemished career and an excellent reputation with every shipping company I've worked for. I've never been fired from a job in my life.

I want to express my gratitude to the Subcommittee for allowing me the opportunity to testify here today. It would have been very easy for me to ignore this hearing as I plan to retire at the end of the year. I chose not to because I'm fed up with these wealthy retirees treating this union as their own little fiefdom. I want this union returned to the membership where it belongs. A union by definition is an organization of workers formed for the purpose of advancing its members' interests in respect to wages, benefits, and working conditions. Our interests no longer matter to our officials. Our Secretary-Treasurer and Plans Administrator won't even answer the most innocuous questions from members. They simply can't be bothered and just ignore requests for legitimate information. A good example is recently one of our members called Phillip Clegg who told him he had a stack of e-mails the thickness of the telephone book, and that he believed ninety percent of them to be absurd.

Webster's Dictionary defines retired as concluding one's working or professional career. The ARA is the only union in this country run by wealthy retirees and their relatives. You have to ask yourself why these men in their advanced years refuse to let go of this union and truly retire. It doesn't take an Alan Greenspan to understand why they don't. The answer is obvious. They will never let go because this union is their cash cow.

ARA members pay the highest union dues in the maritime industry and possibly the entire nation--$1,000 annually. On top of that, an additional nine percent of our vacation pay before our taxes is levied.

We are a tiny union, one of the smallest in the country. Our membership numbers only 165 members, yet administrative and other officials for our pension, welfare, IRA, and vacation plans averaged over $1.5 million annually from 1989 to 1996. The Plans Administrator refused my request for the 1997 figures.

In 1996, administrative and other expenses for our vacation plan alone were over $220,000. How much expense is involved in processing two or maybe three vacation checks a week, if that? There's no reason why union officials should be handling these funds in the first place. It's no expense for the company to include the man's vacation pay in his payoff when he gets off a ship.

From 1992 to 1996, Phillip Clegg was a National Council member and our Secretary was Bernard Stoller. In violation of the special election clause of our constitution, Stoller retires and, lo and behold, Clegg is appointed Treasurer and Stoller assumes Clegg's National Council position. The two simply reversed roles--all this without one word to the membership. We learned about it after the fact. Union officials totally ignored the special elections, Section 9 of our union constitution that states in part: "an election shall be conducted between regular quadrennial elections to fill any vacant offices or to fill any newly created office shall be known as a special election."

Edwin Steinberg, ARA Counsel, under Phillip Clegg's signature, countered my protest with this statement: ``The ARA Constitution, Article, IV, Section 5(i) gives the National Council Authority to name a replacement for any office which becomes vacant by reason of death, retirement or resignation. Therefore, upon retirement, Bernard A. Stoller as Secretary-Treasurer, the designation of Phillip Clegg to complete Brother Stoller's unexpired term was within the authority of the National Council. Why then was Stoller, who is allegedly retired, appointed to Clegg's previous position as National Council Member?

One of the duties of the Secretary-Treasurer is contract enforcement. Clegg claims to have settled contract violations for members totaling many thousands of dollars, yet when pressed for details, he won't provide any. Last year, one member had to hire an attorney to get him to enforce a contract dispute that went unresolved for three years. That got his attention in a hurry. Last week, another member informed me he is hiring an attorney for the same reason.

On April 12, 1998, my ship, the President F.D. Roosevelt, was reflagged foreign, and I lost my permanent job of nine years aboard the American President Lines containership. The same fate befell my union brother, Stephen Beguin, on the sister ship, the President Eisenhower.

We both should have received a year's pay--nearly a year's pay severance pay under the Shipman Award. Our severance pay was negotiated away during a contract re-opener. We didn't learn this until after the fact. That's how things work in this union. The severance pay was reduced to a quarter of what it should have--what we should have received and need to be placed in specially designated account in an existing trust or trusts.

On April 18, 1998, I e-mailed union Secretary-Treasurer, Phillip Clegg, demanding he inform the membership and myself exactly what existing trust or trusts are referred to in the contract, where they are, and how much money is in them. To date, I have received no reply, as if the case of 99 percent of my correspondence with union officials. No one has been able to touch these people for 50 years, and they do what they damn well please with impunity. Our 1987 to 1990, 1990 to 1994, 1994 to 1998 contracts dealt specifically with severance when a ship is reflagged foreign. In 1987 to 1990 contract, it went directly to the union. In the 1990 to 1994 and 1994 to 1998 contracts, it specifically stated that the severance goes to the individual involved. The 1994 to 1998 contract with American President Lines, my employer, was reopened in 1997, and once again severance pay was taken away from the individual. I would have received over $50,000 in severance pay to carry me through to my retirement at the end of this year.

Severance pay for union officials is quite another story. Of course, they get it. From our ARA Constitution, Article Five, Section 9: "The Union shall pay severance pay of one week's pay for each of year of service to present and future elected officials who complete their term of office or who severe their relations with the Union through illness or other bona fide reason." This would be--amount to over $57,000 for a union official paid $100,000 a year with 30 years of service.


Chairman Fawell. The red light is on. If you'd like to just to close it out here. The entire speech, which I have read by the way, will go in the record, and you will have more time to make later to make some references.


Mr. Sapp. Okay, well I wish I could have finished this. But I just want to mention that I'm the only member of the Union to receive a refund of the $1,000 extorted from us by the Union officials for their so-called REO Defense work. If you didn't pay, you weren't issued a clearance to work.

Finally, I want to say our once-honored profession is now in its twilight. The Communications Act of 1995 legislated away the legal requirement for ships to carry a radio officer after February 1, 1999. There will be few jobs left after that. Our careers should never have ended this way. Our union officials should have done the right thing and negotiated the severance package with the companies and let us leave with honor and dignity intact. This is not the reality. We are laughing stock of our shipmates and their unions. ARA's members are very upset, perplexed that we were never allowed any input whatsoever on these issues concerning our livelihood. Now, you know why I chose to appear here today. Our only salvation is to have this union placed under Federal trusteeship, our officials removed from office permanently, and new election conducted under Federal supervision. Without it, we're all doomed. And our officials will stay where they are, laughing all the way to the bank.

Thank you.

[The statement of Mr. Sapp follows:]



Chairman Fawell. Fine, and I thank you, Mr. Sapp. And as I say, you will have more to be able to say as we have an interchange of conversation here.

The Chair would recognize Mr. William Steinberg.




Mr. William Steinberg. Mr. Chairman, Members of the Committee. My name is William R. Steinberg. I was born in New York City on November 19, 1912. I am married, have two children, five grandchildren, two great-grandchildren. I'm also to state that my son, Edwin, who is presently ARA counsel and has been for 25 years, worked onboard ships of the U.S. Merchant Marine as an ordinary seaman and a member o the National Maritime Union. He also worked as a radio officer and a member of the ARA.

I studied to become a radio officer shortly after Japan bombed Pearl Harbor and war was declared against that country. On passing my FCC license examination, I was recruited by TWA airlines under contract with the U.S. Air Force as a flight radio officer and as a follower of the Armed Forces. I flew Air Force missions to Greenland, Iceland, England, North Africa, West Africa, and South America. I was one of the flight radio officers flying diplomatic and military personnel to the summit meeting held by President Roosevelt, Prime Minister Churchill, and Soviet Premier Stalin.

When my service as a flight radio officer was completed, I sailed as a radio officer in the Atlantic and Mediterranean war zones. As a result of my military service as flight radio officer, I was awarded a honorable discharge from the U.S. Air Force. As a result of my service as a radio officer in the U.S. Merchant Marine, I was awarded an honorable discharge by the U.S. Coast Guard.

On June 16, 1951, I was appointed by the U.S. Coast Guard as a member of a hearing board established under Executive Order 10173, relating to the security of vessels and waterfront facilities subject to the jurisdiction of the United States. This appointment was renewed yearly for a period of 17 years until June 26, 1967.

I'm certainly pleased to appear before this Committee, even though it is because of false charges presented to this Committee and being communicated worldwide on the Internet by certain ARA members. I understand that my appearance has been requested along with the current officers of the ARA because these members charge that the ARA is an undemocratic organization; that the ARA rank-and-file have been and are now being denied their democratic rights; that the officers of the ARA are corrupt and associated with gangsters and hit men; and that these members fear for their lives. How ARA members Schalestock, Lejafe, Schultz, and Reed should have concocted such a convoluted script about the ARA and its democratically elected officials is truly beyond belief.

The American Radio Association was born out of a democratic rank-and-file revolt against officials who were members of the Communist Party U.S.A., and who adhered to all of the dictates of the Communist Party of the Soviet Union rather than to the needs and problems of the union membership. I was part of an anti-Communist slate that was elected in 1946. And in 1948, we were granted a charter by the Congress of Industrial Organizations, the CIO.

As a member of the General Executive Board of the CIO, I preferred charges against ten CIO affiliated international unions whose policies I believed were consistently directed toward the program and purposes of the Community Party, U.S.S.R. rather than toward the achievement of the objectives as set forth in the CIO Constitution. These were substantially the same charges which I directed against the Communist dominated leadership of my own union prior to us receiving a direct charter from the CIO. A copy of my statement presented to this CIO investigative Committee is attached, in which I repeat the charges against those 10 unions and which I did against my own union.

