Serial No. 106-63


Printed for the use of the Committee on Education

and the Workforce
















The Subcommittee met, pursuant to notice, at 10:34 a.m., in Room 2175, Rayburn House Office Building, Hon. John A. Boehner [chairman of the subcommittee]presiding.


Present: Representatives Boehner, Ballenger, Goodling, McKeon, Hoekstra, DeMint, Andrews, Kildee, Payne, and Holt.


Also Present: Representatives Graham, Miller, Woolsey, and Brady.


Staff Members Present: Robert Borden, Professional Staff Member; Becky Campoverde, Professional Staff Member; Amy Cloud, Staff Assistant; Lauren Fuller, Professional Staff Member,; Rob Green, Professional Staff Member; Peter Gunas, Professional Staff Member; Mark Rodgers, Workforce Policy Coordinator; Deborah Samantar, Office Manager; Kevin Talley, Staff Director; Gail Weiss, Staff Director; Cedric R. Hendricks, Deputy Counsel; Peter Rutledge, Senior Legislative Associate/Labor; Marjan Ghafourpour, Staff Assistant/Labor; Brian Compagnone, Staff Assistant/Investigations; Cassandra Lentchner, Special Counsel/Investigations; Gregory Jefferson, Counsel/Investigations; and Patrick Dugan, GAO Detailee.



Chairman Boehner. Good morning. A quorum being present, the Subcommittee will come to order. We want to welcome all of our guests here this morning, especially our witnesses. We appreciate all of you taking the time to come and participate.

Under Rule 12(b) of the Committee rules, any oral opening statements are limited to the Chairman or Ranking Minority Member, which will allow us to hear from our witnesses sooner and help members to keep their schedules. If other members have statements they wish to submit, they will be included in the hearing record. And without objection, all members' statements will be inserted into the record.

This is our third hearing this Congress in a series on union democracy, and our seventh hearing in the past two years. Our review has made it clear to me that the federal law intended to protect the democratic rights of rank-and-file union members the Labor-Management Reporting and Disclosure Act of 1959, or most commonly referred to as the Landrum-Griffin Act needs strengthening.

The intent of Landrum-Griffin is to empower union members so that they can regulate themselves. By ensuring honest elections, access to financial information, and the imposition of fiduciary obligations upon union officers, and the ability to speak out against and challenge union leadership, the Act seeks to promote internal union democracy so that government supervision, ideally, becomes unnecessary.

Unfortunately, the story we focus on today involves decades of corruption and financial fraud at the Hotel Employees and Restaurant Employees International Union. It shows that we all have serious work to do. The Landrum-Griffin Act and the Department of Labor's enforcement of the Act, quite frankly, need an overhaul.

For those of you who have not been following this Subcommittee's series on union democracy, let me point out that we are seeing a pattern where the rights of rank-and-file union members granted by the Act are not, in my opinion, adequately being enforced. We have looked at, among other things, the Boilermakers, AFSCME, the Carpenters, LIUNA, and the American Radio Association, which is an affiliate of the Longshoreman's Association. And it is safe to say that the Act is not working as Congress intended in 1959. I would also note for the record that no changes to the law passed in 1959 have occurred since then.

Things were so bad at the Hotel and Restaurant Employees' Union that the Department of Justice and a district-court-appointed Monitor, in particular, had to step in and investigate. The Monitor ended up removing the Hotel and Restaurant Employees' general president, Edward Hanley. And this is exactly what the Landrum-Griffin Act was supposed to avoid. It is my hope that today's hearing, and this entire series on union democracy, will help this Committee identify where we can improve the Act and its enforcement and better protect the rights of union members.

Briefly, as I understand the facts at the Hotel and Restaurant Employees Union, in September 1995 the Justice Department filed a RICO suit alleging 25 years of criminal racketeering activity. A consent decree was entered into which provided for a Monitor Mr. Muellenberg, who is here today to oversee and implement the consent decree. The decree also provided a Public Review Board to review complaints, and an Ethical Practices Code to safeguard against further corruption and undemocratic activities. All of this, I add, was and is paid for by the rank-and-file members of the union. One of the objectives of the consent decree that I am particularly interested in was the goal of promoting and protecting union democracy.

Mr. Muellenberg's Monitor report released in September 1998 is shocking. It documents years of financial mismanagement, fraud, and cronyism, nepotism, inadequate internal controls, and undemocratic practices. Among other things, the report points to union officers using union funds for their own personal expenses; officers and their wives using the union jet for personal purposes, and this alone cost rank-and-file union members more than $1 million; consulting relationships with individuals who did little or no work; fraudulent imposition of trusteeships upon local unions; pension fund delinquencies; and misuse of a fleet of 50 union-owned vehicles.

Incredibly, the Hotel and Restaurant Employees Union, which takes in about $30 million a year and has a quarter of a million members and I will now quote the Muellenberg report traditionally operated without some absolute basics. There is no budget, there is no organizational chart, there are no job descriptions for employees, and no policy manual.'' President Edward Hanley negotiated an immunity agreement with the Department of Justice, and agreed to step down. He is allowed, however, to keep for the rest of his life his $350,000 per year salary. And it seems to me that the message sent to the Hotel and Restaurant Employees is that crime pays.

Let me say, as I did before our last hearing dealing with the Boilermakers Union, that the hearing is not about embarrassing the Department of Labor, or anyone else. I believe that it is this Subcommittee's responsibility and obligation to look at how the Department of Labor enforces the Landrum-Griffin Act.

It is my understanding that the Department of Labor often defers to the Department of Justice in these matters, and I want to explore that. I am also interested in an audit that the Department of Labor performed of the Hotel and Restaurant Employees Union earlier this decade, and what became of that audit.

Before I introduce the witnesses and turn to my distinguished Ranking Member from New Jersey for his opening remarks, let me say that one of the reasons I wanted this hearing was because of some comments made in the Chicago Tribune that were brought to my attention. The article is from an October 2, 1998 edition, and is entitled, and I quote, ``Union Monitor Finds Democracy Hard To Achieve.''

Mr. Muellenberg, the piece says, concedes, and I quote, ``he was perplexed over how to bring democracy to a union where, as he discovered, many records are secret, and neither budget nor job categories exist for most standard operations.'' Quoting again: ``I have wrestled with it, and I am still wrestling with it,'' Mr. Muellenberg said, ``I have been criticized for not restoring democracy, but that is a very difficult thing to do.''

This Subcommittee and the Monitor, Mr. Muellenberg, are on the same page, and I think we are after the same goal. And I am very pleased that you have come here today, Mr. Muellenberg. Perhaps something positive can come out of this unfortunate set of circumstances.

Our first witness will be Mr. Hugh Giblin, of Chicago. Mr. Giblin is a former Hotel and Restaurant Employees Union member and administrative aide. He was an accountant for 35 years. We are looking forward to hearing his perspective on the union's financial practices, and on its democratic practices in general.

Our next witness will be Mr. Pablo Garcia, of Chicago, Illinois. Mr. Garcia is a shop steward at Local 1 in Chicago, and he is here to testify today regarding the level of union democracy at Local 1, which recently held elections and which was featured prominently in the Monitor's report.

Our next witness will be Ms. Maria Elena Durazo, of Los Angeles, California. Ms. Durazo is president of the Hotel and Restaurant Employees Local 11 in Los Angeles, and we are pleased this morning that she has come this great distance to be with us.

Our fourth witness will be Mr. Jonathan Palewicz of San Francisco. He is a member of Local 2 in San Francisco, and is also a member of the group referred to as ``HERETIC,'' ``HERE To Insure Change.'' He testified regarding union corruption in the Hotel and Restaurant Employees Union some 16 years ago before the United States Senate, and we are pleased to have his historical perspective.

Our next witness will be the Honorable Kurt Muellenberg, and as I have mentioned, Mr. Muellenberg is the former court-appointed Monitor of the Hotel and Restaurant Employees Union and has served as a member of their Public Review Board since March of last year. From 1966 until 1987, he was a career employee with the U.S. Department of Justice, and during the period 1979 and 1980, he was the Inspector General of the General Services Administration.

And testifying next, after Mr. Muellenberg, will be Mr. John Wilhelm. Mr. Wilhelm is the new general president of the Hotel and Restaurant International Union, having served in the union for many years. He has served as secretary/treasurer of the international union, and spent years as the union's West Coast organizer. By mutual agreement, Mr. Wilhelm will be given ten minutes for his opening statement.

Our next witness will be Mr. John Keeney. Mr. Keeney is the Assistant Attorney General of the Criminal Division of the United States Department of Justice. We thank him for being here to represent the Justice Department.

And our final witness will be Mr. Lary Yud. Mr. Yud is the chief of the Division of Enforcement at the Office of Labor Management Standards, that office at the Department of Labor, with the responsibility for enforcing the Landrum-Griffin Act. And we thank Mr. Yud for coming this morning to represent the Department of Labor.

At this time, I would like to ask my colleague from New Jersey, and the Ranking Member, if he would like to give an opening statement.




Mr. Andrews. I would, Mr. Chairman. Thank you, and good morning. Good morning, ladies and gentlemen. I start from the proposition that every man and woman who joins a union in our country should have his or her rights protected, should have a fair and democratic say in the affairs of the union, should be sure that the dues money that he or she pays is spent on his or her behalf, should be sure that if they want to voice their dissent within a union that it will be heard fairly and fully, and should always have the option through the election process to change what is there.

And you know in a case where it appears that those rights are not being validated, in cases where people are not being treated that way or where money is being misspent, there ought to be a law that stops it. And there is one. And I believe we are here today to see how that law, imperfect as it is, has in fact worked.

The question that we should focus on today is not the particular record of this international union, which is a very serious record with many, many serious questions and problems that have been raised. That question has been raised in the United States district courts and in other forums, and will continue to be raised in an appropriate way in the future.

The question that we should be asking today is in our role as legislators, do we need to modify or change the underlying law that brings us here today? That is a valid subject of inquiry, and it is one that I am glad we are here to listen to.

I read through this record before today, and I am eager to hear it supplemented by the ladies and gentlemen who are here. And it appears to me that the record essentially reflects this. There were practices taking place in the international union which run contrary to the goals of our law. Money was being misappropriated; people were being mistreated; things were being done that weren't right. And the law worked.

There was a court proceeding, or a consent decree. My understanding is, after a very professional, skilled, dedicated job by the Monitor, who took on a thankless task and apparently did it with great distinction, that 47 recommendations were made to fix the problem.

The state of affairs today is that 44 of those recommendations have been implemented. The remaining three are in the process of being implemented. Have they all worked the way they should? I do not know. That is one of the things that we will hear about today. Will there be other forums for adjudication to the answer of that question? Yes, there will be, under the supervision of the court, under the supervision of the Department of Labor. And that is as it should be.

The question we should be asking is whether the underlying law works as well as it should, and whether it should be fixed. Every law that we pass around here is imperfect. Since 1995, many of the laws we have passed around here have been more imperfect than in the past, I would say about every law that we pass is imperfect. And we are here to look at the imperfections that may exist in the Landrum-Griffin Act, which I am very interested in fixing so the rights of people are not trampled upon.

But I would suggest that in our continuing series to find and fix imperfections in the law which protects union members, that the Committee is being unduly narrow in its scope of looking at American labor law. Because we have not had any hearings yet on what happens when a corporation closes its plant or closes its doors, and walks away from a community and from its obligations, and leaves thousands of people unemployed.

There are abuses of the securities laws and the bankruptcy laws and the other laws that govern corporations that we have not looked at in this Congress. We have had one hearing in the full Committee on the subject of raising the minimum wage. I would suggest that great violence is being done to the prospects of a lot of hard-working people because the minimum wage is not as high as it should be. There are those who disagree with that; but that is a valid inquiry for a hearing, as well.

There are practices which are taking place in pension funds around the country. And to the Chairman's credit, he has expressed both a record of activism on this and a willingness to go forward further. But there are instances where both public and private employees around America have had their pensions raided and depleted, for a variety of agendas by Wall Street and by state governments, and we need to take a look at those imperfections, as well.

So we are truly prepared to listen this morning to all the stories that people have to tell. The record, which led to this hearing, is a sorry one. There is no question about that. But the question that we should be asking is whether or not the law worked and, if it did not, how can we improve on the law?

It is not our role to supervise the affairs of this union. It is presently the role of the United States District Court. Perhaps some day in the near future, it will be the role of the union itself again. Our role is to look at the law and how it works, or does not work. And I look forward to hearing that question.

And again, I would say there are other questions about other imperfections in American institutions in corporate America we should be asking about, too.

I want to note for the record that a colleague who is not a member of our Committee, but who is actively engaged in labor issues before the Congress joins us this morning. Mr. Chairman, with your consent, he is not here to ask questions, but simply to observe. It my friend and colleague, Congressman Robert Brady of Philadelphia, who has a long and distinguished career in organized labor and is friends, as am I, with many of the gentlemen and ladies that are here today.

I also, Mr. Chairman, in advance, want to apologize to you and the witnesses, because at some point during this morning's hearing I am going to have to leave for a while. Legislation that I have concerning national security is before the Armed Services Committee, and I need to be present to debate it. But I will come back forthwith.

And I appreciate the opportunity to hear from the witnesses, and look forward to that.


Chairman Boehner. Thank you, Mr. Andrews.

Witnesses appearing before the Committee on Education and the Workforce and its Subcommittees are asked to take an oath and 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 might be prosecuted under the law. In light of this, I would like to ask all of our witnesses to stand and raise their right hand.

[Witnesses sworn.]

Chairman Boehner. I would remind also the witnesses that under Committee rules statements are limited to five minutes. If you need a little bit more time, take it. Do not get carried away. And as I mentioned earlier, by mutual agreement, Mr. Wilhelm will be allowed ten minutes for his statement. And I would also like to remind members that they will be allowed to ask questions of the witnesses after the entire panel has testified.

Mr. Giblin, you may begin your testimony.




Mr. Giblin. Thank you. I am pleased that the Subcommittee is holding this hearing and showing its concern for the matter of union democracy, and in particular the lack of democratic process in HEREIU.

