Serial No. 105-138


Printed for the use of the Committee on Education

and the Workforce


Thursday, July 30, 1998

House of Representatives,

Subcommittee on Oversight

and Investigations

Committee on Education and

the Workforce,

Washington, D.C.







TABLE OF INDEXES………………………………………………………………196

The subcommittee met, pursuant to notice, at 2:40 p.m., in Room 2175 Rayburn House Office Building, Hon. Peter Hoekstra [chairman of the subcommittee] presiding.

Present: Representatives Hoekstra, Norwood, Hilleary, Ballenger, Parker, Mink, Scott, and Kind.

Also present: Representatives Owens and Payne.

Staff present: Robert Borden, Professional Staff; Rebecca Campoverde, Professional Staff; Patrick Lyden, Staff Assistant; Mark Rodgers; Workforce Policy Coordinator; Dan Anderson; Joe diGenova; John Loesch; Michael Quickel; Michael Reynard; Lisa Rich; Philip Smith; August Stofferahn; Dan Sullivan; Victoria Toensing, Majority Counsel; Gail Weiss, Minority Staff Director; Brian Compagnone, Minority Staff Assistant; Jim Jordan, Minority Director of Communications/Special Counsel; Cassandra Lentchner, Minority Special Counsel/Investigations; Michael Berlin, Minority Counsel; Gregory Jefferson, Minority Counsel; John W. Lee, Minority Senior Investigator; Patrick Dugan, Minority GAO Detailee, and Darryl Chang, Minority GAO Detailee.



Chairman Hoekstra. [presiding] The subcommittee will come to order.

Good afternoon.

The subcommittee has held a series of hearings in which we have examined the Teamster's Union failed 1996 election. We have gathered considerable testimony about the inner structure of the IBT headquarters.

We have worked to under the context in which the Ron Carey campaign finance scandal took place, and the lack of controls that allowed it to happen.

We have heard from veteran reform-minded Teamsters whose fight for more openness in the union was discouraged, and finally defeated.

We have heard from the Federal Election Officer, the Independent Financial Auditor, the IBT's own auditors and actuaries, the IBT's acting president, the president of the AFL-CIO, and an IBT vice president who has served as Ron Carey's executive assistant and as administrator of the union's Ethical Practices Committee.

But no attempt at understanding the history of the IBT during the past 10 years would be complete without testimony from the panel of witnesses who appeared before us today.

The role played by the Independent Review Board in the life of the Teamsters union really has been unique, in terms of both its extraordinary power and the authority to direct the overall course of the IBT, and the remarkable share of the burden of responsibility to it by the Federal Government in its campaign to encourage union democracy.

This week we saw the latest example of this entity's far-reaching influence over Teamsters affairs when the IRB banned Ron Carey from the union for life, along with his former director of government affairs, Bill Hamilton.

The roots of the IRB's monitoring and disciplinary authority lie in the consent decree signed by the Justice Department and the Teamsters Union in 1989.

Since 1989, there have been two distinct stages in the life of this authority.

The consent decree originally created an Independent Administrator whose principal focus was to eradicate mob influence in the IBT. The Independent Administrator also had far-reaching authority to review IBT finances, and to veto financial transactions if necessary.

The Administrator's actions were intended to pave the way for the Teamsters first-ever direct election of officers in the 1991 contest won by Ron Carey.

Phase two began after the 1991 election, when control over day-to-day union affairs was restored to the IBT, which the government believed, or maybe hoped, had now grown more democratic. The Independent Administrator was succeeded by a three-member Independent Review Board, which retained considerable power to monitor IBT affairs.

The three members of the IRB, now in their second terms of service, are with us today, along with the IRB's administrator and its chief investigator. One of them, Judge Frederick Lacey, also served as the original Independent Administrator. So we have a veritable encyclopedia of institutional history to draw on this afternoon.

I often hear people say, or I read in newspaper editorials that the Teamsters are a different union today. In terms of ridding the union of mob corruption, that appears to be true. The IRB deserves credit for that accomplishment.

At the same time, to be candid, we have to acknowledge that the swap schemes carried out by the Carey campaign in 1996 were a keen disappointment. A serious setback for the government's efforts to instill the spirit of union democracy in the IBT.

Only last week, the Justice Department pointed out that the IBT, which had been ordered by Judge Edelstein to submit a plan for conducting the re-run election made necessary by the Carey scandal, grudgingly submitted eight short paragraphs to the Judge.

The Justice Department commented, and I quote, ``the union's utter failure to submit a workable plan for the re-run, and its dismissive attitude toward the court-ordered schedule for that election, demonstrate that the IBT is neither ready, willing, nor able to proceed with the re-run election without direction by the court.''