When I was elected as President of the ARA in 1948, the Union had nine offices in major port cities. Each office was manned by an elected official. These officials, known as port agents, together with the President, Vice President, and Secretary-Treasurer comprised the National Council. At that time, the National Council adopted the credo that the ARA Constitution and shipping rules were to be uniformly applied to all members regardless of race, creed, color, sex, friendship or political support or non-support. To the best of my knowledge and believe, this credo was faithfully carried out to this date. As President Emeritus, the ARA National Council has provided me with an office where I am available on a daily basis to consult with and advise union officials whenever they may wish to contact me. These duties take anywhere from 40 to 60 hours per week, and I do so every week. The National Council has also appointed me as Chief Contract Negotiator because of my experience in negotiating contracts with the companies over a period of 50 years. Sometimes these negotiations take me coast to coast, and I also sit with the other unions and try to help them in their negotiations. I also continue to be designated by the ARA National Council as Chairman of the ARA Pension, Welfare, and Vacation Plans, which are supervised by boards of trustees composed of equal representation of the companies and the union. I am in a position where I can observe the operation of the union and how its Constitution and shipping rules are being administered. I can, therefore, honestly state that the current ARA officials adhere to and support the same credo of equal treatment for all, which was adopted in 1948. I served as President until 1992.

Thank you, Mr. Chairman and members of the Committee.\

[The statement of Mr. William Steinberg follows:]



Chairman Fawell. And I thank you very much, Mr. Steinberg. Mr. Schuman.




Mr. Schuman. Mr. Chairman, Congressman. I was born in New York City in the year 1922. At the age of 16, I graduated from Seward Park High School and attended New York University and the College of the City of New York.

In September 1942, I enrolled in a Maritime Administration and New York City Board of Education jointly sponsored Merchant Marine Radio Officer course given at Public Schools 20 on the lower East Side of Manhattan. After obtaining my FCC license in February 1943, I shipped out in March of 1943 as Assistant Radio Officer on the motor vessel Sun. My first voyage was via convoy through the submarine infested North Atlantic to Scotland.

I continued sailing the North Atlantic and Mediterranean theaters during the entire World War II period and was preparing to depart for the Pacific when the war ended. I received an honorable discharge from the U.S. Coast Guard for my war service.

I continued sailing after the war serving on tankers, passenger vessels, freighters, and colliers until 1963. During this period, I served the Union as Port Agent in Boston and New York, District Organizer, and as a member of negotiations and strike Committees.

In 1963, I was appointed Administrative Aide for the ARA Plans. I have been Assistant Administrator of the Plans from 1969 to 1992, when I became Administrator of the Plans. I held this position until February 1998.

In 1984, I was elected to the Union post of Secretary-Treasurer and in 1988, I was elected to the position of Regional Representative. In 1992, I was elected ARA President, and in 1996 was reelected.

The ARA and its predecessor organizations were among the first labor unions to insert non-discrimination clauses in their constitutions and contracts.

In the period after World War II when I served as Union Port Agent in New York, one of our black union brothers was refused employment. The ARA, together with the cooperation of the NMU crew, struck the company, the Isbrantsen Steamship Company, with Captain ``Two Gun Jones'' aboard and was successful in getting Brother Amos Laing reinstated to the ship.

The ARA policy is for open democratic expression of its membership. The ARA is composed of a highly literate, very well educated, intelligent and sophisticated group spread throughout the United States and foreign countries. With incomes, at times, exceeding $100,000 per annum, while our total numbers are less than 200, participation in Union elections exceeds 80 percent, in 90-day mail ballot elections conducted by the Honest Ballot Association, a uniformly recognized as an impartial organization.

Membership meetings are held on the first and third Tuesdays of every month. During the period 1985 through 1998, I conducted these meetings at Linthicum Heights, Maryland, and Scotsdale, Arizona, on a bimonthly basis. Our school facility at these locations provided the quorum necessary for a union meeting. These meetings were very well attended, with full recognition to each participant to express his opinions. The eligibility requirement for Union Office is extremely liberal with only three signatures required for National Council Member, and five for President or Secretary-Treasurer. An ARA election is generally marked by a tremendous amount of literature being sent to the voting membership, this including weekly, worldwide radio telegraph transmissions, three times per week mailings, phone squats et cetera. The opposition group in the ARA even maintains their own membership mailing lists.

Mr. Leja was a candidate for Union office in 1992 but voluntarily withdrew because of personal reasons. Mr. Leja also attended our school facility at Scotsdale during the summer of 1996. He was present at the membership meeting of August 6, 1996, at which time I spoke on contracts agreements with Afram Lines and Navieras Puerto Rico. At this meeting, the members voted to ratify both agreements. Under Good and Welfare, Mr. Leja also participated in discussions on various union matters.

Mr. Schulz was present at the school facility of June of 1996 and attended the meetings on June 4 and June 18 of 1996, at which time I reported on the upcoming nominations and elections of union officials.

Thank you very much, Mr. Chairman and Congressmen, for allowing me to express my opinion.

[The statement of Mr. Schuman follows:]



Chairman Fawell. And I thank you, Mr. Schuman, for your testimony. Mr. Edwin Steinberg.





Mr. Edwin Steinberg. Thank you, Mr. Chairman, and distinguished members of the Committee. I appreciate the opportunity to be before you.

As stated, I have been counsel to ARA for approximately 25 years. My perspective of membership rights within the union is based on my observations in the conduct of elections, operation of the hiring hall and processing of grievances.

ARA elections are, for the most part, bitterly contested with charges of improper conduct being made almost routinely. Mr. Schalestock's virulent opposition is unusual in only one respect. In the past, opposition candidates have accepted the decision of the membership. Many have remained active in union politics; some have moved on with their careers and eventually retired.

The Department of Labor has scrutinized many ARA elections after receiving complaints from unsuccessful candidates. In every election that I have been concerned with, the Department has examined every aspect of the election process from the nomination procedures through counting of ballots. The Department has interviewed witnesses, requested production of numerous documents; and in each instance, there has been no finding of misconduct or improper procedures that ever required an ARA election to be rerun.

The eligibility requirements to become a candidate for office in ARA are extremely liberal, so that any member can become a candidate simply by having his nomination petition signed and remaining current in their dues.

The hiring hall is maintained by a dedicated dispatcher who administers the shipping list fairly and equitably. In my experience, there has never been a case where a member has complained of improper shipping practices or manipulation of the list.

In instances where a member has filed a complaint with the NLRB, the union has provided records to establish that the rules had been uniformly applied without discrimination, favorable or unfavorable, towards any members. Questions pertaining to the ARA assignment rules are referred to the National Council for resolution based upon an examination of the facts and past practice where unusual circumstances may be presented.

Grievances are processed on behalf of all members without regard to political activity. In my experience, the ARA official responsible for handling grievance--who is at present Phil Clegg--is conscientious and dedicated. On a few occasions where an issue cannot be resolved arbitration may be necessary. Mr. Clegg consults with me where questions of contract interpretation or other legal issues are involved. It is my sincere belief that the issues and concerns of the membership has always been a priority for ARA officials. I have no knowledge of any instance where a member was not treated fairly, or put another way, has been treated unfairly or denied any benefit because of their participation in union politics. Thank you.

[The statement of Mr. Edwin Steinberg follows:]



Chairman Fawell. And I thank you, Mr. Steinberg. Mr. Clegg.




Mr. Clegg. Mr. Chairman, thank you very much for this opportunity to address the distinguished members of this Committee.

My name is Phillip Clegg. I am secretary/treasurer of the American Radio Association. I have held two elected positions with the union since January 1993. From 1966 through January 1993, as a rank-and-file member, I sailed worldwide both in peacetime and war in the U.S. Merchant Marine on all types of vessels under contract with ARA, continuously since 1966. I am also a veteran of the U.S. Navy.

My 26 years of experience with the American Radio Association as a rank-and-file seagoing radio officer and six years as an elected official demonstrated to me the American Radio Association's commitment to democratic principles. The record will clearly show that Mr. Schalestock, Mr. John Leja, Walter Schultz, have also taken full advantage of exercising their right to participate in union affairs despite unsuccessful bids for elected office.

Allegations in the August 4, 1998 testimony about authoritarian control over ARA's membership are patently absurd. One question begs an answer. How does ARA, a small union, exercise authoritarian control over an ARA membership that is geographically dispersed throughout the United States, overseas, and on ships at sea.

Certainly, this is impossible to achieve with an ARA membership freely exercising its right to participate in union life and make their voices heard in union decisions. ARA's 50-year history speaks volumes to the freedom and democracy its members enjoy today.

These allegations, not unlike Mr. Schultz's far-fetched allegation of onboard accidents, is a product of his imagination. He says that you might fall overboard at night and your person never found until the next morning. I have never personally experienced any abuse of power of any kind, nor have I heard of any hint that any member has experienced, threatening or discriminatory action, because of political activities.

This Subcommittee may ask how does ARA respond to freedom and democracy in a membership that is geographically dispersed? Evolving over many years, ARA leadership responded to this challenge with the introduction of the Worldwide Union News broadcast which initially started in Morse Code and later on Telex over radio.