As someone who was an administrative aide for six years in the International, I have had a unique viewpoint of its activities. As an accountant, I took a special interest in its financial life. As a union member, I took a strong interest in its treatment of its members. I was appalled at what I discovered in both of these areas, so appalled that I contacted federal law enforcement agencies offering my help in ending these corrupt practices.

The Monitorship found financial misfeasance representing large expenditures of union funds during the very limited lifespan of his engagement. If one were to go back and perform an audit of the financial abuses spanning two and a half decades, the amount determined would be staggering.

These were not, incidentally, the occasional spending excesses found in many organizations, or the result of men who had limited business skills. This was conscious, deliberate exploitation.

The abuses ran unchecked and unabated for 25 years. One could reasonably ask how such a situation could continue despite periodic audits by the DOL and annual audits of the certified accounting firm. The abuses were on the whole not clandestine, but apparent. Some were in direct violation of the Landrum-Griffin Act, and potentially criminal in nature, as the Monitor's report bears out.

At times, DOL and the accounting firm would take note of the lack of accounting standards, but their efforts were feeble and futile and the follow-through inadequate and ineffective. It was this very lack of basic, essential accountability, which allowed the financial rape of this union for a generation. These accounting deficiencies were deliberately designed to obscure and prevent accurate accounting for union funds, so that the financial diversion of union funds could continue.

Let me give you a precise example. The annual report of the labor union to the DOL makes this statement: ``It is not practical to make a precise distribution of automobile expenses.'' This is an accounting cliche used with rare validity in this day of computers. I saw this phrase also used relative to the accountability of credit card expenses. What it really means is that the expense records were deliberately obfuscated.

The DOL has the statutory obligation to protect the membership of unions from these abuses by audits, which, under Title 29, Section 431(b), require financial information ``in such detail as may be necessary to accurately disclose its financial condition.'' ``In such detail'' is the mandate; not what is practical. I believe an examination of the DOL audit reports would support my contention that they repeatedly failed in their obligation to this union's membership.

The accounting firm has a fiduciary obligation to be independent and to report fairly the financial condition of its subject audits. As a former auditor, I found it completely incomprehensible as to how these accounting deficiencies and resulting financial abuses were allowed to continue for decades by this union's accounting firm. The Monitorship did not address these critical issues.

The integrity and viability of the present electoral process, in which the local's members elect delegates who then vote for the general officers at the general convention every five years, is very questionable. This is due to the strong dependence of the locals on the International.

In HEREIU, this political process, coupled with the intimidation of the president's publicized organized crime connections, created a dictatorship. The DOJ in its initial RICO declaration stressed the need for return of democracy to this captive union. For some inexplicable reason, this civil RICO failed to establish this most essential mechanism for democracy; an item, incidentally, that was found necessary in the Teamsters and laborers civil RICO.

This in my opinion is irresponsible and inexcusable. It violates the spirit of the consent decree, and indeed the spirit of democracy our nation purports to exemplify. This failure also undermines the other mandate of the consent decree: to preclude future abuses of organized crime influence. The members have been denied the only tool they have to remove corrupt officers: the vote.

Finally, the other ingredient to democratic process, an informed, membership, was largely ignored. No ongoing information on the Monitorship was published in the union newsletter. Knowing organized crime figures were being removed from office would have been a crucial encouragement to the rise of democratic elements in this union.

HEREIU has many able and dedicated unionists who, if given a democratic framework, could make this one of the best unions in the country. The Monitor's solution to future organized crime influence is the establishment of an Ethical Review Board, of an indeterminate duration, which I understand will meet four times a year. If this is the totality of oversight, it is wholly inadequate, and it is the Government's attempt to exit the union gracefully. I can say one thing with absolute certainty: The Mob will be back as players in this union, unless much longer and stronger preventive action is taken.

Out of the millions of dollars taken from this union, only $28,000 was recovered. This is a token gesture, and an insult to the membership and the meaning of justice. While President Hanley retires on three pensions, a 401(k), and a $267,000 lifetime salary, I have an aunt who was a housekeeper and a member of this union, who retired on $45 a month and this was in the '80s, and not the '50s.

The principle of disgorgement has been effectively used in prior civil RICOs to force guilty parties to give up such funds. Further, a portion of the over $3 million spent on this RICO should be borne by the parties responsible for creating it, not the membership. And there is precedent in RICO case law for this application of justice.

Most importantly, the participants in this hearing have the power to give democracy to this union by installing direct elections of general officers and to give the membership the same right in the workplace that we enjoy as citizens: the right to vote for their president. Thank you.




Chairman Boehner. Mr. Garcia, you may testify.



Mr. Garcia. I would like to thank Congressman Boehner, his staff, and all Committee members, for giving me this opportunity. My name is Pablo Garcia, and I have been a banquet waiter in Chicago for ten years. In that time, I have become familiar with both the service industry and my local of the Hotel Employees and Restaurant Employees International Union. I think there are few people in Chicago, in the city, who know as much as I do about my local.

As an immigrant who has become a citizen of the United States, I want to tell you how proud I am of the opportunity to speak before such distinguished representatives. I am a working person, and English is not my first language, so I hope you will bear with me. And trust me that even if my speech is not sophisticated, I speak with great passion for the condition of working people in my union.

The leadership of my local is composed of people who do not have the slightest interest in representing members. They are people Ed and Tom Hanley decided to reward with jobs that require no work. This is not my opinion. Early on when I first became interested in participating in my union, I got to know the leaders of the local. I even became friends with them. I eventually became disenchanted and suspicious of the Hanleys. After the Federal Government threw them out of the union, I thought this was the time to build a new union; but the current leaders told me nothing would change, because they owe their loyalty to the Hanleys and they do what the Hanleys tell them. That was when I became a reformer.

So you see, even though the Hanleys were thrown out of the union, nothing has really changed. The current leaders, led by President Terry Maloney, run the local according to the Hanleys.

Distinguished representatives, I want you to think for a moment what it must be to clean 15 rooms a day, five days a week, and earn about $15,000 a year. Then think about how the Hanleys and Terry live off of dues of these hardworking people, even though investigation after investigation points to criminal activities by the Hanley machine. And yet, rather than face criminal courts, these men still schmooze with government leaders, and live like celebrities.

What a great thing our members could do if they had the money to invest in decent things like schools, pensions, and homes. I have heard housekeepers say during their break that they dream of some day having enough money to buy a home. The hotels in my city are making millions of dollars every year. If we had a strong union, we could negotiate contracts that would allow them to buy their own home. But instead, we are stuck with the Hanleys, the Maloneys, and their whole corrupt and expensive machine. I am tired of bearing this burden, and so are my fellow members.

Believe me, distinguished representatives, I have been forced to think long and hard since I decided to fight for a strong union. I believe in democracy, but democracy means law, and the Hanleys have gotten away with flaunting the law for 30 years. Sometimes, I cannot believe it when I think about it. After all the time and effort the Federal Government spent in investigating my union, little has changed. Ed Hanley is living off a huge pension, and his son Tom running the show through Terry Maloney.

Let me tell you a story about our election. After election results were announced, Terry Maloney and the other union leaders had a suite at the Hyatt Hotel. We know this, because members through the city kept us informed of what is going on. This is what they told me. Tom Hanley was there, and he made a short speech. He told Terry and the rest of the people that his family is grateful for their service in the election. It was just another sign that Terry Maloney is just a front for Tom Hanley. We believe that Terry Maloney is waiting for the right time to bring Hanley back to the union. It is very strange to think that Tom Hanley may be plotting a return to the union, when he should be facing criminal charges.

I wish you could see Maloney's behavior in the first meeting after the election. We tried to put a motion on the floor. Maloney was ridiculous, shouting us down, violating our rights and the rules of governing meeting procedures. The meeting was more like a collection of gangsters than a democratic union meeting. Sitting just behind Maloney was the president of the International, John Wilhelm, smiling as if nothing was wrong. And yet, everything was wrong. But Wilhelm would say nothing about Maloney after the meeting.

My union is at a crossroads. Maloney and the Hanleys will try to keep things as they are, and we will fight them at the meetings and at the worksites, and in the newsletter that we have created.

Representatives I want you to know that my fellow members and I will continue to fight for a union we can be proud of. I want you to know that I fully support anything that will help members know more about their rights, so people like the Hanleys and the Maloneys can no longer live lives of wealth and ease, but must face the anger of members whom they exploit.

Thank you for the opportunity to speak at this meeting today.



Chairman Boehner. Mr. Garcia, thank you for your testimony.

Ms. Durazo.



Ms. Durazo. Good morning. My name is Maria Elena Durazo, and I am the elected president of HERE Local 11 in Los Angeles, California. That is my full-time responsibility. I am also a vice-president at large of HERE International Union Executive Board.

My parents are immigrants from Mexico, and our family of ten children worked in the fields of California as immigrant farmworkers until I was in high school. I started in the labor movement as an organizer in the garment sweatshops with then International Ladies Garment Workers Union.

I got hired as an organizer at Local 11 in 1983, and for four years I witnessed a union deteriorate right before my very eyes. The leadership of that local had a policy of exclusion. Seventy percent of the members are immigrants from Mexico and Central America. The meetings were held in English only; the publications were sent out in English only; and members rarely attended meetings. In fact, the office closed down at 4:00 p.m., the time most members were getting off their shifts.

As a result of their exclusion, the members had no voice in their union and, worse yet, no voice on the job. They had no training to know their rights. The union was weak, because the members did not participate, and therefore the union did not have the real ability to negotiate fair contracts.

In 1987, I led a rank-and-file effort to change the leadership and the direction of our union. We were very inexperienced, and we had a very weak union, of which the employers took full advantage. During the internal election period, many charges were made back and forth about the campaigning. The incumbent asked for the International Union to step in, and a trusteeship was declared.

Needless to say, I was angry and skeptical. I suspected that the International Union was only intervening to save the incumbent from being kicked out. One thing for sure: I was unwilling to give up on our goals. And that is that our members participate in the decisions of the union, because those decisions impact their lives, and that employers treat the members with respect, whether they are dishwashers or front desk clerks or housekeepers.

To my surprise, the International assigned some of their best staff, former organizers with Cesar Chavez and the United Farmworkers Union. The International Union started making the changes that we were fighting for:

They started a shop steward system to train the rank-and-file on their rights. Workers were participating in committees to negotiate contracts with their employers. All meetings and publications were bilingual, Spanish and English.

Congress and President Reagan had just signed the Immigration Reform Act, which created opportunities for members to legalize their status. The International Union gave the local $100,000 to assist our members through the amnesty legalizing process.

While western regional director, President John Wilhelm twice negotiated our citywide hotel contract covering more than 4,000 hotel workers. We won historic collective bargaining agreements and this was unheard of in our local and in Los Angeles the best wage increases in decades. We won for the first time a prepaid legal plan with a panel of attorneys to provide free legal services to members. And we protected free family health insurance, which employers were threatening to take away.

In 1989, the trusteeship ended. I ran for president, and our entire slate won. I was fortunate that the International continued to provide some staff and resources until we could get back on our feet and learn how to run a local.

We have rebuilt our health, welfare, and pension funds to make major improvements. We quadrupled the pension benefits from the miserable level that it had been at for 25 years. President Wilhelm taught us to work hard to establish partnerships with employers, and we have succeeded in many cases. We also learned, though, that we must fight back if that partnership is rejected and if our members' livelihood is threatened. We are known for going as long as it takes, with demonstrations in the streets to civil disobedience against billionaire corporations like USC, or Kajima, the largest construction company in Japan.

In 1996, I am proud to have been elected the first Latina to the National Executive Board of HERE. Today, Local 11 is a strong, financially viable union with a strong presence in Los Angeles. Specifically, we are known throughout the community for standing up for the issues of concern to Latinos. We are also known in the broader circles of business and political leadership in the city to promote responsible economic development that includes the needs of workers. Under both the previous Democratic mayor and the current Republican mayor, I have been appointed to serve on key city commissions and boards.

I have learned that it is easier to tear down than it is to build. During the last 12 years, we have worked very hard to rebuild this local: cooks, dishwashers, and housekeepers participating in negotiating their own contracts. Our monthly meetings grow in numbers because we work hard to make sure the members participate in our activities and because the meetings are held in both Spanish and English.

The overwhelming majority of our new hires for positions as organizers and union representatives come from the membership. We have monthly training for shop stewards and committees. We are a vibrant union. We depend on the participation of our members to make decisions about what is important to them and to their families.

There is no doubt in my mind, having been a dissident and on an opposition slate, that without the help and the resources of our International Union and the training we received from President Wilhelm, we would not be where we are at today. I started the opposition to the incumbent to establish union democracy, not in theory, not on paper, but in a way that really changes and helps the daily lives of cooks and bellmen and dishwashers and housekeepers. Thank you very much.



Chairman Boehner. Ms. Durazo, thank you for your testimony.

Mister, How do you pronounce your name, sir?

Mr. Palewicz. Palewicz.

Chairman Boehner. Palewicz.

Mr. Palewicz. Mr. Chairman, I have a question for you, before I start. HERETIC has a 25-word proposed amendment to one section of Landrum-Griffin. I see how fast these red lights come on. It is on the cover sheet of my little talk here. Should I read it first, or do you want to read it first, or should I just allude to it in the presentation?

Chairman Boehner. Yes, I think you can just do it in your presentation.

Mr. Palewicz. Okay.

Chairman Boehner. You may begin.






Mr. Palewicz. Chairman Boehner and Members and excuse me if I mispronounced your name, sir.

Chairman Boehner. Turn-about is fair play.


Mr. Palewicz. I would like to thank you for inviting me, a lifelong member of the Democratic Party, to testify before you here today. The heart of my testimony will center on urging you to help inform a large group of citizens namely America's private-sector trade union members of their already existing federal statutory right to union democracy. This is a bipartisan concept and presentation, and I hope that all of you on the Subcommittee on both sides of the aisle will receive and consider it as such.