ARA encompasses ARA collective bargaining negotiations, general news of seafarer interest, the participation of negotiating committees for members, ARA Times school, class schedules, pension and welfare updates. And this broadcast is entitled the ARA Press, and in conjunction with its weekly transmission to all ships at sea, is mailed in e-mail to all ARA radio electronics officers at home each week.

Mr. Leja's testimony that he is overly sensitive to issues of personal freedom, integrity and honesty he associates with qualities seriously absent from the American Radio Association is a contradictory statement confirmed by his long, prosperous 30-year membership in the American Radio Association.

It also raises questions of his motivation and credibility, particularly since, after a 30-year membership, Mr. Leja has decided to freely file a pension application on July 10 of this year for his retirement effective September 1 of this year.

Mr. Leja's enviable retirement achievement is an acknowledged tribute to American Radio Association's only agenda over 50 years: simply to protect jobs and working conditions and provide a good pension and medical benefits for all its members. Mr. Leja's quality of retirement options succinctly highlights that fact.

John Schalestock's testimony that we would be going down for the last time as technology replaces us and an international treaty terminates our profession with the February 1, 1999 implementation date of the Global Maritime Distress and Safety System, is dishonest and untruthful.

The true facts disclose that through tough bargaining, ARA leadership has secured collective bargaining agreements with extended durations of one, three, and five years from the GMDSS February 1, 1999 implementation date with ARA's largest contracted companies.

Mr. Schalestock misrepresents the true facts to this Committee. The agreement he rails about was a sell-out was a result of nearly a year of tough, hard bargaining, including two work stoppages; and was ratified with a 60-day referendum by the membership on November 13, 1997. Mr. Schalestock is entitled to his opinion, but it does not give him a license to make unsupportable statements in the guise of fact.

Contrary to ARA's mandate to protect jobs and working conditions for its members, John Schalestock would like to convince this Committee of his titanic political philosophy that a referendum to terminate the union and distribute assets on an equitable basis would be the obvious and fair thing to do.

Mr. Schalestock ran for elected office on this political platform seeking to dissolve the union in two elections. And ARA membership, by a wide margin, rejected this political platform decisively in 1992 and 1996 elections.

The reason we are here today is because of John Schalestock's inability to accept the decision of the membership. By refusing to accept the decision of the ARA membership, Mr. Schalestock's principles and democratic values must be questioned.

Two facts disclose that Mr. Schalestock has worked under excellent contracts. He denounces union officials, plan trustees, employees of the Department of Labor as corrupt, however, without providing any factual basis for his outrageous denunciations.

Nevertheless, his freedom to speak his mind and present his ideas and opinions to this membership are the hallmarks of an open and democratic union. This cross-sectional diversity of views presented by John Schalestock, John Leja, and Walter Schultz bears witness to this Committee that ARA leadership throughout its 50-year history has been guided by two principles. One, all ARA members receive fair and equal treatment. Two, all ARA members are afforded the right to participate in union life to make their voices heard in union decisions, to support candidates of their choice in union elections, and like myself, to serve as elected officers.

In conclusion, Mr. Chairman, I wish to thank you and this Committee for the opportunity to provide insight into the American Radio Association commitment and dedication to safeguard all ARA member democratic rights. Thank you.

[The statement of Mr. Clegg follows:]



Chairman Fawell. And I thank you. There are so many areas here where one might have questions.

I would like to look at there are allegations here that there is a great deal of money being expended in terms of salaries of the officers. I gather, Mr. William Steinberg, you actually retired in the year 1992, is that correct?


Mr. William Steinberg. I retired in 1984.


Chairman Fawell. In 1984. And then there was a resolution passed in 1979 which created the position of President Emeritus to be occupied by yourself for life upon your retirement from the office of President whenever such event may occur, so the union shall continue to have the benefit of your counsel and your vision. Do you recall that resolution having been passed?


Mr. William Steinberg. It sounds familiar.


Chairman Fawell. Now, from the testimony that I have read, I gather you are a very active retiree. You have worked hard most of your life and I think you have trouble slowing down. But I gather you had indicated that you still worked 40 to 60 hours a week, and you still are the chief negotiator also, and you still are in basic charge of the pension plans and the welfare plans and education plans. Mr. Schuman, what do you do, since you are president emeritus?


Mr. Schuman. I do the exact same thing, but on a different level. I keep in touch with the different offices, I talk to any of the members who have any questions that can't be answered in the local office or through the dispatcher's office, and I try to handle all disputes of that nature.

Normally, on a day-to-day basis, the average member would go to the particular office where he had a beef. If he had a question on contract enforcement, he'd go to New York. If he had a problem on shipping, he goes to New Orleans. Then if they have a problem, then they would call me for what I thought. I keep in touch with these local officers on a daily basis.


Chairman Fawell. All right. May I ask this--maybe you don't have the information--but in 1984, what was the salary of the president?


Mr. Schuman. I don't recall at that time.


Chairman Fawell. The reason I--


Mr. Schuman. No, I--


Mr. William Steinberg. Mr. Chairman, if I may, the salaries of the officers of the union are limited to the highest amount received by a working radio officer aboard ship.


Chairman Fawell. And how much is that?


Mr. William Steinberg. And if in 1984, let's assume it was about $75,000 or $80,000 a year. That's what the office got.


Chairman Fawell. The reason I am asking this--


Mr. William Steinberg. And this year, the highest paid radio officer makes about $100,000 a year. And that's what the officers are limited to.


Chairman Fawell. Excuse me. Mr. Sapp, you seem to be jolted by that statement.


Mr. Sapp. Yes, I'd like to meet him.



Chairman Fawell. In your opinion, what is the average pay for a radio officer?


Mr. Sapp. Well, I'll tell you right now--


Mr. Payne. Mr. Chairman, are you asking for the average pay or the highest paid?


Chairman Fawell. Average pay or the highest pay.


Mr. Sapp. Our job dispatcher makes more than the average radio officer today. Her last salary was $43,000.


Chairman Fawell. Well, what is the average pay?


Mr. Sapp. I don't know. I don't know now because we took a forty-one percent pay cut with our premier employer. Assuming a man works, and is fortunate enough to get six months work, he is not going to get that, but maybe $40,000.


Chairman Fawell. All right.


Mr. Schuman. Mr. Chairman, may I?


Chairman Fawell. Let me just ask my question. I have a limited time here, too. I am bound by that clock.


Mr. Schuman. Well, they were asking about the wages. They know their wages. Leja in 1994 made $87,000; in 1995, $70,000; in 1996, $87,000; in 1997, $84,000. Mr. Sapp in 1994, almost $88,000; $71,000 in 1995; 1996, $90,000; and in 1997, $109,000.


Chairman Fawell. All right, thank you. That's helpful. But what I am looking at here is according to the figures that I have for the years 1994 and 1995. For instance, this is a relatively small union which averages maybe $600,000 to $800,000 in revenues, although in 1994, 1995, it was approximately $1 million. $225,000 went to Mr. William Steinberg, who was the retired. I don't have how much went to you, Mr. Schuman, or to the other officers, though.


Mr. Schuman. What went to me was a big zero. I received no wages, no salary.


Chairman Fawell. In 1994 or 1995?


Mr. Schuman. That's correct. 1994?


Chairman Fawell. This is for the year 1994-1995.


Mr. Schuman. I believe I was at the same rate the other officials were. I believe it was $100,000.


Chairman Fawell. $100,000?


Mr. Schuman. Yes.


Chairman Fawell. All right. I am told that it was $194,000.


Mr. Schuman. Are you referring to the union salary?


Chairman Fawell. Pardon?


Mr. Schuman. Are you referring to the union salary?


Chairman Fawell. I am referring to the combination of ARA and then all of the various plans that the total income to you was $194,000. And the total income to Mr. Edwin Steinberg was $245,000. The total income to Mr. William Steinberg was $178,000.

So the allegations have been made that there is special treatment for those of you who have been affiliated in officers' positions with ARA for a number of years. Any material that we can have, we will share with you the material we have. It was important for me to know what is the average income for a radio officer, but also I am concerned as to how much money is going out at the top.

But I have just a few more seconds, and you have more time to respond. And I guess I will come back to this. There is also a special office down there in Florida for Mr. William Steinberg which costs about $54,000 a year, according to our figures. I gather that at one time, there used to be nine offices throughout the country so that this widely dispersed membership had pretty good access to union halls. And that gradually dried up and you now have only one, in New York. It was in Maryland for a while, and then Arizona.

And you have now an office in New York, a small office in New Orleans, and then apparently, an office which Mr. William Steinberg operates. But I notice that there are a number of subleases also operating out of that office.

So I am going to stop now because I have gone over my time. But please understand, I don't feel comfortable putting these questions to anybody, but the allegations are that the officials are treating the union as a cash cow, as has been stated. We have to look at this carefully. This, along with other allegations that there have not been fair elections, is something that we would be concerned about. But at this point, I am going to turn the podium over to my friend from New Jersey, Mr. Payne, for his questions. I will be back, but there are other members that have some questions too.


Mr. Payne. Thank you very much. I think everybody ought to have the opportunity to try to perhaps set the record a little bit straight, and I just wanted to move to the first question. When the chairman asked, as it was indicated, that the president's salary is sort of commensurate with the highest paid worker, that question was then changed to the average salary.

If the salary of the president remains commensurate with the highest paid employee, then the average salary has nothing to do with it, in my opinion, unless average means highest there. I don't know.

Also, the Chairman has indicated that Mr. Steinberg's salary is $225,000. From what I understand, that includes the cost of the rent for the Florida office, rental of car, and so forth. That's like saying that our salary is about $135,000, but if you include your car, your office, your staff, you know, it probably goes into the millions. So that's like a person saying, Congressman Payne, you make a million dollars, don't you? No, I don't. Well, what about your car and your help?

So could you clarify this question about your salary and what is built into that number used by the chairman?


Mr. William Steinberg. I'd be delighted to. I have lived in Florida since approximately 1960, which is 38 years. And I was president of the union at the time. The union provided an office for me in Florida from which I conducted my business. I was on the union payroll and worked full-time until 1984 when I retired officially.

Now, this is what happened to our union. After the war, we had in the neighborhood of 1,500 radio officers, more or less. We had officers all around the country, in Seattle; San Francisco; Wilmington; California; Houston, Texas; New Orleans; Baltimore; Boston; New York. Each one was manned by a full-time official, and some of the offices had secretarial help.

As the membership started to go down, we didn't need these offices, so we closed one, then another, and another, and another. In certain cases, as our pension programs developed and they became what I would say substantial pensions, we had to close offices, so those officials who were very well qualified to conduct union business, we asked them to retire, take their pensions, and continue to provide services to the union.

That happened with Mr. Strichartz, who is deceased now, and Mr. Baird. It happened with myself. Fortunately, I am still around to answer the questions. But eventually, we had a core of retired radio officers, union officials, who were living off their pensions and provided the services to the union.

Now, there is nothing in the constitution of the ARA that prevents any radio officer from retiring and continuing to pay his dues and be a member. We call on these retirees from time to time in national emergencies, and they come out and sail the ships. Some of them like to take a trip once in a while and they are relief radio operators.

And just as Congressman Payne said, you can't average salaries. One man might want to make two trips a year, but we have full-time men aboard ship, full-time radio officers on American President Lines, Maxim Steamship Company, who make between $90,000 and over $100,000 a year.

Plus, in addition to that, these men get up to six months of vacation. Now in the case of Mr. Leja and his vacation, he also works ashore for certain companies as a technician, and he makes his salary from being a radio officer aboard ship and he also makes additional money from working ashore. So I don't know what he is making. He may make $200,000 or $250,000 a year. I have no idea what he is making, but it's none of my business.

But as far as union officials are concerned, they are limited, if they are not retired, to the highest amount that a full-time radio officer works aboard ship. And every retired union official that works for the union does not get paid, period. He has his pension, and that's it.


Mr. Payne. Well, thank you very much. That does kind of clarify issues. I was a little impressed by the salary that--what's his name? Yes, Mr. Leja. And that's just for half a year.

The other thing that is kind of surprising, Mr. Sapp, you didn't know when they read your salary, you said it was $40,000.


Mr. Sapp. I'm talking now. That was then; this is now.


Mr. Payne. What we are trying to do is get the facts straight. That's the only reason I asked the chairman when he was asking about the highest paid employee. It was clear to when Mr. Steinberg said the president makes a comparable salary to the highest paid employee.

The average salary has nothing to do with the highest paid person, in my opinion. And when you say your salary is $40,000, and we find that the record says it's $82,000, $81,000, $83,000, well, you say we are talking about a different time. So this is a kind of flowing, waving kind of discussion but I hope we can get a clear picture. It's just like saying your salary, Mr. Schuman, is $225,000. Well, they are talking about rent, they're talking about a car. And then the president doesn't get paid at all.

Your salary, Mr. Schuman, what is it?


Mr. Schuman. No salary at all.


Mr. Payne. Zero. So all we are trying to do is lay some of the facts out. I will stop because my time has expired.


Chairman Fawell. The gentleman from Missouri.


Mr. Talent. Thank you, Mr. Chairman. I have a couple of questions. I am struggling to grasp this volume of material, as well, so I will probably go from subject to subject here just regarding aspects of this that I find interesting.

Mr. Clegg, on the second page of your testimony you mention that there is a very popular maritime labor weekly news periodical. I take it that part of the testimony is in answer to the charge that the union discontinued this newsletter over time, so it is no longer informing people. Is that the point of that statement there?


Mr. Clegg. No, this broadcast goes out every week, weekly to ships at sea; and in conjunction with that, it is sent by mail distribution to people at home, or e-mail, depending on their request.


Mr. Talent. Okay. The point I am trying to make is that's the union's way of communicating with the members, is that the way?


Mr. Clegg. That's one.


Mr. Talent. There are others as well? Because one of the points that was made in some of the statements by some of the other witnesses was that over a period of time, the union stopped communicating with its members.


Mr. Clegg. Well, that's incorrect. In my recollection, I answer everybody's phone calls, e-mails, or what-have-you. In the case of Mr. Sapp and his allegation that I don't respond to his, I would like to submit here for the record some of the reasons. If he has claims, legitimate ones, he's been answered just like everybody else.


Mr. Sapp. No, I haven't.


Mr. Clegg. I will read you one of his.


Mr. Talent. Just read one or two of them, because I have questions in other areas. But, without objection, Mr. Chairman, may we submit that for the record?


Chairman Fawell. Yes.


Mr. Clegg. I will read this one here. It is an e-mail from Norris Sapp, and its subject is stupidity knows no bounds. It is addressed to Cleggstein, I assume that's me. "In case one of your stooges hasn't forwarded this to you already, here it is. You arrogant bastards are more incredibly stupid than I ever gave you credit for. The NLRB is going to rip your pricks apart."

So I answer all e-mails, I answer all correspondence, but I don't see any reason--


Mr. Talent. Sure. I can see why you might not get on the phone immediately and respond to that e-mail.


Mr. Clegg. Right. I just don't respond to these. So when he says I have a pile of these, and he calls it--I call it affectionately b.s., you can get a pretty good reason why.


Mr. Talent. Mr. Sapp, what about the existence of this weekly newsletter?


Mr. Sapp. Well, we have had, ever since I have been in the union, what is called the ARA Free Press. It is broadcast to ships at sea and it's mailed to your homes. But what that thing is, it's nothing but articles taken from the Journal of Commerce, just general maritime news. On rare occasions is there anything that actually pertains to our livelihood. The only thing that was ever in there is the past was when contracts were negotiated, the details of that. But 99 percent of that stuff is fluff.


Mr. Talent. Okay. Mr. Schuman and Mr. Steinberg, maybe you want to reply to this. When I was reading the other statements, it struck me as a problem and I'd like you to explain it, is the testimony about eliminating the branch offices of the union, going down to one branch which then moved around. And then also eliminating the union conventions.

First of all, did the number of branches go down from six to one?


Mr. Schuman. Yes.


Mr. Talent. Okay. And did you eliminate the quadrennial conventions after you merged with, what is it, the AMA?


Mr. William Steinberg. We were an international union and the constitution required conventions. When we merged with the Master Mason Pilots, we no longer required conventions. The Master Mason Pilots had conventions, and we participated in that.


Mr. Talent. Okay.


Mr. William Steinberg. And we disaffiliated from the Master Mason Pilots. We were still affiliated with the international of the International Longshoremen's Association, and we were issued a charter as a local. As a local, we are not required to have a convention.


Mr. Talent. Wouldn't it have been good to have one, though, so that people could at least every four years get together and--


Mr. William Steinberg. No, locals don't have conventions, really. They have membership meetings and they pass resolutions.


Mr. Talent. Did you really change the assignment rules at a meeting where there were only five people and they were students?


Mr. William Steinberg. No, sir, I don't recall that. When did that place? What is the allegation?


Mr. Talent. Well, I have so many of these. You've have more statements here than you have members of the union, I think. All right, find that for me, because I want to ask Mr. Sapp something and Mr. Schalestock.

It seems to me the strongest argument made on the other side of this, and we obviously have two sides of this, is that you and your ticket did run for union office on several occasions and you lost and you lost pretty overwhelmingly. And also, among a small union, it would seem to me that you could communicate directly with the members if you suspected fraud. If you thought that they just weren't counting ballots, wouldn't you just write to people and say, look, did you vote for me, because I only got 30 or 40 votes out of 175 or so, and then try and find enough people who voted for you that you could get the election overturned. Did you do that?


Mr. Schalestock. Mr. Talent, what took place was a situation that I would characterize as probably somewhat bizarre in the democratic process. We are a union that allows retired people to vote, but only if they have maintained themselves in good standing per our constitution.

That good standing requires that a retired member at that period of time pay $1,600 to the union for the privilege of casting one vote in one election every four years. Be that as it may. The LMRDA, as Congressman Ballenger read during the last hearings, specifically stipulates that a candidate may note the names of people voting. We have been repeatedly refused that right.

I submit that the names on those lists could and would prove to be the smoking gun for fraud and the election process from which all else flows.


Mr. Talent. Let me ask you this. Mr. Steinberg, have you been given the names of the people that voted?


Mr. Sapp. No.