My name is Jonathan Palewicz, or``Jon'' for short. I am a bellman and a hiring hall extra banquet server from the 10,000-member-strong HERE Local 2 in San Francisco. We are the most democratic, and one of the toughest, of the HERE locals in the United States.

I am very proud not only to be a Local 2 member, but also to have served my local as twice unanimously-elected shop steward; as a member of the master contract negotiating committee; as a chairman of the election committee, the trial boards committee, and the health and welfare taskforce.

I have served our local in many other capacities as well. If it is of interest, more biographical information is in my supplemental written statement and the exhibits attached to it. All of the numbered references to the printed text of this oral statement refer to those supplemental materials. I request that those supplemental materials be printed in full somewhere in the Subcommittee's permanent record as background for any reader's better understanding of my testimony here today.

I think that I have also been invited to testify here because I am a lawyer and a co-founder of HERETIC, the four-year-old national alliance of HERE members that is trying to restore democracy to many HERE locals in the wake of our infamous former general president's recent ``resignation.''

HERE's new general president, John Wilhelm, is here with us today also, and I welcome him. Thousands of members in Local 2_including me in many ways greatly admire him; respect his abilities, his record out west, and his encouragement of Local 2 in doing things the way that we do. Brother Wilhelm has also firmly expressed to us in writing his commitment to the principle of union democracy in HERE. I hope that we will be discussing what forms that democracy will take, and that he will both contribute to and learn from this hearing.

In ``Labor Notes'' in October of 1995, Laura Sanchez and I described at length the need for and our hopes for the HERE Monitorship. Those need not be repeated here. The former Monitor of HERE, Kurt Muellenberg, is also in this room today coincidentally, right next to me. In the past, Mr. Muellenberg has personally admitted to me and I like Mr. Muellenberg very much, so take this gently that he knows almost nothing about the subject of internal union democracy. Therefore, I urge this Subcommittee to take any pronouncements that he may make on this subject with more than a grain of salt. Perhaps he, too, will learn a little bit here today.

HERETIC's assessment of Mr. Muellenberg's efforts can be found in the review of his final report that we ghost-wrote for the Association for Union Democracy. An article based upon that review was published under Carl Biers' byline in ``Labor Notes'' in May 1998. Ninety-nine percent of HERE's members have never seen Mr. Muellenberg's final report. He refused to send it to us.

Sixteen years ago, in 1983, I had the opportunity to submit a presentation similar to this to the other legislative body, which labors under this majestic dome. That statement also concerned Local 2, the HERE, Edward T. Hanley, and union democracy. In addition, it contained a few suggested statutory changes. Over the past 16 years, some of those proposals have been signed into law; others have been secured through court actions; a few have been politically obtained within Local 2 or the HERE; and a number of them are still out there on the vine. I urge you to review them all.

However, today, on behalf of HERETIC and on my own behalf as a citizen, I speak before you single-mindedly, solely, and emphatically, to urge you to make just one small but key change to the LMRDA for the reasons that I will now relate to you. That change of just 25 words appears on my cover sheet to this oral statement, and I urge you to review it after this statement.

I believe that this change to Section 105, which calls for members being regularly informed of that law, standing alone, is the single most important, most useful amendment that Congress can realistically make to the LMRDA during this session. A federal court judge, Judge Peter Messitte in Maryland, apparently also wants direction from Congress concerning the purpose of Section 105 of the LMRDA.

The Association for Union Democracy, on whose advisory board I hold a seat, has prepared a draft amicus brief both for you and eventually for the Fourth Circuit Court of Appeals that may help you evaluate HERETIC's proposal.

Almost done.

Today, only two expensive books, which are photocopied in part for you in my materials, are available to those union members who somehow discover the LMRDA's existence and want to find out more about their rights. That kind of information should be regularly provided by unions to their members. That goal is precisely the purpose of HERETIC's proposed new wording for LMRDA Section 105. This change is good, and the time is ripe for it now.

Please allow me to be both politically and historically blunt with you about HERETIC's proposal. Today, late in July 1999, the talk of bills of rights is the current fashion on Capitol Hill. Be it a taxpayers bill of rights, a health care bill of rights, a patients bill of rights, or an airline passengers bill of rights, the list goes on and on. However, the union members bill of rights, also known as the Landrum-Griffin Act, is already the law. Legislative giants of the past such as Barry Goldwater, John F. Kennedy, Sam Ervin, John McClellan, Sam Rayburn, and Lyndon Johnson, passed it in 1959, and President Eisenhower immediately signed it.

All HERETIC is asking you to do is to stand on the shoulders of those giants, add a final necessary touch to their handiwork, and let the people for whom they intended the LMRDA be regularly informed of that law and its provisions. Even in today's polarized political atmosphere, such a proposal ought to easily pass both houses of Congress with real bipartisan support, and President Clinton himself would be hard pressed to veto it.

Unfortunately, I predict to you that everything else that you may attempt to do to the LMRDA in this session, however well intentioned you may be on both sides of the aisle, is doomed to failure. Nothing will pass until after the next presidential and congressional elections, if then. Union democracy is just too sensitive a subject. Any other proposal you offer will be amended to death on the House floor, filibustered in the Senate, and vetoed by the President, if it ever gets to him.

You know it, and I know it, that nothing of any real substance in any legislative area is going to become law until after the next election. The 2000 campaign is already on. Any real changes in Social Security, health care the list goes on are dead in the water for now. So, too, any other proposals you may make regarding LMRDA. Admit it.

Please, just push HERETIC's Section 105 proposal as a separate and distinct bill. It alone might actually make it into law, because of its history and its simplicity, during the political slugfest coming over the next 18 months. At least get something actually changed for all your efforts in this area.

Thank you for your attention to this statement. Amend Section 105. And incidentally, I believe that I can prove to you that this proposal would cost the average labor union about one cent per member per year. Thank you.




Chairman Boehner. Mr. Palewicz, thank you for your testimony. I am more optimistic than you are.

Mr. Muellenberg.




Mr. Muellenberg. Mr. Chairman and members of the Committee, as you indicated in your opening statement, I was a career official at the Department of Justice.

Chairman Boehner. Mr. Muellenberg, if you could pull the microphone a little closer, it would be helpful.

Mr. Muellenberg. Yes. I came out of retirement to take on this particular assignment. I never have been in private practice of law.

On September 5 of 1995, Judge Garrett Brown in the District of New Jersey appointed me as a Monitor to oversee the implementation of this consent decree. I had nothing to do with the negotiations leading up to the consent decree. And the original term of the consent decree was for 18 months. At the end of the 18 months, I requested a one-year extension, which Judge Brown granted, because of ongoing matters that I had not yet completed. And my Monitorship ended on March 5 of 1998.

I wrote a report, which you have alluded to. It is dated August 1998. It is an 82-page report. It has an appendix, which lists the disciplinary actions I have taken. I do not know whether this report will be part of this record and these proceedings or not. I also have prepared a 16-page statement, which I would request be made part of this record.

And I just want to simply go through some of the highlights of the consent decree and some of the things we hopefully accomplished. The consent decree is based on a history of racketeering influences on this union. And the remedial objective, which is listed in the consent decree, is really to remove the influence of organized crime in this union now and in the future. One of my jobs in the Department of Justice, I was chief of the organized crime section in the criminal division. I have some knowledge about organized crime in the United States.

In addition, the consent decree enjoins all officers and union members from violating the RICO statute, from associating with organized crime individuals, and from associating with people who have been barred from participating in the labor movement. Barred persons primarily are people who have been convicted of certain crimes. They are barred by law. Or in the case of the Teamsters consent decree, if Judge Lacey or the independent review board of the Teamsters barred you, you would be a barred person.

In addition to that, I had the responsibility to review all contracts over $10,000, which I had to approve. And I also had to review candidates for local and international elections, to see if they were qualified to hold office. In that effort, I had the support of the United States Government, primarily the Department of Justice, the United States Attorney's Office in New Jersey, the FBI, and the Department of Labor.

I also should add at this particular point that the hotel and restaurant workers international union and the international leadership during Mr. Hanley's term as general president were supportive of all my efforts. I was never obstructed in anything I was trying to do.

Now, as far as my activities are concerned, I hired a lawyer as my investigations officer. I hired an experienced retired FBI supervisor, who was my chief investigator. And we examined a number of the local unions. It is explained in some detail in my report to the court, which is available to you.

And we examined just the basic operations of these local unions. And we made a number of findings, which I do not want to go through right now; but it is fair to say there is just a tremendous lack of obeying the bylaws of local unions in terms of credit card uses and things of that nature.

The disciplinary actions I have taken, which I want you to know about: I disciplined 34 people in this union. I barred for life 22 members of the union. Ten of those were barred for associating with organized crime people. Two were barred for a period of 13 years, under Landrum-Griffin. This is barred by operation of law. One of them is former Congressman Rostenkowski, who was a consultant to this international union. And the rest of the ones were suspensions of various times.

I finished my report. I made recommendations. And I was pleased to learn that in a meeting on September 1, 1998, under the new general president Wilhelm, the general executive board of this union adopted all the recommendations that I have made. They are now being implemented, and I feel very confident that this is a step in the right direction.

I will later on, if you want to inquire, give you my recommendations for possible amendments to LMRDA at the appropriate time in this hearing. Thank you.



Chairman Boehner. Thank you, Mr. Muellenberg.

Mr. Wilhelm, welcome. And as we mentioned before, under mutual agreement, you will have ten minutes to testify.




Mr. Wilhelm. Thank you very much. I am grateful to the Chairman and members of the Subcommittee for the opportunity to testify today, to tell the story of the Hotel Employees and Restaurant Employees International Union, which is often referred to as ``HERE.''

I have submitted a statement for the record, and would appreciate that the statement and its attachments be included in the record.

Chairman Boehner. Without objection, all witnesses' statements and any supporting documents will be included in the record.

Mr. Wilhelm. More than 29 years ago, after graduating from Yale University, I began my career with this union in New Haven, Connecticut. Since then, I have had the privilege of serving our union's members in many parts of the United States. On August 1st, 1998, I became general president of the union. By constitution, the general president is the CEO of the union.

Our union has a very important mission. The hospitality industry is the largest employer of women and minorities and immigrants in this country. For the most part, those who labor to serve guests at hotels, restaurants, and other facilities do not have a place at our nation's economic table. Non-union workers in our industry typically have low-wage, no-benefit, high-turnover, insecure jobs. Often, they need to work two or three jobs to make ends meet. The resulting toll, especially on their families and their communities, is very destructive.

It is our union's mission to address these issues. To the extent we are successful, we make a significant contribution to this society. To the extent we fail, workers and their families suffer; but so also do communities, employers, and guests. I have dedicated my professional life to this mission.

However, for all of those 29 years plus, a cloud has hung over this union. Allegations that the national leadership of the union is corrupted or controlled or influenced by organized crime have been very damaging to our mission. Those allegations were not consistent with my own experience of the union. And that is why I strongly supported the International Union's program beginning in 1990 of cooperation with the Federal Government. I felt that a thorough investigation by objective, competent authorities would show that the national leadership of the union did not have an organized crime problem. If I were wrong, I would resign.

In December 1990, the Department of Justice filed a civil RICO suit aimed at HERE Local 54 in Atlantic City, New Jersey, alleging an organized crime problem. The International Union responded by offering to enter into a consent decree providing for a court-appointed Monitor to oversee the affairs of Local 54. The International Union provided experienced representatives to assist the Monitor with the trade union aspects of his assignment.

The Local 54 Monitorship ended successfully. The Monitor reported to the Federal District Court that the local union is free from organized crime. Several weeks ago, the slate of local union officers that was first elected during the Monitorship was reelected in an autonomous local union. The president of that union, Bob McDevitt, and many of his officers and rank-and-file members are here today.

This cooperative effort in Atlantic City led to the next step, in HERE Local 100 in New York City. In 1992, the International Union took the first step by putting Local 100 into trusteeship. When it was learned that the Justice Department was investigating Local 100, a partnership was hammered out. A voluntary consent decree was entered into in which a court-appointed officer took charge of investigating wrongdoing in Local 100, and a trustee appointed by the International Union managed the trade union activities of Local 100. That trustee was International Union Vice President Henry J. Tamarin.

The Local 100 partnership also ended successfully. Mr. Tamarin was reelected to lead this local union, and he and his team have been reelected and have substantially revitalized that local and made it a model of union democracy. And he, too, is here today.

Based on these cooperative successes, the International Union and the Justice Department took the final step: a consent decree, referred to earlier, filed in 1995, providing, as you have heard, for a court-appointed Monitor to investigate any and all wrongdoing in the International Union, while the officers of the union continued to manage its affairs. This partnership is, to my knowledge, unique in federal supervision of national unions.

The consent decree defines its goal this way:

``The remedial objective of this consent decree is that the HEREIU and its constituent entities be free from the direct or indirect influence of any organized crime group, or the threat of such influence now and in the future.''

The consent decree provided that the Monitor have unfettered access to the books, records, and personnel of the union; that the union pay the costs of the investigation; that the union cooperate fully with him; and that he have broad powers to take disciplinary action, including barring individuals from the union for life.

What was the result of the Monitor's three-year investigation? The Monitor, who is, as you have heard, a career expert in organized crime, with the combined resources of his own investigation and the law enforcement sources of the United States Government, concluded that there is no issue of organized crime with the previous general officers of the International Union, or with me or my colleagues who are the new general officers of the International Union. In fact, no such allegations have ever been made about me.

The Monitor filed charges against a number of other individuals. He barred eight individuals from five local unions, out of the total of about 125 local unions in HERE, for life; and imposed lesser discipline on one other person from one of those same locals on account of organized crime association. He also, as you have heard, barred a number of other people, or filed charges or drafted charges not related to organized crime, against others.

I believe the Monitorship was worthwhile, for the central reason that I supported this nine-year program of cooperation with the Government: As I had always believed would be true, an independent, expert, well-researched investigation showed that the national leadership of this International Union is not corrupted by or controlled by or influenced by organized crime. And that was, again, the remedial objective of the consent decree.