Mr. Talent. I asked him. Let him answer.


Mr. Edwin Steinberg. Let me comment on that. The LMRDA requires that a candidate be able to examine the membership list. I don't know whether Mr. Sapp or anybody else has ever done that. It does not require that a copy of the membership list be given to the candidate.

Be that as it may, the ARA elections follow a very clear procedure. There is an elected ballot Committee. They check the membership list, they check eligibility. It's given to the Honest Ballot Association, who together with the balloting Committee, reviews the membership list. They count the ballots, they do all the things that are supposed to be done.

The Department of Labor, in both 1992 and 1996, investigated this allegation. I believe they took the names of the retirees, if memory serves me correct, and I said well, what are you taking them for. They said, well, we probably will call some of these people to see who they are.

Now, I don't know whether they did or they didn't. We don't get involved in that. All I can say is that the Department signed off on the election, they addressed all of the complaints, and they didn't find anything wrong.

My recollection is that I think there were 25 retirees who retained membership. If every one of them voted for Mr. Schalestock, he still would have lost the election, if every one of them voted the way he says they should have.


Mr. Schalestock. Mr. Talent, may I address that?


Mr. Talent. Well, it's all right with me, if the chairman and the ranking member don't mind. I am just trying to inquire on both sides and trying to get to the bottom of this, because you have raised the retiree issue, which I think you probably have a point.

But if the voting figures are correct and there was no fraud in that, then you lost overwhelmingly among the active members, which seems to me to bear on this, because if you had the opportunity to raise your points and they rejected it, then you raised the points and they rejected it.

So are you telling the Subcommittee that you think that the ballot totals did not accurately reflect the way that the active duty members actually voted? Do you think they voted for you and somehow they didn't count them?


Mr. Schalestock. Mr. Talent, let me read into the record that I personally, along with Mr. William Yerger, a candidate in a 1992 election, stood next to the Honest Ballot representative as he opened ballots and we counted as many as 25 consecutive ballots that were obviously marked with the same black felt tip pen.

However, Mr. Steinberg has continuously obfuscated this question of membership lists. The Department of Labor distinctly defines two different lists. The membership list, as he correctly states, may be observed, but not copied. The ballot list--and I will read you directly from the Department of Labor--the observer may note the names on those voting so that the candidates may be authorized to ascertain whether unauthorized persons voted in the election.


Mr. Talent. Mr. Steinberg, why don't you just give them the list? Is there a reason why you don't give them the list of the people who voted?


Mr. Edwin Steinberg. Mr. Schalestock could have been at the ballot count. My recollection is that he wasn't.


Mr. Schalestock. Mr. Schalestock was at the 1992 ballot count.


Mr. Edwin Steinberg. He's entitled to have an observer there.


Mr. Schalestock. Mr. Talent, I will say the Committee has before it an affidavit from the observer who was, in fact, the elected recording secretary of the balloting Committee who refused to certify the validity of the election because Mr. Steinberg refused to allow him to copy that ballot list.


Mr. Edwin Steinberg. May I respond to that?


Mr. Talent. Sure, you have the last word on this.


Mr. Edwin Steinberg. He is referring, I think, to a member of the ballot Committee who was one of his supporters. And this gentleman sat at the table with the ballot Committee and he was able to observe the list, he was able to observe the names of the people, he was able to check the ballots as the HBA did it. He was a full participating member of the ballot Committee.


Mr. Schalestock. That's disingenuous, sir. It says the observer may note, may note. The Department of Labor has determined that to mean copy.


Mr. Talent. And you weren't allowed to copy.


Mr. Schalestock. He was not, and he followed the Honest Ballot Association representative to the parking lot. She said, I will not give it to you, I am working for Mr. Steinberg.


Mr. Talent. Okay. Thank you, Mr. Chairman, I have run way over my time. I appreciate it.


Chairman Fawell. I appreciate the gentleman's questions. There is an awful lot that we have to look into. I am trying to settle in my own mind the amount of money that relatively few officials of the union are receiving, bearing in mind that there is a relatively small amount of money that the union gets, just in general.

But the resolution that was passed appointing Mr. Steinberg as president emeritus stated clearly that there should be no pay, that all expenses would be covered, but when and if he were to assume the President Emeritus, that there would be no pay given.

Well, obviously, that has been violated. I note that, Mr. Schuman, when you say that you are not charging the ARA anything for your work, you are, however, being paid salary and compensation, so much from the vacation plan, so much from the welfare plan. According to the figures we have here from the tax returns indicating in 1993, you got $186,000; and in 1994, $194,000; in 1995, $178,000; and in 1996, $176,000.

Theoretically, yes, you were working for free as far as the ARA is concerned, but still doing all right.


It is one of those questions that, like the President said, well, you didn't ask the right questions. I guess I didn't ask the right questions.


Mr. Schuman. May I try to explain that? Number one, I am 76 years old. Under the IRS regulation, once you reach 70 and a half, you are required to draw your pension. It makes no difference if you are working. That is a required minimum distribution. I come under the law like everybody else. So, in addition to my salary, I receive a payment from the pension plan, which is a statutory requirement.


Chairman Fawell. Well, this is all marked as "compensation." This is not an indication of an obligation to take, but at the age of 70-and-a-half, you must begin to draw down on your pension, yes?


Mr. Schuman. Correct.


Chairman Fawell. This is not in reference to that.


Mr. Schuman. Well, somebody's wrong--


Chairman Fawell. This--


Mr. Schuman. I don't know where it--


Chairman Fawell. It lists--


Mr. Schuman. I have W-2s--


Chairman Fawell. It lists that you're receiving compensation from the vacation plan, that you're receiving compensation from the welfare plan. It indicates--


Mr. Schuman. I beg to disagree, Mr. Chairman.


Chairman Fawell. Well, we shall look into that. It's classified as salary and pension. Expenses are a total of $504 during that year.

But, my point, of course, has been that we also have Mr. Edwin Steinberg receiving relatively large sums over that period of time as an attorney, though. You're not employed by the union, I assume that. So, you're rendering legal fees. But, to the membership it does appear that--to the membership--that you're all doing, you know, okay.

Now, let me--and we'll be glad to go over these figures and if any of these numbers are simply you drawing your pension--you know, that's not income. I mean, you may have to pay a tax on it but it's not income for work that you're doing now and I would--


Mr. Schuman. There is no question, Mr. Chairman. I have to pay a tax on it.


Chairman Fawell. Yes. Now, it does not appear to me that that's the situation here but I am willing to be educated on that.

Let me get, however--not only, Mr. Steinberg, you are indeed contrary to the resolution passed in 1979 receiving pay for your services. This is not to say they aren't valuable services--


Mr. William Steinberg. No, that's not the point.


Chairman Fawell. --but it does seem to be the contrary to the present President of America's resolution passed in 1979. But, in addition, you have a private office down there for your use whereas the union has closed a number of very valuable offices around the Nation because they, allegedly, can't afford that, which makes it very, very difficult for these people who are out in Seattle or San Francisco or Boston or Houston or New Orleans. It's very tough for them to get to Maryland for an important vote.

And, indeed, I understand that a quorum is five members out of 165 or some and you have to have one member of the council included in that so that the stories have been that you'll have a meeting and, if nobody from the council shows up, everybody goes back to San Francisco, Houston or where else and so, it's a difficulty that you don't have these offices. But, there is an office and then we have information that indicates that there are sublessees--one being the Four Freedoms House of Miami Beach, which, I believe, is a foundation for senior citizens. It's serving housing--


Mr. William Steinberg. That's right.


Chairman Fawell. --for its senior citizens. I'm assuming that's a not-for-profit corporation.


Mr. William Steinberg. It's a not-for-profit--


Chairman Fawell. I gather the union is interested in that--


Mr. William Steinberg. Right.


Chairman Fawell. Now there's a Prudent Property management entity and then there are the law offices of Mark Hildebrand. You do appear to be a director on each of those corporations, not in the law office of Mark Hildebrand. But, could you explain, are these rentals being paid for these people who are subleasing there? And if so--


Mr. William Steinberg. I'm subleasing from them.


Chairman Fawell. You're subleasing from whom, then?


Mr. William Steinberg. From Prudent Property.


Chairman Fawell. They are the landlord?


Mr. William Steinberg. Yes, they are the landlord.


Chairman Fawell. I see and--


Mr. William Steinberg. And I have an office--


Chairman Fawell. --so--


Mr. William Steinberg. --for which we pay rent and secretarial services--


Chairman Fawell. I see.


Mr. William Steinberg. --and telephone.


Chairman Fawell. And what is the rental, then? Well, our figures are that's about $54,000 a year to maintain that office.


Mr. William Steinberg. Yes, approximately $30,000, $32,000 a year for secretarial services including benefits for the secretaries. Then, there's telephone, faxes--


Chairman Fawell. We do have the figures here, at least--


Mr. William Steinberg. --appliances--


Chairman Fawell. --for 1995 through 1997, indicating for 1997 it was $31,000, in 1996 it was $52,700, in 1995 it was $49,719 according to the LM forms, I gather. But the--


Mr. William Steinberg. That's not any pay of any kind--


Chairman Fawell. No, I understand but it's the cost for operating the office--


Mr. William Steinberg. That's office expenses, car money and whatever other expenses I may have but we may have some people come into Florida--


Chairman Fawell. Yes--


Mr. William Steinberg. --for a meeting, I may take them to dinner--


Chairman Fawell. Yes, yes.


Mr. William Steinberg. --and charge for dinner--


Chairman Fawell. But, that is twice as much as the cost of operating the New York office, isn't that correct?


Mr. William Steinberg. I am told that the cost of operating the New York office is $27,000 a year.


Mr. Schuman. I don't know what the cost of operating the New York office--


Chairman Fawell. Those are the figures we have, at any rate.


Mr. William Steinberg. I perform a service for the union for the membership. The National Council has designated me as chief contract negotiator. In 1994, when the complainants here, Mr. Sapp and Mr. Leja and Mr. Schalestock, et cetera, were saying that we would never get a contract from American President Lines and that all the men on the ships were prepared to get off the ships. I spent untold numbers of hours in negotiations--days, nights, weeks--and finally achieved the contract which saved jobs on 23 ships.

Now, let's take a look at what this means.


Chairman Fawell. I don't question the abilities you have and that you have not rendered services; I'm only bringing out the fact that you are retired but you are being paid substantial sums of money from the ARA.


Mr. William Steinberg. I'm not being paid substantial sums of money. They're paying expenses.


Chairman Fawell. Well, the compensation is $108,000 for 1994 and the expenses are $69,000, according to your tax returns--the corporation tax return--the union tax returns, I mean.


Mr. William Steinberg. One period of time, during 14 years, the ARA National Council says, look, you're all doing a superhuman effort on behalf of the membership with negotiations, you're spending a lot of time, we think you should get a consultant's fee.


Chairman Fawell. Yes.


Mr. William Steinberg. And that's where that $108,000, I believe, came in.


Chairman Fawell. Yes, I'm sure that money--


Mr. William Steinberg. During the 14 years--


Chairman Fawell. My point is--


Mr. William Steinberg. --that was the one point--


Chairman Fawell. --simply that all of you are being paid relatively handsome sums of money. At least it appears that way to the membership and it does not appear to me that because you're retired, you're not charging. And, at the same time, Mr. Edwin Steinberg, is also as counsel receiving good compensation there, too. I'm not saying that it isn't excellent legal services.

But, in a union where communications aren't good to begin with, at least, some of the members, and it's hard to get these figures, there can be a lot of misunderstanding, that information doesn't flow. It would seem to me, Mr. Steinberg, when somebody wants a list of the membership, for goodness sakes, give it to them. Why, in any way, be reticent about something like that? I'm not saying that everything that was testified to on August 4th is--


Mr. Schalestock. Mr. Chairman?


Chairman Fawell. --the absolute truth but, I think you then are casting a cloud upon the situation that people can, indeed, wonder about that.

Yes, Mr. Schalestock?


Mr. Schalestock. Mr Chairman, with all due respect to Mr. Steinberg who has been an icon in this industry for many years, I would like to point out that this contract that he negotiated has resulted in a forty-one percent pay cut for the rank-and-file and, among other outrages, includes two phrases in the contract, one of which is that work duties will now include "and any other jobs as so designated by the company."

Mr. Chairman, what that really means in our environment is this: this is almost the literal equivalent of the Speaker of the House redefining your job to include janitorial duties after the hearings are over.


Chairman Fawell. Yes.


Mr. Schalestock. If I were Mr. Steinberg, I would not be very proud of negotiating a contract like that, which, in addition, eliminates the severance pay for men losing their jobs to be redirected to funds and trusts and other funds to be so designated. In other words, a black hole totally controlled by the incumbents.


Chairman Fawell. All right. I--


Mr. William Steinberg. Mr. Chairman?


Chairman Fawell. I'm going to--


Mr. William Steinberg. Mr. Chairman?


Chairman Fawell. --turn the podium over to--


Mr. William Steinberg. Mr. Chairman, if I may? I'd just like to respond to that.


Chairman Fawell. Yes.


Mr. William Steinberg. The contract that Mr. Schalestock is referring to was sent out to the membership in a referendum and the vote in favor of that contract was 149 to 19--


Mr. Schalestock. Twenty.


Mr. William Steinberg. Nineteen votes against that contract--


Mr. Schalestock. And who counted the votes? Who counted the votes, Mr. Steinberg?


Mr. William Steinberg. Mr. Chairman--


Chairman Fawell. Well, it does appear to be a wide margin there, unless there's a complete fabrication.

Mr. Steinberg, may I put one more question to you? We have information about these following entities and, if you could clear up for me just how they are connected, if at all to the union, I would appreciate it: the Wilston Enterprises. Is that--


Mr. William Steinberg. Who?


Chairman Fawell. Wilston Enterprises.


Mr. William Steinberg. Wilston Enterprises.


Chairman Fawell. Does that mean anything to you? Or, Mr. Schuman, to you at all?


Mr. William Steinberg. No, that's not Mr. Schuman.


Chairman Fawell. All right. Now, the Four Freedoms House of Miami Beach--


Mr. William Steinberg. Yes.


Chairman Fawell. You are aware of that. The Four Freedoms National Medical Health Services, you are aware of that?


Mr. William Steinberg. National Medical--yes, that's a defunct corporation.


Chairman Fawell. Yes. What about the President Madison Corporation?


Mr. William Steinberg. That was a hotel that was purchased by a coalition of unions and then was sold about four or five years after they bought it and it was for union retirees. And, the ARA did not provide any funds for that.


Chairman Fawell. When it was sold, didn't the ARA receive any money?


Mr. William Steinberg. No, none whatsoever.


Chairman Fawell. How about the National Communications Consultants?


Mr. William Steinberg. Who?


Chairman Fawell. The National Communications Consultants.


Mr. William Steinberg. I have no idea what that is.


Chairman Fawell. Mr. Schuman, are you familiar with that at all?


Mr. Schuman. No.


Chairman Fawell. Mr. Edwin Steinberg?


Mr. Edwin Steinberg. Never heard of it.


Chairman Fawell. And, Mr. Clegg, never heard of it?


Mr. Clegg. Never heard of it.


Chairman Fawell. Right. I thank you. You may--


Mr. Payne. You yield back the balance of your time? Let me just ask a couple of questions. Mr. Clegg, are there scheduled meetings monthly for the union?


Mr. Clegg. Yes, there is. They're held out at Kinks Point.


Mr. Payne. Are they monthly or bimonthly?


Mr. Clegg. They're once a month, usually the first Tuesday.


Mr. Payne. Mr. Schalestock said that there is no communication, that people don't know what's going on. Do they know about this meeting that they can come to?


Mr. Clegg. Well, they will because the next meeting or the collects class starts, I believe, October 6th. However, with the last one, I wasn't even aware of it myself.


Mr. Payne. Okay.


Mr. Clegg. I hadn't received any information about it.


Mr. Payne. I'm just trying to get back, then, also to the--


Mr. Clegg. Why don't you sit up here, Mr. Leja?


Mr. Leja. I will.


Mr. Payne. He was here last time so we're accustomed to him. Mr. Schalestock, I get the drift that you feel the election was stolen from you. You really won but, in your opinion, votes were taken away. Do you feel that you, in your opinion, won and they stole it?


Mr. Schalestock. In my opinion, Mr. Payne, it is impossible under the circumstances to even consider a democratic process. I'm mindful that this Committee is interesting in examining impediments and I submit to you that what's been demonstrated here are direct violations of the LMRDA, granting me or an observer to note--that means copy--the list of people voting on two separate occasions. It creates an insupportable cloud of suspicion over the integrity of the union.

But, Mr. Payne, I would like to compliment you on pointing right to the crucial question earlier on in your statement there when you requested to know if we were talking about average salary or top salary. I will report to you that, even as recently as three months ago, I had to solicit a collection for a fellow union brother who was destitute because he couldn't get work.


Mr. Payne. Well, I--


Mr. Schalestock. And, if you want to talk average salaries, I challenge this panel to examine the average salary compared to the salaries or the compensation that the incumbents are receiving.


Mr. Payne. Okay. Well, I noticed here that you've actually complimented the union's management of the health care plan at one time and you feel that, at least, is adequate, I assume, since you did compliment them.


Mr. Schalestock. That was then, this is now. We now have a six-month backlog of claims being filled.


Mr. Payne. Okay. You know, there were a couple of elections I didn't win either. But, your feeling is that something wrong was done.

Well, as you know, in the last decade it was not uncommon for labor to take a beating. I mean, your W-2 tier, the ILA is talking about having different starting salaries now than what their high salaries used to be, all unions are giving back, that's been the trend. Not to make that a major issue, but what happened, evidently, in this contract was not anything different that was happening all around--


Mr. Schalestock. I beg to differ, Mr. Payne.


Mr. Payne. --well, let me just--


Mr. Schalestock. It's not fair--


Mr. Payne. --finish because it seems, if you're going to win an election, you've got something to offer people. If the people, evidentially, seem to reject this because of trends that are going on in labor in general--it's not uncommon--that labor's been taking a beating. I mean, that's been the way of the 1980's. That's why wages have stayed low and CEO salaries have gone through the roof, so--not to defend the union, you know, they can defend themselves. But, the arguments that you make to me wouldn't necessarily seem to have changed anyone's thinking.