Aside from the organized crime issue, the Monitor also examined the financial controls and procedures of the International Union, and found them lacking. In his final report, he made 47 distinct recommendations to improve the union in those areas. On my recommendation, the general executive board of the International Union promptly adopted each and every one of those recommendations. I have attached to my testimony a chart that shows the status of the implementation of those recommendations. Forty-four of the 47 have been implemented to the extent possible, and that is extensive. And implementation of the other three is in progress.

In my judgment then, the union has done everything it possibly could in this situation. For nine years, we have worked hard to partner with the Federal Government. We have cooperated fully. We have opposed nothing that he chose to do.

This exercise was always about organized crime. Decades of allegations in that regard about the leadership of the International Union have been put to rest. And we are also, beyond that remedial objective, implementing every one of his recommendations in other areas.

We have done one other very important thing to ensure the highest ethical standards in the union for the future. During the negotiation of the consent decree, the International Union proposed that the union's constitution be amended to include a stringent code of ethics and an independent public review board with broad powers to enforce that code of ethics, including the authority to bar individuals from the union. The Government accepted that proposal, and at our 1996 convention the delegates did amend the constitution in both those regards. I have attached a copy of those articles to this testimony.

The charter members of the public review board are highly qualified. The chairman is James R. Thompson, former governor of Illinois and former U.S. Attorney. The other members are Archbishop James P. Keleher of Kansas City, and Mr. Muellenberg, the former Monitor. And the board has, as I said, very wide powers, and we cooperated fully with it.

So, what of the future?

I do not have much time left.

I do not believe that a useful purpose is served if I come before you today and make promises or speculations about what my administration might do. But I think my past performance is a fair guide to how the new administration of this union might carry out our stewardship. I wish I could talk about all of the opportunities I have had to be part of building vital, progressive, honest, democratic, effective parts of this union all across the country. I have made some reference in my written testimony.

But I want to talk for a moment about the assignment I had beginning in 1997 [sic]. I was assigned to respond to a request for help from the newly elected insurgent officers of Local 226 in Las Vegas. Partnering with that local leadership, I had the privilege of directing a campaign with the full support of the International Union that has become a national model for a revitalized labor movement.

I wish I had time to tell you the full story of that campaign. Let me try to summarize 12 years of sweat, toil, struggle, and solidarity on the part of thousands of union members, by pointing to the hallmarks of that effort which I was privileged to lead:

Excellent contracts for union members and their families;

The fastest-growing private-sector local union anywhere in the American labor movement;

A model program of rank-and-file membership participation and leadership;

A positive, mutually beneficial relationship with most major employers in that city;

Groundbreaking labor-management cooperative programs, especially in health care and job training without, by the way, a penny of government money;

Successful campaigns against employers acting unfairly;

A bipartisan political program driven by the rank-and-file members of the union;

Full cooperation with gaming industry regulators, resulting in an excellent ethical reputation for HERE in Las Vegas.

That is the kind of union I have led in my career. That is the kind of union my fellow officers and I believe in. And that is the kind of union HERE will be, so long as I have the privilege of remaining in the leadership.

I had asked, as you know, Mr. Chairman, for the opportunity for just two rank-and-file members of our union, who support the union's program and who have experienced it as I have discussed it with you, to speak. That opportunity was, unfortunately, rejected.

There are many members of our union here today. They are here because they care about their union. I want to acknowledge their presence. I want to thank them. Sometimes rank-and-file can become an abstraction in a room like this. With them here, I do not think it is an abstraction.

I want to thank them not just for being here today, but for making unionism real and vital, back home, at work, and in their local unions. And I would like to recognize the two individuals who I had hoped would have the opportunity to speak to you directly.

Clester Nelson is a baggage handler at Bally's in Las Vegas; 27 years a HERE member. His wife of 41 years is a 29-year member of the union. An active union member, elected negotiating committee member, elected shop steward, elected rank-and-file executive board member. Lynne Myrden is a restaurant hostess at the Golden Nugget in Las Vegas; 21 years and a HERE member; similarly elected to rank-and-file positions.

These folks lived through the revitalization of a highly democratic, highly effective union, and I wish that you had the opportunity to hear directly from them.

If I might, Mr. Chairman, I see that my time is up if the opportunity exists during the course of the questions and answers, I would like to respond to your comments about the law itself, as well as to some of the other comments by some of the witnesses. Thank you very much for the opportunity.


Written Statement of John W. Wilhelm, General President, Hotel Employees and Restaurant Employees International Union.


Chairman Boehner. Well, thanks for your testimony today. And as you are well aware, we try to present a very balanced panel, to get the broad scope of the story for the benefit of members of the Committee on both sides of the aisle. And we suggested, and we will welcome, the testimony of the two people that you have introduced to be included in the record. And as we get to the end of the hearing I will open the record, and leave open the record for 30 days, for any person that wants to make a comment to file a brief on their own behalf.

But I must say to you, Mr. Wilhelm, my father was a member of this union for some 40 years. I doubt that my father ever made $15,000 a year. And I want to disclose that, because I do not have any animus about it. But he ran our local tavern that my grandfather started in the '30s. And I know something about what happened in their own local, and what has happened over the years.

Mr. Keeney, you may testify.




Mr. Keeney. Thank you, Mr. Chairman. I would like to briefly outline the role of the Department of Justice in the investigation of this union. As you all know, in 1964 President Johnson appointed a Commission on Organized Crime. After extended hearings, that commission focused in the labor area on four unions as being corrupted and being infiltrated by organized crime. The Department of Justice then began inquiries and investigations with respect to all four.

With respect to the Hotel and Restaurant Workers, we focused first on Local 40 in Atlantic City, where a monitor was ultimately appointed; moved on to Local 100 in New York, where a monitor was appointed. And then, we started to focus in on the international operation of the union.

And the ultimate result was that the union became aware of the fact that the Department of Justice was seriously considering filing an action against them using, as had been done previously, the equitable provisions in the RICO statute.

We had discussions with counsel. They were held primarily in New Jersey. And the ultimate result was that in 1995 a complaint and consent decree were filed. Mr. Muellenberg was appointed as the Monitor.

We worked closely with Mr. Muellenberg, coordinating the funneling of information from the federal agencies, from the FBI, from the Labor Department, to Mr Muellenberg, and gave him whatever help we could.

In any event, after his investigations Mr. Muellenberg compiled a report. He also had discussions with counsel for then-president Hanley, and there were discussions as to Mr. Hanley stepping down and making certain concessions with respect to his financial situation. But Mr. Muellenberg find the proposal acceptable, but there is one hang-up. Mr. Hanley was demanding immunity from the Department of Justice from prosecution.

After analyzing the various cases that we had outstanding, the allegations against Mr. Hanley, primarily based on Mr. Muellenberg's investigation, I concluded and I was the deciding official that the probability of conviction on those various allegations, or any of them, was not high enough for us to pass up the opportunity to get Mr. Hanley out of the union and to tie down the concessions which he was willing to make. And that is the bottom line. That is what happened, Mr. Chairman. Thank you.



Chairman Boehner. Mr. Yud.



Mr. Yud. Thank you, Mr. Chairman. Mr. Chairman and members of the Subcommittee, thank you for inviting the Department of Labor to testify today. I am the chief of the Division of Enforcement of the Office of Labor-Management Standards. As you know, OLMS has primary responsibility for administering the Labor-Management Reporting and Disclosure Act of 1959, as amended, commonly called the LMRDA.

The LMRDA includes civil and criminal provisions that provide standards for union democracy and help protect the financial integrity of labor organizations that represent private-sector employees. The Department of Labor and the Department of Justice, under a 1960 Memorandum of Understanding share responsibility for investigation and prosecution of crimes and civil enforcement actions under the LMRDA.

Any evidence of criminal conduct uncovered by OLMS is referred to the Department of Justice for prosecution. Criminal activity relating to organized crime in the context of labor organizations is handled primarily by the Federal Bureau of Investigation and the Department of Labor's Office of the Inspector General. OLMS works jointly with the Office of the Inspector General and the Department of Justice in particular cases, as appropriate.

My prepared statement summarizes the substantive member rights and union responsibilities set forth in the LMRDA, principally in the first five titles. And to save time, I will not go through those provisions. But I would simply note that the LMRDA provides for certain rights to be enforced only by union members through private suits. The statute also gives the Secretary of Labor responsibility and authority to take enforcement action in certain other areas.

The Department of Labor is committed to vigorously and effectively enforcing the LMRDA, which covers over 32,000 unions at the local, intermediate, and national levels. In the last five fiscal years, our agency has conducted 832 election investigations, and supervised 206 elections. We have completed 128 trusteeship cases, audited 16 international unions, conducted over 2,500 audits of local unions, and conducted 1,600 criminal investigations primarily involving the embezzlement of union assets and related reporting violations. During this period, the Department's investigative efforts resulted in 716 criminal indictments, and 672 convictions. OLMS has a total LMRDA staff of approximately 280. This includes 160 investigators in 21 district offices throughout the country.

Let me now turn to the specific questions you raised in your letter inviting testimony by the Department today:

The Department of Labor's role in the 1995 Hotel Employees and Restaurant Employees consent decree: The Office of Labor-Management Standards in the Department of Labor played a fairly limited role in the events leading up to the consent decree, which was primarily an FBI and Department of Justice led effort under the Racketeer Influenced and Corrupt Organizations Statute. The DOL's Office of the Inspector General's Division of Labor Racketeering was also included.

Once the consent decree was finalized, we participated in meetings held by the Department of Justice concerning the decree, and regularly assisted and cooperated with requests by Justice and the Monitor, generally for background information, reports, and similar things.

The operation of the 1960 Memorandum of Understanding between DOL and Justice with regard to HEREIU was another area you asked about. Let me clarify that the 1960 Memorandum of Understanding between the Departments of Justice and Labor deals with shared enforcement responsibilities under the LMRDA. The suit leading to the consent decree between Justice and HERE was filed under the RICO statute, and there is no such Memorandum of Understanding applicable to that.

The Memorandum of Understanding is an effort by the two departments to carry out the mandate of Section 607 of the Act to avoid unnecessary expense and duplication of functions in the enforcement of the various provisions of the LMRDA. The agreement accordingly specifies the investigative and prosecutorial role each agency will play with respect to the various parts of the statute enforced by the Federal Government.

The Memorandum permits different arrangements to be made on a case-by-case basis. It has been the experience of the Department of Labor for almost 40 years that the Memorandum of Understanding has served the public and governmental interests in enforcing the provisions of the LMRDA.

You also asked about the nature, extent, and disposition of audits of HEREIU conducted by the Department of Labor. OLMS conducted an audit of HEREIU under its International Compliance Audit Program for the fiscal year 1989. That audit was conducted generally in the calendar year 1991.

Reporting deficiencies, recordkeeping violations, and potential criminal embezzlement violations were uncovered. Ultimately, the criminal findings relating to the potential criminal embezzlement violations were referred to the appropriate United States Attorneys offices. I would note, also, that we have done numerous audits of local unions of HERE over the years.

You asked about the role of the Department of Labor in oversight of HERE, should the court supervision conclude. Unlike the RICO statute, the LMRDA does not provide for ongoing supervision of unions. However, OLMS will continue to carry out its statutory civil and criminal enforcement efforts in cooperation with the FBI, DOJ, and other enforcement agencies. We also are prepared to work with the HEREIU Public Review Board to provide compliance assistance regarding the LMRDA to HEREIU officers, members of the union, and the Public Review Board itself.

You asked about suggestions with regard to areas of the LMRDA the Subcommittee should review and address. The Department has no plans to propose legislative changes to the LMRDA. The authors of the Act worked very hard to establish a fair and open framework that provides for rights of union members, standards for labor union democracy, and financial integrity. We think that balance continues to work, and the current structure helps to provide an environment that encourages free and democratic unions.

In addition, as the members of the Subcommittee know, on March 22, Chairman Boehner asked the General Accounting Office to conduct a comprehensive five-year review of the operations, accomplishments, efficiency, and effectiveness of the Office of Labor-Management Standards in enforcing the LMRDA. On April 7, GAO staff held their initial meeting with the staff of OLMS to begin the requested review. Numerous subsequent meetings have been held, and OLMS continues to cooperate fully with GAO's review.

That will end my formal testimony, and I would be happy to respond to any questions you may have.







Chairman Boehner. Mr. Yud, thank you for your testimony. And again, I want to thank all the witnesses for their testimony today.

As many in this room are aware, the Hotel and Restaurant Employees Union was originally founded as the Waiters and Bartenders Union in Chicago in 1891. Allegations of Mob influence have been a consistent problem with this union for many decades, going back to the 1930s when Tom Dewey of New York found evidence of racketeering in the restaurant business in New York.

In 1958, the Senate Select Committee on Improper Activities established that organized crime figures in Chicago and other cities had assumed control of some of the local unions. The United States Senate conducted hearings establishing that the influence of organized crime in union affairs was in fact real, and found in 1984 what the Monitor, Mr. Muellenberg, found in the mid-1990s.

Mr. Yud, the Department of Labor under the Landrum-Griffin Act, has the responsibility to guarantee that union members' rights are preserved. And this union has been under the supervision of our Government, either by the Department of Labor or the Department of Justice, since 1959 when the Act was passed.

My concern here, as we have had these hearings, and we are going to continue to have these hearings, is: How do we get the law to work effectively to protect the rights of rank-and-file union members? And here we are, some 40 years, trying to stamp out the problems in this union.

And Mr. Yud, can you explain to me, or give me advice, as to what changes need to be made in the Landrum-Griffin Act to better guarantee that the rights of union members are protected?

Mr. Yud. Mr. Chairman, as my statement noted, the Department has no plans to propose changes in the law.

Chairman Boehner. You think that the current law is effective in guaranteeing the rights of union members across this country?

Mr. Yud. Yes, sir, I do. There are 32,000 organizations covered by this law, and I think the law balances the rights of those members with Government interference in them.

Chairman Boehner. So what you are saying to me is that you are defending 40 years of undemocratic activity in the union in denying union members their rights, as we have seen and heard testimony on here today?

Mr. Yud. Mr. Chairman, I am affected by you, as you are by the statements of the union members, the rank-and-file. And I would never defend some of the activities that have occurred. I think this was an extraordinary situation, and I think extraordinary measures were taken to correct it.

Chairman Boehner. But you stated_ just want to make sure I heard this correctly that the Department of Labor has no intentions in making recommendations to this Congress as to the changes that should come about in the Landrum-Griffin Act?

Mr. Yud. My statement was that the Department has no plans to propose changes, yes, sir.

Chairman Boehner. Mr. Garcia, in your testimony, I believe that you said that Mr. Ed Hanley continues to be involved in the union. That runs counter to all types of testimony that we have seen and other evidence that we have seen, where Mr. Hanley has been, frankly, barred from the union. Do you have any evidence?

Mr. Garcia. Well, during the election, the same day of the election, okay, they had a meeting. As a matter of fact, they threw a party at one of the suites at the Hyatt Regency in Chicago, where he was thanking everyone there in behalf of his family, okay their support, the way that they support him and his family.

And, well, that does not come from me; comes from people that were actually there, because we were not invited. But personally, I have not seen Hanley, okay, in the meetings, okay? But I have a conversation once with Mr. Maloney when he stated that if he needs Mr. Hanley to get their feet wet, to go to International, he will allow that.

Chairman Boehner. Mr. Muellenberg, in February of 1998, you entered an agreement with Mr. Hanley, a negotiated agreement, which required him to retire. Can you outline the other areas of that agreement with Mr. Hanley for us?

Mr. Muellenberg. Yes. After long negotiations, we reached the point where we did agree, and Mr. Hanley would announce his retirement not later than May 31 of last year, and indeed retire by the 31st of July.


Mr. Hanley had personally requested that that agreement would be under seal not later than May 31, because he felt that in order to have an orderly transition of leadership in this International Union, it would be helpful to him to have some time to deal with his general executive board to bring that about. I agreed to that. Judge Brown, the supervising judge in this matter, also agreed to that.

If I may take this moment to just talk about two things, Mr. Palewicz, who is sitting here next to me, made the statement that my report was not available to him and we did not send it to him. I have an agreement with Mr. Wilhelm. A copy of my report was made available to every local union. The union magazine stated that you can go to the union office and obtain that report if you are interested in reading it.

Now, we did have some reports from people who said they were reluctant to go to the local union office and ask to see the report, because they felt intimidated. But it was simply impossible this is an 82-, 85-page report to make 300,000 copies and mail it to every member of the union. So I thought this was the most practical way of doing it.

Chairman Boehner. Mr. Muellenberg, if Mr. Hanley directly or indirectly participates in the management of this union, does that not violate the agreement?

Mr. Muellenberg. Well, I am not aware, and I am not altogether clear from the witness from Chicago, whether he is talking about Mr. Ed Hanley or Mr. Tom Hanley. Mr. Tom Hanley_

Chairman Boehner. Mr. Garcia, which Hanley are you referring to?

Mr. Garcia. Tom. Junior.

Mr. Muellenberg. Yes. This is Mr. Hanley's son, who was the president of Local 1 in Chicago, whom I suspended for one year.

Chairman Boehner. Is he currently under suspension?

Mr. Muellenberg. He is under suspension until the 31st of August, at which time he has to pay a $25,000, in effect, fine to the union, and then he can ask to be reinstated as a member in some kind of capacity. But Mr. Hanley will relinquish both his position as president of Local 1, as well as one of the four general offices. He was the director of organization, was one of the four general officer positions in this International Union.

Mr. Wilhelm. Mr. Chairman, if I may?

Chairman Boehner. Yes.

Mr. Wilhelm. May I comment on one aspect of the Local 1 situation? Local 1 in Chicago recently conducted its first local union elections, after the issuance of the Monitor report. And Brother Garcia, who has testified here today, was a candidate for office on one of the slates in that election. And I am delighted that he exercised his right to do so. As it happens, he was a candidate on a losing slate, but that is neither here nor there.

The Public Review Board of the International Union requested me, in my capacity as general president, to join with the board in asking the Department of Labor to supervise that election, because of the scrutiny that it was under in the aftermath of the Monitor's report. I did join in that request. The Department of Labor, as is its consistent policy, said that it was not in a position to supervise that election; but it did offer technical resources.

The election committee of the local union, which according to the bylaws is a group of rank-and-file members, asked the local union to retain special counsel for the purpose of advising it in conducting that election, in order to ensure that it would be conducted fairly. The local union retained as counsel to the election committee not counsel to the local or any of the candidates attorney Thomas Gahagan of Chicago, who is a well-known authority on the subject of union democracy and local union elections, and I believe serves on the advisory board of the Association for Union Democracy with Brother Palewicz.

Attorney Gahagan recommended to the election committee that the American Arbitration Association be retained to supervise the election. The election committee decided to do that, and the local union asked the International Union for financial assistance for the purpose of paying for these extraordinary expenses; namely, the Triple-A and the attorney.

I recommended to the General Executive Board of the International Union to subsidize those expenses, even though we would not normally get involved in that, because I thought it was in the best interests of everyone in the union to go to whatever lengths were necessary to ensure a free and fair election.

And I think it is of note and I will close with this on this point that after that election was conducted and it was fiercely contested, as is appropriate the slate headed by the incumbent officers happened to prevail; the slate of which Brother Garcia was a member happened to lose.

But I think what is singularly important is that the losing side in the election filed no objection or challenge of any kind to the election. And in fact, the leader of the slate, the candidate for president, who is a co-worker of Brother Garcia's, was quoted in the media as having said he believed the election was conducted fairly. And I think that was important. And I am delighted that the International Union was able to respond to the request for resources to ensure that result.

Chairman Boehner. Mr. Payne.

Mr. Payne. Thank you very much. This is a real opportunity for me, because I am not the Ranking Member any longer of this Committee, but did serve in that capacity during the last session. And this seems like it is the same old thing all over again.

This is the sixth hearing that I have been at where we have taken a union and we know that there are thousands and thousands of unions, there are hundreds of thousands of members, millions of members but we have been able to find unions where there may have been a problem, to highlight evidently that you try to come to a conclusion, I guess, that therefore all unions are bad run by criminals, and do not serve their people.

And I think that it is totally the opposite. Bills that have been put in the Landrum-Griffin Act, the National Labor Relations Act these are legislative moves that have made labor and industry equal, that have been fair. But during the last two sessions, I have seen time after time attacks on these laws and talk about changing them.

I agree, if there is something wrong, it should be brought out. But when you only dwell on a negative that may have occurred, then I wonder whether the real interest is of the workers in the union. I really question that.

I have seen hearings on a union that, I think they were radio operators on transport ships. They had 200 members nationally. But they found this union, and decided that this was the worst run union in the world. It is probably the smallest, too.

But, you know, I have to give my colleagues credit, because since the 105th Congress I do not know if my time will expire but I looked at some of the legislation when I came down, not realizing that I would be in the seat of the Ranking Member. And I am sure the Ranking Member may have wished he had stayed here.

But there was a bill called the Working Families Flexibility Act. That sounds very good, but that was a bill that was proposed by my colleagues on the other side to give you time off, except overtime. The Sales Incentive Compensation Act. That sounds very good, but once again, my Republican colleagues introduced the legislation that changes overtime status of sales workers.

The Teamwork for Employers Act. Everybody would like teamwork, but what does that say? That the company can select the people to negotiate with for union pick your union representatives.

The Workers Paycheck Fairness Act. Who could fight against paycheck fairness? What was that? It says that you could not use union dues for political purposes.

The Truth in Employment Act. Everybody wants truth in employment. What did that mean? That meant that if you worked for a union and you were in construction work, you could be prevented from working on a non-union job.

And I can go on and on. The Fair Notice of OSHA. That sounds fair. I do not even want to go into that.

The Workers' Paycheck Fairness Act. Who could fight against paycheck fairness? What was that? It says you could not use union dues for political purposes. The Truth In Employment Act. Everybody wants truth in employment. What did that mean? That meant if you worked for a union and you were in construction work, you could be prevented from working on a nonunion job. And I can go on and on.

The Fair Notice of OSHA. That sounds great. I do not want to even go into that. The Fair Act. That one says that if the NLRB took a case and if the employee lost the case the NLRB had to pay the business its cost because they won the case. Of course, not reverse.

So, I just bring that out to say that this is not surprising that we are continuing in the trend of the types of hearings that we have had.

Now, let me just ask a quick question. Mr. Wilhelm, I understand, were 47 recommendations that were made when intervention came about. Could you tell me and I think you mentioned it in your testimony but could you tell me how these 47 recommendations and almost I also want to note that the Monitor did not find that there was day-to-day control of the unions, according to everything I have been able to read as it was mentioned here that it was just the opposite but could you tell me about these 47 recommendations of the court and what has been done? And have they been fulfilled or how many have been fulfilled? And what may be left and what is happening in that regard?

Mr. Wilhelm. Thank you, Congressman. And you are, indeed, right, that the Monitor concluded, as I said in my testimony, that with respect to the former as well as the present national officers of this union, that there is no issue of organized crime. Not only control but influence or association.

With respect to the recommendations in the Monitor's report, there were some 47 of them, as you said. I received this report and when I had been General President for about three weeks, I promptly convened a meeting of the General Executive Board as the Monitor, and former Monitor testified on The first of September, 1998.

And we had a thorough discussion of all of the Monitor's report and his recommendations. The General Executive Board unanimously adopted my recommendation that all of these recommendations from the Monitor be adopted and implemented by the international union.

I have, personally, overseen their implementation. And 44 of them have been implemented. Three of them are in progress and the only reason those three are not completed is because they involve a cooperative effort with two other unions, and they will be completed in short order.

So, even though those recommendations go far beyond anything required in any law, we have adopted all of them and I believe they have been helpful. Because I believe that the Monitor's report demonstrated, as I said in my testimony, that the business and financial practices of the union needed substantial tightening, and, so, they have all been implemented. Even though, of course, the union was under no compulsion to implement any of them.

Mr. Payne. Thank you.

Well, I would like to add your report as a part of the record for this, the Muellenberg Report, and I hope that it is without objection.

Let me just ask the representative from the Labor Department, you have indicated incidentally I am a former waiter and bartender and worked in Richfield Caterers in Verona, New Jersey and did a lot of work at private homes, so, I understand the work that I did myself. My father, he worked in another business. But I know what the union has tried to do and I certainly feel supportive.

Just quickly, my time has expired, but why do you oppose changing this legislation that has been on board? Maybe, just in a quick nutshell, since my time has expired.

Mr. Yud. Well, as I said the Department has no plans to oppose legislative changes. I think in balance the view of the department is that the legislation has worked well, that it sets the proper balance between member rights and responsibilities of the unions and the basis for government interference in those activities.

Mr. Payne. Thank you very much.

Mr. Giblin. Could I make a comment, Mr. Chairman?

Chairman Boehner. Mr. Giblin?

Mr. Giblin. I still would raise the question as to how these abuses existed for as long a period of time as they did, despite the oversight of the DOL. I went, personally, to their offices after the audit the gentleman alluded to and that was completed, I believe, in 1991. And I asked them about some of these abuses and why they did not act on them. I pointed out they were aware of them, most of them. And the answer I got was, we do not like it, but it is up to the members to do something about it.

How can the members do something about it when they are not made aware of it? These records, these ICAP records are not public. I do not even know if you can get them on your FOIA. So, again, I ask, how are we supposed to do something about something that we are not aware of, that the DOL is aware of, and closes its eyes to?

I would also like to make a comment on the issue of organized crime and those allegations, which I think, are being glossed over here. Mr. Hanley, the president of this union was barred from any communication with the Atlantic City local when that civil action was taken. Barred from communicating with his own local because of these connections, alleged connections.

I talked, personally, with a DOL agent who told me that as a result of that action more evidence had come forth, through them, about organized crime connections. Mr. Hanley testified and took the Fifth Amendment 35 times relative to these allegations during the hearings in the 1980s.

So, I feel that there is more substance to these charges and allegations than we are hearing about today.

Chairman Boehner. Mr. DeMint.

Mr. DeMint. Thank you, Mr. Chairman.

As a first-term Congressman, this testimony has been very helpful to me and I appreciate your contribution to my education. I am sure we can all agree that just as it should be our primary goal as Members of Congress to protect and promote the rights of the individual citizens that we serve, the primary goal of any union must be to protect and promote the individual workers that it serves.

When either the government or a union abandoned that purpose and abused the rights of the people we serve, it is a serious problem and essential that the problems be identified and corrected. And I will remind my colleague on the other side that Republicans have done much more to identify and correct abuses of government since we took control than we have unions.

I am encouraged to hear today that some progress is being made towards reestablishing integrity and trust of HERE. But to continue the progress towards union democracy it is important that there be full disclosure of decisions made by union leadership that affect union members.

This brings me to one question about the compensation of union officers. And I will direct my question to you, Mr. Wilhelm, is it a policy of HERE to provide lifetime salaries of retired officers of the international; and, if so, when was this policy implemented, who approved it, and did rank and file have a chance to vote on it?

Mr. Wilhelm. Going forward, the answer to that question is that under my administration there is a policy that there will not be any retirement arrangements beyond the normal pension plan that covers all of the employees of the international union, from the lowest to the highest. There will not be any additions to that.

Looking backward, several of the former officers of the international union, including three still living and one or two deceased, had contractual agreements with the international union that I have been advised by counsel are binding contractual agreements, that provide a supplement to the pension plan that has the effect of continuing for their lifetime their previous salary, not on top of their pension but the total, including the pension, equals the previous salary, and their other emoluments in office, whatever those might have been.

Those contracts were voted upon and approved by international union conventions and those conventions consist of delegates elected by each of the local union rank and file in elections that take place prior to the convention pursuant to the constitution.

So, the answer is going backward there were four or five such arrangements; three of those individuals are still alive. Going forward, so long as I am the General President, I will not recommend nor accept arrangements of that kind.

Mr. DeMint. Well, I want to compliment you on the change in policy and I know that will do much to help reestablish trust.

Thank you.