There was an allegation by the gentleman on my right that the union has made poor real estate investments throughout the country. Is there any truth to this allegation? Maybe Mr. Clegg, you could answer that?


Mr. Clegg. I'm sorry. I didn't hear that question.


Mr. Payne. Regarding real estate investments, it was alleged at the previous hearing that the union made poor investments in real estate.


Mr. Clegg. I have no knowledge about that.


Mr. Payne. Well, there were some allegations about the union's involvement with some senior housing or some HUD project.


Mr. Clegg. I think that question could be best answered by Mr. Steinberg.


Mr. William Steinberg. Mr. Chairman?


Mr. Payne. Yes.


Mr. William Steinberg. I'm involved in the Four Freedoms non-profit Corporation in senior citizens housing. The ARA has never invested any money in any real estate ever. Not one penny have they ever invested in real estate. The ARA has never paid any money to any of the non-profit corporations that were established to provide senior citizen housing.

These corporations were set up by unions, such as the Auto Workers, the Steel Workers, the Electrical Workers, the Potters and under the Housing and Urban Development, just like other non-profit organizations, churches, synagogues, other trade unions, they sponsored non-profit housing under legislation.

We did that service for our union people and for retirees of the communities where these houses were being built. Now, this is a service that we provided as a union.


Mr. Payne. Yes.


Mr. William Steinberg. We participated in the community. We did build these houses but no union has ever invested one penny. This is one-hundred percent Housing and Urban Development financing.


Mr. Payne. I understand. I have some UAW housing like that in my district.

I also have a question about this $1,000 per member special assessment. Did the members vote on whether or not to approve this one-time special assessment of $1,000 or was that just put on them?


Mr. Schuman. It was a referendum vote of the membership.


Mr. Payne. Okay. And, I believe there was a disagreement with the NLRB being on this issue. Can you tell us about that situation?

Mr. Edwin Steinberg. What happened in that situation was that the union in the NLRB had conflicting viewpoints of what that assessment was. It was the union's position that was really dues because it was used strictly for collective bargaining contract enforcement. The NLRB took the strict position that because it was called an assessment, you could not deny a member the right to register on the hiring haul list for non-payment of that.

When we looked at the case law, assessments were concerned with burial funds and things of that nature. There were some cases that although not directly on point, supported our position and the board disagreed. In any event, they issued a complaint based on Mr. Ristad's charge and during the course of our discussions with the board we agreed to settle it on the basis that the union would not admit that there was any wrongdoing--because there was no wrongdoing--and that notification would be given as required by the NLRB.

They require that two members be reimbursed for money. That was Mr. Ristad, who was the charging party, and Mr. Sapp. The reason that no other members received that was because the statute of limitations had passed and the board's determination was that these were the only two members who were entitled to get the money back.

In complying with the settlement, we notified Mr. Ristad that he could apply and get the money refunded and he refused. He didn't want to get his money back. Mr. Sapp was the only member of the union who received the money back. One or two gentlemen may have filed charges with the board because they misunderstood the nature of the settlement agreement and they filed charges with the board, saying that they also wanted the money back. But, the board would not issue a complaint because the determination was that they had been out of time, the statute of limitations had passed.


Mr. Payne. And, did you send out--


Mr. Edwin Steinberg. And, then they--


Mr. Payne. Go ahead--did you send out a notice required by the settlement agreement with the NLRB?


Mr. Edwin Steinberg. Yes, yes. We had the dispatch office compile a list of all members who were advised that they could not be registered on the list unless they paid the assessment. I don't remember how many members it was. I counseled the secretary/treasurer's office to prepare a mailing list and send those notices out, which, as far as I know, this was done.


Mr. Payne. First, let me just--I don't know if there will be another round--but I certainly, Mr. Steinberg, I'm a member of AARP and that's the, you know, group that looks out for senior citizens, retired people. I'm in that age category where I qualify and I just hope that if I'm your age that I wouldn't be brought before a group fussing about how much I'm making. You seem very sound and able and I would--let me know what kind of tonic water you drink so I can start taking it myself.



Mr. Payne. I think it's only in America where people can continue to perform according to their ability and I compliment you.

I just have a question for Mr. FawellCan you tell us who the groups are that you asked Mr. Steinberg and Mr. Schuman about? And, I'd also be particularly interested in what is their relevance to this particular situation?

I think that we need to be sure that we have everything here correct, since people are under oath. I'd to make sure the witnesses are fully aware of what the questions were in the interest of balance and fairness.


Chairman Fawell. Well, each of those corporate entities, I am informed, had their address of registration at the address of the union in Miami Beach and in their--I've just been going over some of these. Some are not-for-profit, some are for-profit.

The Four Freedoms Services, Inc., for instance, is a for-profit corporation and although no one seemed to be aware of it, I notice that William Steinberg is one of the incorporators. In the ninth clause, one of the three directors is William Steinberg, along with Phillip Saul and a Harry D. Stone. So, apparently, your memory--


Mr. William Steinberg. Let me explain that, Mr. Chairman.


Chairman Fawell. So, I'm not--


Mr. William Steinberg. We have Four Freedom Services--


Chairman Fawell. --trying to insinuate anything. I'm just trying to understand why these different corporate entities all seem to be officed at the same address and we wanted to find out--


Mr. Payne. Then why don't you let him explain it? I mean, you've certainly been dwelling on that for quite a bit and you don't want to insinuate but you keep bringing it up and they want to explain it to you. And, you say, well, no, I'm just, I don't want to insinuate. Well, then, let them explain.


Chairman Fawell. Are you through?


Mr. Payne. You know--


Chairman Fawell. I'm just--


Mr. Payne. You seem to be pretty--


Chairman Fawell. --trying to ascertain--


Mr. Payne. --cogent right now--


Chairman Fawell. --what connection. Now, the last answer I had is nobody ever heard of this. Now, evidently, you are connecting--


Mr. Payne. I didn't say I didn't hear of Four Freedoms--I didn't hear--


Chairman Fawell. Well, now, I listed every one of these and--


Mr. Payne. Well, Four Freedoms was not one--


Chairman Fawell. --Mr. Steinberg, Senior--


Mr. Payne. --that Mr. Steinberg said that he didn't know about--


Chairman Fawell. --Mr. Schuman and Mr. Edwin Steinberg said they had no connection and knew nothing about it.


Mr. Payne. Well, but--


Chairman Fawell. Well, all right. Memories can be--


Mr. William Steinberg. I don't believe anybody said that.


Mr. Payne. No, I don't either.


Chairman Fawell. Well, I can go back to the record--


Mr. William Steinberg. I don't believe when I said that--


Mr. Edwin Steinberg. May I just say what I was responding to, for the record? What I was responding to was whether I knew anything about National Communications whatever it was.


Chairman Fawell. Right.


Mr. Edwin Steinberg. That was the corporation that I believe I was asked if I was familiar with--


Mr. Payne. Right.


Mr. Edwin Steinberg. --and my answer to that was, no, I have no familiarity with that corporation.


Mr. Payne. That's right. That's what I heard.


Mr. Edwin Steinberg. I believe that's what the other witnesses were expressing their answer to.


Chairman Fawell. All right. Well, then, what about Four Freedoms? That's a for-profit corporation--


Mr. William Steinberg. This was a complex of offices--


Chairman Fawell. I gather--


Mr. William Steinberg. --that were where my union office was and we paid rent and expenses as part of the office. We did not have a lease. The ARA never had a lease there. Now, this Four Freedoms Services, of which Phillip Saul was involved, was a for-profit pharmacy that was opened in Miami Beach and I was part of that corporation. That pharmacy was open for about a year and then went out of business. It has nothing to do with--


Chairman Fawell. But, it's corporate address was the same as the--


Mr. William Steinberg. It has nothing to do with the union.


Chairman Fawell. It's corporate address was the same as the union office address, though.


Mr. William Steinberg. That is correct. There was just a sign that that's where their office was.


Mr. Sapp. Mr. Fawell, could I make one comment about that office?


Chairman Fawell. Yes.


Mr. Sapp. Mr. Steinberg had that office for years and one of our members actually pedaled a bicycle up there and went up into this building and the name ARA didn't appear on the door until he complained to the union.

I also might add the only time I have ever seen that address in print was in the last week's ARA press where they just talked about contract negotiations with Madison that were being held at this office. That's the first time we've ever had any knowledge that that office has been used for union business.


Chairman Fawell. Let me just say, and then I'll leave this topic, is that National Communications Consultants, Inc.has one of the directors listed as Edwin Steinberg. You said you've never heard of it?


Mr. Edwin Steinberg. Never heard of it. National Communications Consultants?


Chairman Fawell. Well, they've got you down here as a director.


Mr. Edwin Steinberg. I've never heard of it.


Chairman Fawell. Along with--


Mr. Edwin Steinberg. I mean--


Chairman Fawell. --Mr. Joseph Andrew and Patrick Arts. Perhaps as an attorney, you just threw your name in there as you were forming the corporation?


Mr. Edwin Steinberg. Where was this incorporated?


Chairman Fawell. Florida.