Mr. Ballenger. [Presiding.] I guess the senior member, since there are a limited number of us that are subcommittee members, will get us first, and then can we finish the subcommittee? I am the last one on the subcommittee.

Oh, Pete, is he on it, too?

Okay. I do not know how to run this thing. And John will be back here in a minute. So, I guess, let me just step in myself and fill in until the rules and regulations are delivered to us.

Mr. Wilhelm_

Mr. Wilhelm. Yes, sir?

Mr. Ballenger. Let me just ask a straight-up-and-down question because Mr. Payne kind of posed some thoughts in his mind about how ineffective we were in coming up.

Let me ask you a question. If there had never been the Landrum-Griffin bill, and if there had never been the Federal Government's intervention and Mr. Muellenberg had not had a job, do you think there would have ever been a chance for you to do the job that you have done in several areas of the country?

Mr. Wilhelm. Yes, sir, I do.

Mr. Ballenger. How?

Mr. Wilhelm. First of all, I think it is important to note that, and again time does not permit me to talk about all the assignments that I have had for this international union. One that I do want to mention because it is relevant to some of the testimony is was in San Francisco, in Local 2, Brother Palewicz' local. And I want to respectfully differ from one small part of Brother Palewicz' testimony.

He said that Local 2 is a highly effective, democratic union and he is absolutely right. He also said it was the most democratic union in HERE. We can have a contest about that. I would respectfully submit there are some others that are probably equal with respect to democracy. But I agree with the thrust of his comments about that local union.

And I had the opportunity and it was a privilege in 1986 to respond to a request from the elected leaders of that local union to join with them. They had an interesting situation there. The situation was that they had a highly democratic local union but a not very effective local union in the late 1970s and early 1980s. And that happens sometimes, too.

So, I had the opportunity to work with them and I played, I think, a small role in their becoming more effective. I had the opportunity to lead the organization of 2,600 clerical and technical employees at my alma mater, Yale University, and lead a strike there in 1984, which was a nationally important struggle for economic equality for_

Mr. Ballenger. Let me interrupt you, if I may, because the buzzer went off and we are going to_

Mr. Wilhelm. Oh, you have go to vote?

Mr. Ballenger. Yes, please cut it short. And I enjoyed your speech. But I would like to ask Mr. Garcia, figuring that you lost so, you have been painted somewhat as a poor loser. But the fact is that at the present time is your union run by a Mr. Maloney?

Mr. Garcia. Yes.

Actually he is right here behind us.

Mr. Ballenger. Yes, go ahead. He is a good friend of yours, I understand or at least you knew him fairly well.

Mr. Garcia. Yes. We were very close friends. And then I started asking him questions about the Monitor report. When I started reading the newspapers, one of my comments was, Terry Maloney, what is going on with this union, you know; the newspaper all over the city talking about us and the Monitor is behind us, too?

He goes, oh, do not worry, they are behind us for seven years, nothing happens. So, do not pay attention to those things.

So, the way that this has been created is like Maloney's committed, okay, to himself and to the Hanley families that have been committed to us, the members. Okay? We are the one who support them, we are the one who paid their bills. But in this case, it does not happen to be this way.

Mr. Ballenger. In other words, right now you say that the Hanleys still have a fairly large influence as far as that Local Number 1 is run?

Mr. Garcia. Definitely. When the Hanleys, Tom Hanley makes a comment saying, my family and myself thank you for all the support that you have provided us, yes. And especially is referring to Terry Maloney, yes, I believe so.

Mr. Ballenger. Mr. Wilhelm, kind of to some extent puts the question. Of course, I realize that you do not necessarily have the authority to kick people out or make sure people are not when they are removed or removed from the management of the locals and so forth. I would love to ask Mr. Muellenberg, is there was nothing doing as far as the Hanleys were concerned that was criminal enough to go to jail?

Mr. Muellenberg. Well, I think we need to clarify something which seems to sort of be present in the room. There is a consent decree which clearly defines the limitations that the Monitor has. This is not a U.S. Attorney's Office, it is not a Special Prosecutor. So, I have to follow the mandates of the consent decree. And the question of whether or not there was ever any possible criminal investigation or possible indictment is not the question that I should answer. The Department of Justice could answer that.

Mr. Giblin. May I comment on that, Mr. Chairman?

Mr. Ballenger. Yes, please.

Mr. Wilhelm. Mr. Chairman, respectfully, sir, I am new at this. I did not take the Fifth or anything and I did not get subpoenaed or anything. I just showed up. You asked me two questions and I have not had a chance to answer either one.

Do I get that chance?

Mr. Ballenger. I know. You used up all my time.


Mr. Wilhelm. Well, okay, I sure would like to answer them at some point, sir.

Mr. Miller. Mr. Chairman, you got to give witnesses a chance to answer the questions.

Mr. Ballenger. Well, he talked for about five minutes and did not answer the question.

Mr. Miller. Well, then write out the answer you want him to give and then he can give that one.


Mr. Miller. You ask a witness a question, the witness is entitled to give the answer. You do not like the answer, then ask him another question.

Mr. Ballenger. Well, he gave me the answer. His answer was, yes, immediately, and then he gave me a long statement of why_

Mr. Miller. I mean Members of Congress go on for hours, for crying out loud, you know, and it is not relevant to the topic.

Mr. Ballenger. But you do it better than most of us.

Mr. Miller. We ought to at least give the witnesses the dignity of whatever answer they want. You got Mr. Garcia speaking for Mr. Maloney, who said something that somebody said to him. Why do we not get Mr. Maloney up here and ask him what he said?

Mr. Ballenger. Well, I am not in charge of the committee, so, we will just have to leave it at that.

Mr. Miller. But you are running it and you ought to run it in some kind of democratic fashion.


Mr. Ballenger. Well, how about a Republican fashion? Just_

Mr. Miller. Well, apparently this is Republican fashion. You do not like what you hear, you cut them off.


Mr. Miller. You know, Democratic, like in the traditions of this country and people's right to be heard.

Mr. Ballenger. Right. Look, we got votes coming up.

Mr. Miller. Now, we got votes, so, sorry, we still cannot answer your question.

Mr. Giblin. Can I make my comment?

Mr. Ballenger. Yes, sure, go ahead.

Mr. Giblin. Okay.

You know, relative to whether or not there were any criminal charges and I certainly am not a lawyer or a judge, but it is my understanding, and this is in discussion with Federal agents, the reason Mr. Hanley retired was he was being presented with an option of being charged for having established a phony local in Rhinelander, Wisconsin, which was adjacent to his and other officers' vacation homes, which was patently fraudulent. And I would guess cost hundreds of thousands of dollars.

I do not have to guess, it did cost hundreds of thousands of dollars over a five-year period, which incidentally showed no increase in membership during that entire period, and did not even meet the standards of a local.

Another item is that Tom Hanley, his son made payments for at least 10 years, of over $31,000 a year to his father for ``advice on how to run a local''. The Monitor found this to be effectively a gift.

I would wonder why there have not been any real serious efforts toward prosecuting some of the officers and, furthermore, why there has not been any recovery of the many millions of dollars that have been siphoned off during their tenure?

One of the troubling things about this RICO is that the expediency factor. The Government goes in, in a very limited period, a ridiculously limited period of time and looks at what is happening now and ignores the past, the history.

Now, you can understand the need for some expediency but I talked with FBI agents and brought up some serious issues and they said to me, oh, no, we are not going back on this. We are not going back.

So, effectively, they are going in and looking at a situation now saying, well, there are no present organized crime connections. Well, what about the 25-year history?

Chairman Boehner. Mr. Wilhelm, you may answer the questions that were posed to you.

Mr. Wilhelm. Thank you, Mr. Chairman. I appreciate that very much.

I believe the first question had to do with whether or not in my judgment this union would have undergone a process of constructive change in the absence of Government intervention? And my answer to that was, yes. And I attempted to begin to explain it and I will try to be more brief. I do sometimes run off at the mouth and I apologize.

In all of the years that I worked for this union, the local unions that have been engaged in projects and struggles on behalf of their members have very often had a resource mis-match with their employers because increasingly, as we know, we have national and worldwide companies and we have local unions. And it is a mis-match by definition.

Whether at Yale University or whether in Las Vegas or whether in San Francisco, Brother Palewicz' home local, in all of those places and in many others, Los Angeles, Sister Durazo's testimony, the international union has provided enormous support for all of those efforts, including the kind of story that she told about the democratization of a local union. So, I believe that that has always been a important factor in my experience of this union.

I think that the changes with respect to the financial processes of the local union were undoubtedly abetted and assisted by the Monitor's report and I have said that in a variety of forums. I have said it to our members.

On the other hand, I believe those things would have happened anyway, because I think standards change and I think for the better. I am a great believer in democracy and I am a skeptic, if you will forgive me, about government regulation. And I believe that in local union after local union and, indeed, in the international union, that our members have stepped forward to make the changes that need to be made.

And I would like to say, Mr. Chairman, in response to the legislative issue that both you and the ranking minority member raised in your opening remarks, I do not know if it makes sense to reopen LMRDA by itself. But I believe there is a very serious democracy problem for workers in America.

To the extent that the democracy problem exists in unions then I believe all of us should address it. I am prepared to address it and Brother Palewicz is quite right. I am anxious to address it in our organization. I offered to meet with HERETIC and have not been so far taken up on that and I hope I will be.

In our 1996 convention, former general president Hanley asked for and received a suspension of the rules from all the delegates for the purpose of permitting HERETIC, even though none of them had run for delegate with their peers, to be seated and, indeed, to address the convention and HERETIC decided, in their wisdom, not to do that and that is fine.

My point is in our union I am prepared, and I believe my record shows that, to do whatever we need to do for democracy but there is a bigger problem, Mr. Chairman and I will conclude, because I said, I predicted myself, I do talk too long but the reality is there is no democracy in the work place in America today. Working people suspend their democratic rights when they punch the clock. They have no free speech. They have no effective redress against their employer. And when they try to exercise their right that they have in the law to organize a union, they are subjected to the most incredible campaigns of intimidation and terror.

So, there is a democracy problem. To the extent that it exists in my union, I am going to attack it and I am going to ask for Brother Palewicz' help. To the extent it exists at work it is overwhelming, it is stifling, it is robbing this country of its human resources.

Chairman Boehner. We have three votes on the House floor. So, we are going to go and vote and the committee will resume this hearing 1 p.m.

We will stand in recess until then.


Chairman Boehner. The committee will resume its hearing.

And the gentleman from Michigan, Mr. Hoekstra, is recognized for five minutes.

Mr. Hoekstra. I thank the chair for this hearing and the participants for being here today. There has been a lot of discussion about systemic, long-standing corruption within HERE. I do not think anyone denies that this has existed and some of it may even continue today.

But the purpose of the hearing is to look at the big picture of union democracy. Is there a lack of rank and file union democracy that contributes to union corruption? And is it the only way to rid a union of corruption and attempt to implement democratic practices through Federal Government supervision? You know, is the structure that oversees unions appropriate?

You know, I read through some of the documents and listening to some of the testimony and it is kind of like been there, done that. The description of what went on within HERE and about a lack of accountability to rank and file is almost identical to what we saw when we did the Teamsters investigation.

Mr. Wilhelm, prior to your election as general president, you served as secretary/treasurer?

Mr. Wilhelm. Yes, sir, for two years

Mr. Hoekstra. And a member of the executive board?

Mr. Wilhelm. Yes, sir

Mr. Hoekstra. The report that came out says and this, again, is almost exactly what we saw within the Teamsters there is no budget, no organization chart, no job description for employees and no policy manual.

Did you, in your capacity as secretary/treasurer or member of the executive board, ever discuss these lack of controls with Mr. Hanley?

Mr. Wilhelm. I was elected secretary/treasurer of the union in August of 1996. The Monitorship was well underway and at that time it was anticipated that the Monitorship would conclude within a few months. As it turned out, Mr. Muellenberg asked for additional time.

I discussed those very issues including, in particular, the need for a budget with not only the general president but the entire general executive board and I was supported in the notion that we needed to start a sane budgeting process and to have a much greater financial reporting to all of the levels of the union. And I began to do some of those things.

With respect to some issues I proceeded. With respect to others, after consultation with Mr. Muellenberg, I thought that final procedures and documents would be aided by his report. His report was briefly delayed as I said before because he needed additional investigative time. But the short answer is that a number of those things were put into place before his report came out and the rest of them have been put in place since his report came out. And that is why I commented that I think his report was helpful

Mr. Hoekstra. How does an organization of that size, you know, over 200,000 members, I think dues, receipts of over $30 million a year, how does an organization get to be that big without developing what are basic business principles in implementing those?

I cannot, you know, other than the Teamsters, you cannot think of many organizations or businesses that would have this total lack of financial controls, even, you know, obviously to report back to their members as to what is going on.

How did HERE get to that point?

Mr. Wilhelm. Respectfully, sir, I, having served on many boards in the nonprofit sector, including some very large organizations, I think that is not terribly uncommon historically in the nonprofit, including but not limited to the labor organization. However, in my view, those changes were overdue and that is why when I became general secretary/treasurer I embarked upon doing those things. I think they are absolutely necessary and that is why I started doing them.

And, by the way, with the full support of all of the other officers, even then, and all of the general executive board members.

Mr. Hoekstra. Well, I would hope so that you would have their full support. I mean you have got an example here of what happens when there are a lack of financial controls. Later on in the report it talks about, you know, routine credit charges of approximately $971,000 incurred by Mr. Hanley and other general officers.

And it says, you know, it totals it: Formal policy regarding the use of above-identified credit card appears to be nonexistent. The Department of Labor files reflect that the international union officials were not keeping adequate records regarding officers' expenses.

Now, they pointed out that in many cases explanations were not given for charges; in other cases were incomplete or insufficient explanation was given.

You know, my experience may be different from yours. I do not believe that it typically the case in business organizations. I am not as familiar with what happens in nonprofit. But having those basic financial management tools not even in place I mean are there some systemic changes that you would recommend in labor law that would require these basic things to be put in place so that rank and file actually knows that the union is being managed to some set of standards that are reasonable?

Mr. Wilhelm. As I said before, Congressman, I believe that democracy works best and I am a skeptic about government regulation. I thought that the process of our cooperation with the Federal Government was extremely useful because it did, in fact, put to rest as a result of a competent expert investigation, the notion that the national leadership of the union was corrupted by or influenced by organized crime.

With respect to the business procedures of the union, and I thoroughly agree with you that they need to be sound business practices, I believe those changes would have come and I think they would have come because of pressure and I use that word in a positive sense because I think pressure from members is good; pressure from members in local unions as well as those of us who have the good fortune to attain higher office.

So, I believe that those things would have happened but I also believe, as I said, that the Monitor's report was helpful in hastening them.

Chairman Boehner. The gentleman's time has expired.

Mr. Andrews?

Mr. Andrews. Thank you, Mr. Chairman.

Let me again apologize to the witnesses for not being present, personally, for all of the testimony and the questions. I did read everyone's testimony. I heard almost everything.

Let me say to Mr. Giblin, Mr. Garcia, Mr. Palewicz (did I say that right?), that your testimony is very valuable to us because as we think about ways that we could make the laws work better it is best to have real life experience and the experiences that you have shown.

Mr. Giblin, I especially appreciate your frustration and the long years of attentiveness to this problem will be very valuable to us.

Ms. Durazo, I think that what you had to tell us this morning was also very valuable because I take it as significant evidence of the fruits of the good work of the reform of this union. The good things that you told us about your organizing efforts and the benefits that your members have enjoyed is proof positive that the process that began in that Federal court is succeeding, and succeeding for the benefit of many members.

Mr. Muellenberg, I want to say to you again, thank you, for taking on what must have been a very difficult and daunting task. It appears to me that you have done it exceedingly well. And I just wanted to read a couple of statements from your report because I think that they provide important context for the discussion we have had today.

On page 81 of your report, which is submitted to Judge Brown, you talk about all the malfeasance that went on, all the troubles that went on but then you say, it would be a great mistake to draw general, sweeping conclusions about the integrity of the thousands of people involved in this union, based on the problems raised in this report and it would be unfair.

Could I ask you just to amplify on that a little bit. What has been your experience generally in dealing with the thousands of rank and file and leaders of this union?

Mr. Muellenberg. Well, I had obviously, it was a short time that I served and I had the opportunity to meet rank and file union people all across the country. And that statement, I wanted to put that in the report because my duties were outlined in this consent decree and my responsibility was to the court in a report to the court. This is not a big-8 accounting firm evaluation or a general accounting office report.

I reported what I did. But at the same time I realized that we looked at a relatively small segment of this union and that some of the people I met I was really impressed with.

Mr. Andrews. I want to note for the record that one of those individuals that I have gotten to know, personally and I am very proud of our association, is with us today who is Bob McDevitt, who is with the Atlantic City local. I welcome him to the proceedings and congratulate him on the work that he has done for his members.

Either Mr. Keeney or Mr. Yud could answer this question for me. This whole process initiated because of a civil RICO complaint, if I understand it, filed in Federal Court, and the complaint and settlement took place on the same day.

I wonder if you could describe to us any circumstances that would not constitute actionable conduct under civil RICO that would be harmful to members of a union I mean the kinds of examples we hear about we heard about it in the Teamsters investigation as well as this one are people misspending funds for personal use instead of union use; people perhaps paying people for work that is not done, and so on and so forth.

Many of those do rise to the level of criminal offenses. And I just wonder if you could tell us if you think there is any conduct that is systematic that would fall outside the scope of a civil RICO action?

Mr. Keeney. That is noncriminal?

Mr. Andrews. Yes.

Mr. Keeney. Mr. Andrews, I am sure there are some but I cannot think of any right off hand.

Mr. Andrews. Well, Mr. Boehner, the chairman, has indicated he would hold the record open. And I would be interested in the Justice Department and Labor Department's views on that. Let me tell you why I ask. The underlying issue here is whether or not new rights or new remedies need to be created in the Landrum-Griffin bill. And the answer is, we do not know.

One of the things that we do know there are expansive rights that are under the civil renditions of RICO. We are seeing some of those rights before us today and I would be interested in the point of view of the department on what misconduct might fall outside the scope.

Mr. Wilhelm, let me finally say to you that I think you have compiled an impressive record of compliance, meeting 44 of those 47 standards and it appears that you are well on the way to meeting the other three as is noted by Mr. Muellenberg in his testimony. We certainly appreciate that effort.

Are there any tools that you have not been given by the consent decree that you think would help you finish that job?

Mr. Wilhelm. No, sir. I believe that, first of all, I appreciate your comments. I believe that this process has made it indelibly clear throughout our union, from the general officers that I took office with, all of whom are new, to the general executive board, to the local union leaders and, indeed, to the members, that this union has to be run in a business-like, sound fashion that is the highest stewardship of the members' money.

We have extremely limited resources at all levels of our union. About two-thirds of the resources of the union are in the local unions and the rest at the national level.

We have to deal all of a sudden with a totally changed corporate environment with mega-corporations. The biggest hotel company in the world did not exist five years ago. And I believe there is a great sense of urgency and a sense of renewed purpose.

So, I do not believe new tools are necessary. I think what has happened is that our union has been awakened from top to bottom and I believe that the foundation for that awakening was laid by the previous leadership and I believe that everybody in our union has resolved to go forward and we are excited about it.

Mr. Andrews. Thank you very much.

Chairman Boehner. Mr. Miller?

Mr. Miller. Thank you, Mr. Chairman.

Just a couple of questions, Mr. Muellenberg, if you will.

One of my concerns about this review, and I think it is quite far from the context in which the chairman has posed it, is to try and learn whether or not, as Mr. Andrews said, additional tools are needed or not needed in current Federal law with respect to labor practices and union practices. That is that we not get sloppy here with respect to what is then and what is now, because I think we are dealing with peoples' reputations, with an organization's reputation.

As I read your testimony one of the suggestions was that because you take the Fifth Amendment that somehow you are guilty. I did not learn that in law school.

But one of the suggestions is whether or not the role or what have you of organized crime within the organization and you state in your testimony, (I think more extensively in your report), the number of people that you disciplined, the number of people that were removed from the union or barred from participation for life and the series of actions you took for people for a number of different violations of proper behavior or the law or what have you, as you outlined.

But you also make it very clear on page 4 of your testimony that none of the four general officers, I am quoting your testimony, general officers are serving at the beginning of my Monitorship have been charged with organized crime association and there has never been any allegation of organized crime association against the general president Wilhelm.''

I assume that is an accurate reflection of what you know the status to in fact be?

Mr. Muellenberg. That is correct. That is correct.

Mr. Miller. I think that is very important because I also in reading your testimony in preparing for this hearing this is not an organization that has not gone through a lot of trauma in trying to deal with its past activities, its undemocratic activities, and to restore democracy in many instances.

Both Mr. Wilhelm has said that that obviously the most important foundation of this kind of organization. You have talked about the fact that when democracy ceased to exist than a lot of bad things can happen, when challenges are not open and above board and contests are not given for officers of the locals and the international.

And I think it is important that we understand that those changes have been made. My understanding, again, is that the PBS is a part of the constitution at this point, if I read your testimony correct, right?

Mr. Muellenberg. The Public Review Board?

Mr. Miller. Yes.

Mr. Muellenberg. Yes, it is. It was approved by the convention in 1996. It is now active. As was indicated, former Governor Thompson of Illinois is the chairman, Archbishop Callahan of Kansas City and myself. President Wilhelm and his senior staff and the other general officers have appeared before the board twice to report on the progress of implementing my recommendations.

The board is conducting inquiries to make sure that where I remove leadership at local unions that there has not been an attempt to recapture that union.

So, the board is active and it will be a permanent part of this union even when this lawsuit is dismissed at which time, of course, the court's jurisdiction and court supervision would be history.

Mr. Miller. And that is a means by which union members can bring complaints directly to you, is that correct?

Mr. Muellenberg. Yeah, that is correct. And I think it is a really very important part for reasons, you know, we could talk about for a long time. It is not the time or the place. There is a sense in some unions of feeling of intimidation, that if you wanted to get some information, people call me saying, well, the last place I am going to go is to the union office.

So, that sort of the existence of that kind of a board could be almost like an ombudsman and is a vehicle for people to have some place to go.

That does not mean that Mr. Wilhelm is correct. The first person has a responsibility to create an atmosphere where people feel more comfortable to ask for the information that they are entitled to is Mr. Wilhelm's responsibility. But the board can be sort of a safety valve, which I think is a good thing.

Mr. Miller. Thank you.

And having said that I assume that you continue to stand by, what is the last sentence in your testimony, that you are satisfied that the new leadership is moving in the right direction to make changes that need to be made. And I am hopeful that in close cooperation with the Public Review Board these change will bring about a greater democracy in this organization.

That continues to be your view?

Mr. Muellenberg. Yes. I really believe that. And I hope it happens because ultimately the union has its destiny in its own hands. That cannot be with a Monitor or with the Government.

Mr. Miller. Thank you.

Thank you, Mr. Chairman.

Chairman Boehner. Thank you, Mr. Miller.

Mr. Palewicz. Mr. Chairman, is it appropriate using Mr. Giblin's example to just interject a question or a comment, quickly?

Chairman Boehner. The gentleman may proceed.

Mr. Palewicz. In Local 2 the way we deal with the question that Member Hoekstra raised about how do you improve things. On the main bulletin board of the Local, beside the list of the officers and when the meetings are there is also the budget and what has been passed by the executive board. People know what it is. I contend here and I turn to Sister Durazo to confirm this, probably now the international executive board members get a list in advance of what unusual expenditures are going to be at the executive board.

And if I remember Mr. Muellenberg's report that did not necessarily happen all the time before. This is a very simple, basic change that I think is very good.

I would also add that Brother Wilhelm is slightly incorrect. I take his invitation for HERETIC and our groups from the international to talk but in terms of the last convention it would be as if Brother Wilhelm today at noontime had invited me for breakfast today. We did not get that information until after the last convention was over and I can prove it.

Chairman Boehner. As I stated earlier, since the passage of the Landrum-Griffin Act, this union has been under the supervision of either the Department of Labor or the Justice Department. That is 40 consecutive years. And Mr. Yud, obviously the Department of Labor has been aware of Mr. Hanley's $350,000 lifetime salary, his private jet, cars for he and his family, and motor home, multiple homes, apartment, stretch limousine, unlimited expenses. Has not the Department of Labor done anything to protect the revenue that is generated by the members of this union?

Mr. Yud. Well, in two ways I think under the law we have had responsibilities there. One, we've obtained reports as required by the law from the union and those reports are, as you know, public documents. And made arrangements for public disclosure of those reports.

Hundreds of thousands of pages of reports are released every year to members of unions and members of the public who request them. And also, as I stated in my statement, we have done an audit of the international union and we took action on the basis of those findings of those audits. Including bringing possible or alleged criminal violations to the attention of the Department of Justice and addressed them with the Department of Justice.

Chairman Boehner. Mr. Muellenberg, who is overseeing the enforcement of the consent decree, since you are no longer being the monitor here?

Mr. Muellenberg. Well, the consent decree is still sort of there, but now the Board is really_

Chairman Boehner. You are referring to the Public Review Board.

Mr. Muellenberg. The Public Review Board is really the entity that would have the authority not only to investigate, but also the authority equal to the Monitor in a sense of can discipline members, anything from a fine to a suspension. So the consent decree is still sort of sitting there until it is dismissed by agreement with both parties, and the earliest date for that I think is September of this year.

Chairman Boehner. When was the Public Review Board put in place?

Mr. Muellenberg. The Public Review Board came into place there was a little bit of confusion but basically when my monitorship ended, which was March 5 of 1998, the Public Review Board, in effect, became active.

Chairman Boehner. How many meetings of the Public Review Board have been held?

Mr. Muellenberg. Oh, I would say about six.

Chairman Boehner. And what, if any, findings have you noticed over that 15 months or so?

Mr. Muellenberg. Well, it is really not the role of the Board at this point to duplicate what the Monitor's Office has done. I am still the court-appointed Monitor, and as such I participate in the Board.

Chairman Boehner. So under the law do you enforce?

Mr. Muellenberg. For example, we have and it gets a little bit technical but we just had a session this week. The Public Review Board, and I am the court-appointed Monitor, there will be a court order entered that as long as the consent decree is in place, since I am a court official, in some way, I will still be able to receive information from law enforcement agencies, just like the FBI and the Department of Labor, which, especially in the area of alleged association with organized crime is almost essential because otherwise you would never know.

Mr. Andrews. Would you yield for just a moment?

Chairman Boehner. I would be happy to yield.

Mr. Andrews. Very briefly. I wanted to clarify one point, your earlier question about the union being under the supervision of the Department of Labor for 40 years. The union's been under the supervision of the Department of Labor in the same way that corporations are under the supervision of the Securities and Exchange Commission; that they are regulated by what the Department does, but there has been no special custodial relationship until the consent decree was entered into in September of 1995. I believe that is correct, and I just wanted the record to reflect that.

Chairman Boehner. Well, the point that was made is either the Department of Justice or the Department of Labor has been involved in trying to sort out the problems in this union since the Landrum-Griffin Act passed, more so than typically being supervised as any other union would be.

Let me go back to Mr. Muellenberg. Will the Public Review Board certify that the International Union has addressed all of the Monitor's recommendations and instituted democratic practices?

Mr. Muellenberg. Well, if and when Mr. Wilhelm reports that all of these recommendations have, indeed, been implemented, I mean, we will know about that. The democratic practices, as you have indicated in your opening statement, is something that I am sort of wrestling with, and I feel somewhat uncomfortable to talk about democratic practices in this or any other union because there are so many people in the room, including yourself, who know more about unions than I do.

But let me at least take this short opportunity to make in my statement, some recommendations. I believe that Landrum-Griffin should be amended so the Labor Department should be able to bring lawsuits to enforce the fiduciary responsibilities against people who violate them, which would require an amendment of_

Chairman Boehner. Well, don't they have that authority today?