Mr. Edwin Steinberg. All I know--I remember--


Chairman Fawell. Now, I've practiced law many times. I'll go in as a director--


Mr. Edwin Steinberg. Yes, I remember about 10 years ago I got a call. I was in Miami because I had an apartment there and I got a call about 3 o'clock in the morning and a female was berating me, wondering where I was. It wasn't my wife and--


Chairman Fawell. I'm not sure if this is relevant.


Mr. Edwin Steinberg. --I said, ma'am, I don't know what you're talking about. She said, are you Edwin Steinberg? And I said, yes, I am. She said, are you an actuary? I said, no, I'm a lawyer. She said, oh, I'm sorry, and she hung up. So--


Chairman Fawell. So, you haven't known--


Mr. Edwin Steinberg. I've never heard of the company--


Chairman Fawell. So, you don't know--


Mr. Edwin Steinberg. --and I've never heard of the two gentlemen who are the directors of that company, along with Edwin Steinberg.


Chairman Fawell. All right. Well, we'll leave that horse right there, right where it is.

All right. One more point. Mr. Watchtell, Mr. Steinberg, if you have a plane to catch, I would have no problem if you wanted to--


Mr. William Steinberg. My flight is at 5:25 and it's now 10 minutes to 5:00. Do you think I could get to the airport in time?


Chairman Fawell. It's not impossible.


Mr. William Steinberg. Okay, I'll try. Thanks very much.


Chairman Fawell. All Right, and thank you for taking the time--


Mr. William Steinberg. If you need anything--


Chairman Fawell. --and then going through all of this--


Mr. William Steinberg. --we'll be glad to respond.


Chairman Fawell. A Mr. Watchtell, who was a member of the ARA, alleged that the ARA National Council, in October of 1997, attempted to ratify a significant amendment involving assignment rules at a union meeting at the union's school in Scottsdale, Arizona when only five students were in attendance. Now, do any of you have any knowledge of this?

And, I understand that, even though one of the students objected to the passage of the resolution, it was nevertheless passed on the basis of that was a quorum.


Mr. Schuman. Well, Mr. Chairman, I think Mr. Watchtell is referring to is the amendment of the 120-day shipping rule.


Chairman Fawell. Yes.


Mr. Schuman. We have a serious problem in the organization relative to the "haves" and the "have-nots." The "haves" want everything their way but the position of the union is that those jobs belong to everybody. Mr. Thomas just says he was present at that meeting, too.


Chairman Fawell. Was the resolution passed with only five members present?


Mr. Schuman. The quorum for a membership meeting is four members plus an official. A quorum was present. Under the constitution, we are required to hold the meeting bimonthly. The first Tuesday and the third Tuesday of every month, which was done. But, not only was it held at that meeting but three consecutive meetings voted on it to make sure that there was a balance of members who were in favor of it.

The original reason that this particular amendment came up was because we were having a particular, critical situation with the men on the ships staying on just below the 180 days. Under the shipping rule, you could stay on a ship 180 days. Let's say you stood 175 days. Then, you got off for one trip, 35 days. You would still be banking when you left the job with almost six months of work that belonged to somebody else.

So, what we've done, which is as a result of discussions at several membership meetings prior to the motion being sponsored and as a result of membership discussions to the dispatcher through Mr. Clegg's office for a general consensus--and our consensus was that instead of 180 days after January 1, 1998 when that man got off for vacation, he had to take all the vacation that he was entitled to--


Chairman Fawell. I'm not so much interested in--


Mr. Schuman. Well, these are the facts--


Chairman Fawell. --the merits of it. I'm interested in the fact that it was actually passed with only five people in attendance at the only office that you had in the entire country, which, obviously, would be rather difficult for people to attend. And, that's all I wanted to establish.


Mr. Schuman. Mr. Chairman, as you are well aware, our membership is geographically situated throughout the United States. It is very difficult to bring together four or five people from Oklahoma, California to attend a membership meeting and, when we have our school facility where the members are in attendance, we take time out and--


Chairman Fawell. Have you considered mailing secret ballots?


Mr. Schuman. Yes, but there is nothing like a discussion where you have the members who are present--


Chairman Fawell. All five--


Mr. Schuman. --they can ask questions. We thought it serious enough to have it at three meetings.


Chairman Fawell. Okay. In other words--


Mr. Schuman. You don't take every issue--


Chairman Fawell. They were students at the school on top of that?


Mr. Schuman. What was that?


Chairman Fawell. They were students at the school, too?


Mr. Schuman. That's what I'm talking about. They were--


Chairman Fawell. These were not the--


Mr. Schuman. --in attendance at the meeting.


Chairman Fawell. These were not the veterans of the union or anything.


Mr. Schuman. Whatever students are available at the membership meeting constitute the quorum.


Chairman Fawell. All right.


Mr. Schuman. Otherwise, we would have not.


Chairman Fawell. All right. Well, thank you--


Mr. Schuman. These students--


Chairman Fawell. Again, I--


Mr. Schuman. --are members, too, just like everybody else.


Chairman Fawell. Yes, I know.

All right. I think that we've beaten this horse pretty enough. I appreciate everybody being here. Again, we're not going to settle things to the complete satisfaction of anyone as to who is right or who is wrong, but I do think that we all can agree that there are some corrections in regard to the Landrum Griffin law that should be able to be helpful, so that more people can be assured that the rights of the rank-and-file, even the minority, are getting some types of consideration.

But, with that, I think I will declare the meeting--


Mr. Payne. Mr. Chairman, before you adjourn--


Mr. Schuman. Mr. Chairman?


Mr. Payne. Mr. Chairman, before you adjourn--


Chairman Fawell. Yes, just one moment. The gentleman from--


Mr. Payne. But, I'll yield, Mr. Chairman. Yes, go right ahead.


Mr. Schuman. Yes, in reference to the salary which you discussed for me, the administrator of the ARA plans was here and he said, these figures are a combination of salary as administrated plus the value of the contributions made to the ARA funds by the welfare plan, then allocated to the various plans.


Chairman Fawell. So, you were receiving salaries?


Mr. Schuman. I was--yes.


Chairman Fawell. I thought you'd indicated you were rending services for no salary.


Mr. Schuman. I was the administrator until February 28 of 1998.


Chairman Fawell. Well, these are for the years up through, what, 1997. Each year you have been receiving a salary for your work.


Mr. Schuman. Yes.


Chairman Fawell. But, I thought you had said and testified that, as a retired person, you were--


Mr. Schuman. I just said that.


Chairman Fawell. You were--


Mr. Schuman. Mr. Chairman, I am not retired. I am an active member who, under the IRS regulations, must draw this pension. And, this is what I do.


Chairman Fawell. Well, excuse me, I thought you had said, though, you were charging no salary--


Mr. Schuman. That is correct.


Chairman Fawell. --at the present time--


Mr. Schuman. After September--after February 28 of 1998, the planned facility relocated to New York City. At that time, I left my job as administrator and my assistant became the administrator by vote of the trustees of the plan.


Chairman Fawell. And that--


Mr. Schuman. Since that time--


Chairman Fawell. That was when?


Mr. Schuman. February 28.


Chairman Fawell. Of?


Mr. Schuman. 1998.


Chairman Fawell. 1998.


Mr. Schuman. Since that time, I've been functioning just about full-time as a union president.


Chairman Fawell. All right.


Mr. Schuman. Without salary.


Mr. Payne. All right. Mr. Steinberg?


Mr. Edwin Steinberg. Just a housekeeping matter. We'd like to have Mr. Schuman's statement made part of the record.


Mr. Schuman. Fine.


Chairman Fawell. Yes. No, his entire statement will be--


Mr. Edwin Steinberg. The entire statement--


Chairman Fawell. --in the record, yes.


Mr. Edwin Steinberg. And, attached is a statement from John Linder, who is the administrator of the ARA.


Chairman Fawell. Yes, without objection, that will go into the record.


Mr. Payne. Mr. Chairman, I have some letters that have been written from members of the union in support of the union and I would just simply like to add them to the record.


Chairman Fawell. The hearing record--


Mr. Payne. Is that--


Chairman Fawell. --will remain open for 30 days to allow additional information to be added and, before submitting the rank-and-file letters received by the Subcommittee to the public record, I want to be particularly cautious to provide ample opportunity to anyone to notify the Subcommittee in writing that they do not wish to have their correspondence in the public record. In the absence of such written notice, all rank-and-file letters received in response to my September 4, 1998 letter, as well as all unsolicited correspondence, will be placed in the public record.

I'd add to that, too, Richard Thomas is here today, a rank-and-file member, and would like to make a statement. But, I think we would simply accept a written statement from him.


Mr. Schalestock. May I make one last comment?


Chairman Fawell. Yes.


Mr. Schalestock. Mr. Steinberg made a big issue in explaining the NLRB assessment process. I would just like to submit to the Committee that he stated, "and it is true that they made no effort to return this money to the membership from which it was extorted under threat of not being allowed to work." I submit that this is an example of the type of "good faith" union administration we have been living under and to Mr. Clegg, who has called me a liar, I forgive you.


Chairman Fawell. And, on that note, the meeting is adjourned. Thank you.

[Whereupon, at 4:59 p.m., the Subcommittee adjourned subject to the call of the Chair.]