Mr. Muellenberg. No, because a member has the authority under 29 USC 501(b) to bring a lawsuit to enforce fiduciary responsibilities, the Labor Department does not. This is not a new recommendation. That was made as a result of the Permanent Investigation Subcommittee hearings in 1983 and also the Organized Crime Commission Report to the President.

Secondly, in many unions I don't know about the Teamsters trusteeships sometimes are imposed for reasons that are not altogether clear, and they seem to go on for a long, long time. Once the 18 months are over, the initial 18 months are over, where it is presumed the trusteeship is proper, the union files a report with the Labor Department, and their report usually says their administrative difficulties have not yet been resolved. There is one local in this union that has been under trusteeship since 1986 in St. Croix in the Virgin Islands. Well, whatever administrative difficulties you may have, it doesn't take 13 years to solve them.

So, I would recommend that the Department of Labor be authorized to initiate an investigation, which here to now it can only do if a member files a complaint about a trusteeship; that the Department of Labor be given the authority to initiate an investigation and enforce ending these trusteeships because that is the ultimate undemocratic operation of a labor union.

Chairman Boehner. If I could just conclude, Mr. Muellenberg outlined some of the rights under 29 USC 501(b) that provides the vehicle for a complaint to be filed by a member, recover funds lost to a brief fiduciary responsibility. Clearly, the number of people who have been driven out of the union, the abuses of Mr. Hanley and others have cost the union treasury substantial sums of money. And Mr. Wilhelm, under 29 USC 501(b), do you plan on trying to recover these lost funds for your members?

Mr. Wilhelm. No, sir, I don't. The union entered into a consent decree with the United States Government in 1995 and invited the United States Government to do whatever is necessary in that regard. We gave them the unfettered authority to do that. We gave them our full and unfettered cooperation. In some circumstances, the Monitor, acting pursuant to consent decree, has sought restitution of sums of money from some individuals.

And it is my belief that if the evidence, as distinguished from the allegations, that the United States Government would have, supported further restitution sought further restitution. I don't know how to substitute my own judgment for the vast investigative resources that the Monitor had at his disposal, both those financed by the union and hired by him, as well as those provided to him by the United States Government. I don't know of any way that I could do a more thorough job of analyzing all of that than the United States Government.

Going forward, if any situation came to my attention that constituted an improper taking of the union's assets, I certainly will do whatever is necessary, and I believe that we have set up sufficient safeguards and procedures so that that won't happen.

Chairman Boehner. Mr. Miller? Mr. Hoekstra?

Mr. Hoekstra. I thank the chair for yielding.

I just want to make clear that, as we took a look at the Teamsters and as I listen to some of these, you know, Mr. Muellenberg, you brought up the trusteeship shouldn't take 13 years, it maybe has, in that case. Under the consent decree with the Teamsters, it has now taken ten years. That is not good for rank-and-file Teamsters. It has been very, very expensive for the Teamsters, and I hope now with their successful election, they are on the road to getting that union back to where it needs to be and restore their financial strength and their standing in the marketplace.

It was interesting on what you talked about with the LM IIs. Because it is the same thing that we found, as we went through the LM IIs that had been submitted by the Teamsters in these types of things, this question is to you, Mr. Yud, as to where is the Labor Department in this? As we took a look at the LM IIs, and in both of these cases we hear about organizations that have no budgets, that have no internal controls and these types of things.

So as we have taken a look at the LM IIs, the numbers aren't all that good in giving you a picture as to actually what is going on within the organization. And then if you peel it back a couple of layers, you find out that the processes that would lead you to get to these numbers, you can't track it.

So where is the Labor Department in, number one, verifying the numbers or actually identifying that the procedures are in place that give any of these numbers any kind of validity?

Mr. Yud. Well, Congressman Hoekstra, I mean, the reports that are required, the general requirements are set forth in the law as to what those reports should contain. And the Department of Labor, over the years, has adopted the reporting forms based on the standards set forth in the law and the give-and-take, I suppose, or even the rulemaking procedures that have occurred in the development of those forms and the regulations.

I would say to you that there is nothing in the law that would require a union to adopt a budget or to do certain things like that.

Mr. Hoekstra. But you audit these reports, right?

Mr. Yud. Yes, we audit the reports.

Mr. Hoekstra. And as you audit back and you find these types of no budgets, no policies, no records and these types of things, how can you actually say that the numbers have any kind of validity?

Mr. Yud. Well, when we do audit and we find that the numbers do not have background or incorrectly reported, then we seek to get amended reports from the union, and we have done that on numerous occasions.

Mr. Hoekstra. But how can you get audited reports when the procedures aren't in place, where you can't track the money, and how can you back to the union and say, ``Give us the documents,'' because their books aren't audited in the first place, and they don't use generally accepted business procedures?

Mr. Yud. Well, I mean, audits are conducted not only by the Labor Department, but by accounting firms hired by unions to come in and do independent audits.

Mr. Hoekstra. Just let me interrupt. Has HERE's books been audited on a regular basis?

Mr. Wilhelm. Yes, sir. Yes, sir.

Mr. Hoekstra. And you pass audit with no you get a clean audit with no budgets, and no policy procedures, and those types of things, and incomplete records and background for credit card checks, and you get clean audits? You have got clean audits for 1991 through 1996?

Mr. Wilhelm. From 1996 on, we have clean audits.

Mr. Hoekstra. I am asking about 1991 through 1996, before you got there.

Mr. Wilhelm. I would have to review those sir.

Mr. Hoekstra. You were secretary-treasurer in 1996. You do not know whether the books were clean from 1991 through 1996?

Mr. Wilhelm. My recollection is that there was a clean audit for each of those years. I would have to review them to be certain of that. I know for certain that the audits have been clean since I became secretary-treasurer.

I did review all of the audits when I took office, and that is my recollection, but I would need to verify that.

Mr. Hoekstra. By a major accounting firm.



Mr. Wilhelm. Yes, sir.

Mr. Hoekstra. Independent accounting firm.

Mr. Wilhelm. Yes, sir.

Mr. Hoekstra. You are willing to answer we have the opportunity to provide some additional questions, and_

Chairman Boehner. The record will be held open for 30 days.

Mr. Wilhelm. Certainly. I would be glad to provide you the audits, Congressman, if you would like to see them.

Mr. Hoekstra. Yes, I think it would be very interesting.

I want to get back to Mr. Yud on that. Does the Labor Department believe that the numbers and the information that they are getting on the LM IIs are sufficient to give the Labor Department the kind of information that they need to fulfill their obligations under the law and to get a good understanding of what is actually going on within these organizations?

Mr. Yud. Congressman, the point was made earlier, and I think correctly, that we do not supervise labor organizations. We do not do the equivalent of what the Monitor has done here. We have an obligation to assure that those reports are filed, and when they are filed, that they meet the standards that have been set for their filing.

And so, yes, if we go in and audit, like we did audit HERE around 1991, and find that credit cards do not have back-up documentation, then we will require them to provide that back-up documentation. If we find that the reports have been miscategorized, we will require them file amended reports.

But the 32,000 organizations that file reports, the major obligation under the law is to make those available through public disclosure, so_

Mr. Hoekstra. So your job is to take the report, and so you don't have any recommendations or observations as to whether the requirements of the reports, as outlined in law, are adequate or not. Your job is to see that those reports meet the law, and if they don't, to get them to that standard and make them public. If there need to be changes, that is our job to figure out, at this point in time, you don't have any recommendations.

Mr. Yud. Well, I mean, you are partially correct, and yes, the Department of Labor, at this time, doesn't have any proposed changes to make. We think those reports set forth, in proper detail, a reflection of the financial status of the union.

Mr. Hoekstra. Well, that is different. You do believe that they set forth a clear picture of the financial conditions of the labor union.

Mr. Yud. Yes, sir.

Mr. Hoekstra. You do.

Mr. Yud. Yes, sir.

Mr. Hoekstra. Thank you.

Mr. Giblin. May I make a comment, since I am an accountant?

Chairman Boehner. Mr. Giblin, you can make one, quickly though.

Mr. Giblin. Yes. I want to say that I think Mr. Muellenberg's comment about the DOL having the ability to file lawsuits to ensure fiduciary responsibility is right on target. I mean, that is critical. We wouldn't be here today if the DOL had that power.

And secondly, I have this fear that this is going to end without us addressing what we are supposed to be addressing, and that is union democracy. We should be asking Mr. Muellenberg why the ability for the union members to directly elect their officers wasn't implemented in this RICO action. We should be asking him whether the Review Board has the power and will exercise that power to bring democracy to this union. But they have made much of 47 recommendations, what about a recommendation for direct elections for these union members?

This doesn't take a prolonged legislative effort. This can be done very easily.

Chairman Boehner. We want to thank all of the witnesses for their testimony and thank_

Mr. Garcia. Mr. Chairman?

Chairman Boehner. Mr. Garcia?

Mr. Garcia. I just would like to say one last thing. I am not here to try to crucify anybody, and I am not here for any political reasons. The only reasons why I came here was because what I want is to I don't want to tell you to reinvent the wheel when it is already there, and I am talking about the Landrum-Griffin rules. I just want the Congress to enforce them, so we can have a sense of free atmosphere in our locals, such as Local 2 in Los Angeles. And this is one of the things that made me come to the Congress and testify I mean, to ask just for a little help from Mr. Wilhelm and Congress.

Chairman Boehner. Mr. Miller?

Mr. Miller. Just quickly, a couple of comments.

Following onto this question of what the Department of Labor certifies or doesn't certify and whether the audits work or not work, and whether or not, as Mr. Hoekstra suggested, the initial documents don't give you that information, I think we could flip this over, and I am not making light of any of this issue, but when we think about all of the regulations that some people think they want to put on labor unions, you could flip this over onto the corporate side.

We just had a guy in Connecticut walk out with $300 million of investors' monies, and people's death benefits and gravestone payments, and apparently converted them to diamonds and disappeared from the country, and he was under the regulation of a dozen or two dozen State insurance commissioners, the SEC and everybody else, and everybody audited him and said everything was ``on the Jake'' and on the up and up. I mean, this happens every day on Wall Street, and it happens in a lot of unions.

And I think we have got to understand we are all for democracy and we are all for transparency, and we have to treat people with that equal kind of dignity. And the suggestion somehow that because the unions don't have a budget, us to be lecturing people about budgets, we went a whole year without a budget here for the United States of America. And the union can have a budget if you want, but the union doesn't know when it is going to take a strike.

And so the purpose of the audits is to tell you what the union did with the money over a period of time, and that is certified by people, and apparently that meets the requirements of the Department of Labor. Maybe those should be changed or not.

But before we get too high-handed here, you know, I mean, we are the people that we put out a budget, and the first thing we do is break it. We put out a budget, we have got caps, and we have broken the caps. We have got emergency spending for nonemergencies, and tomorrow we are going to say that perhaps the census, which we didn't know was coming, but it has come every ten years for 200 years in this country, it is going to be an emergency so we can tuck the spending into another category and put it out the back door for some other purpose.

So let's put all of this stuff in some kind of relative context. That doesn't dismiss people's fiduciary relationships, that doesn't dismiss their responsibilities. But I just want to make sure that we deal with this on an even playing field with respect to the entities that we have, and we ought to be very careful about that.

I don't know who said it a little bit earlier, but there are hundreds of thousands of reports that are given every year about somebody's activities, and most of them are never looked at. That may be a problem with the way we organize the activities, whether it is the Department of Labor, Treasury, SEC or anybody else. And then the suggestion is somehow the consent decrees are running too long for the Teamster's Union, but maybe not long enough for this one, and that reaching a consent decree in St. Croix has been too long, but let's decide what the standards are.

I can remember when Gorbachev met with Speaker O'Neill. He said the negotiations in Geneva were going on too long. And Gorbachev said, ``Well, if you want to shorten them, put all of the negotiators in Iceland.'' Maybe if you took the people from St. Croix and put them in Nome, Alaska, we would get a consent decree.

So there is an awful lot of looseness here in a number of systems. This committee ought to be in charge of trying to tighten these up and make sure that, in fact, there are democratic processes for workers. But workers ought to retain control of the organization, not the Department of Labor, not the Congress of the United States, because that is the fundamental principle of democratic institutions.

Chairman Boehner. I couldn't agree with the gentleman more.

Mr. Miller. I know you would. And what I am saying is this union, the Teamster's Union, and others have gone off the track from time to time. Our responsibility is to restore the democracy and then let the workers control this union. And so before we get all hung up with Mr. Hoekstra on what level of the onion you peel back. I think it is up to the workers to make many of those determinations, not the Department of Labor, because most of the people on the other side of the aisle wouldn't settle for a minute the suggestion that we are going to do that to a corporation.

And so I just want to make sure that as we move through this, the questions of Landrum-Griffith, that we also understand that there is a flip side to this, and in the corporate world, if you are going to put these kinds of constraints on people or you are going to change that, because, you know, a corporation is supposed to be a democracy. It is about the shareholders. We also know that a corporation can disenfranchise shareholders so fast it will make your head spin. People have nonvoting shares, and this kind of shares and that kind of shares.

So let's just be careful that we don't get into the position of redefining what is a basic institution in this country that has worked very well on behalf of working people in this country.

Thank you.

Chairman Boehner. My good friend from California outlined some of the shortcomings of the Congress, and I might just add to his list that the fact is that it is all done out in the open, all done under a bright light. And as we have proceeded through these hearings, we have brought a number of examples to this committee of the shortcomings in the current act. It is 40 years old, and it has never been addressed. And the fact is, is that some light is the best disinfectant.

Empowering people to take greater control of their own destiny is something that I agree with the gentleman from California. We need to take a look at this law and figure out how do we better empower union members to have more democracy in their own unions and empower union members to hold their elected officials accountable.

And with that, we have another hearing in this committee room at 2 o'clock. I want to thank all of the witnesses for your valuable testimony and all of our guests. This committee hearing is adjourned.

[Whereupon, at 1:48 p.m., the subcommittee was adjourned.]