I notice that Judge Edelstein, who oversees the consent decree, actually called on, quote, ``the good members of this union to rise up in revolt against the self-serving little men in charge'' of the IBT. I assume he was referring to acting president, Tom Sever, and the other Carey holdovers at the IBT.

As I'm sure our witnesses know, this subcommittee has encountered a similar attitude of arrogance and a similar strategy ranging somewhere between stonewalling and grudging compliance.

I look forward to this afternoon's testimony. This is a very timely opportunity to ask whether 10 years of Federal oversight has been effective, and whether the condition in which we find the IBT means that the government underestimated the task before it.

I'd be interested to hear, too, whether the IRB might be able to bring some of its power and authority to bear to help this subcommittee overcome the IBT's refusal to cooperate, even now with some aspects of this investigation.

Specifically, I will be very interested to find out what our witnesses know about work performed by attorney Charles Ruff and a private investigator, Jack Palladino, for Ron Carey in 1994, the same year that Carey's alleged ties to the mob were under investigation by the IRB.

The IBT refuses to comply with our subpoena for documents relating to whatever work was done by Mr. Ruff, who now serves--this is his job today--who now serves President Clinton as White House counsel. The mystery deepened in our hearing last week when Aaron Belk, Carey's former executive assistant, seemed to contradict Mr. Ruff's sworn testimony about the nature of his services to the IBT.

Mr. Belk said that he, Belk, had served as head of the Union's Ethical Practices Committee, and at not time had Ruff performed work for the committee.

But in a sworn affidavit, Ruff said, ``as part of the firm's representation of the IBT, it also served as counsel to the IBT's Ethical Practices Committee.''

I am eager to hear what light today's witnesses can shed on the matter of Ruff and Palladino, and whether they may possess investigative powers that can force into the daylight whatever it is the IBT is working so hard to hide.

Mrs. Mink.



Mrs. Mink. Thank you, Mr. Chairman. I want to join the chairman of the subcommittee in welcoming all of you here. We have actually been waiting a long time for this opportunity to hear from this very, very important board. There have been many unfortunate accusations against you and the performance of your responsibilities. And I hope that today those things can be cleared, and the matters set to rest. Because in reading your record and the testimony that you have presented here today, I am fully satisfied that you have performed your responsibilities honorably and efficiently, and have fulfilled the highest expectations of the government in establishing this review board in order to hear out all the various charges and complaints that were coming in from members and from Locals and from various other individuals about the conduct of the union since you took over after the 1992 elections.

I believe that it's unfair for this Congress to conclude that the government's intervention under the consent decree has failed because the 1996 election was flawed. The ability of the government to uncover the various schemes that were revealed was possible because we had a mechanism in place, and it parallels quite well the work that you do as an Independent Review Board. And so, it's unfortunate to me that despite all of the statements that the million plus members of the Teamsters ought to have a chance to elect their own leadership, democratically; that we are now in a situation where quite likely the elections will be conducted unsupervised because of actions taken by this Congress. And I find that most unfortunate.

I hope that, as a result of your presence here today, and the opportunity to hear about your record and your performance that all of the suggested nuances of your complicity with the leadership of this union will be erased forever. I'm impressed very much by the numerous instances in which you proceeded against international officers, Local officers; set up some 21 trusteeships, 9 of which were Carey Locals. So that the implication that you proceeded only against the enemies of Mr. Carey is outrageous.

I know that no institution in America, in a democracy can be made perfect by the intervention of government or by any board or by any committed individuals towards perfection. But I do believe that your performance has been outstanding, and that the condition in which the union exists today has quite a lot to do with your ability to rout out corruption, continued contacts with mob figures, mob intervention with management, and all of those other associations which you outline quite well in your brief.

So I welcome you here today with a very hearty and warm respect for each of you whose services, I believe, have been invaluable towards steering this union towards a much more honorable and democratic institution.

Thank you very much.


Chairman Hoekstra. Thank you.

Without objection, the opening statement of any member of the subcommittee who wishes to provide one will be included in the record.

I recognize the gentleman from Georgia for the purpose of offering a motion.


Mr. Norwood. Mr. Chairman, I move, pursuant to Clause 2(j)(2)(c) of House Rule 11, that counsel be permitted to question the panel of witnesses for one hour prior to questioning by the member, with which to be equally divided between the majority and the minority counsels, and that counsels be permitted to further question the panel of witnesses aver questioning by the members for up to an additional hour, with that time to be equally divided between the majority and the minority counsels.

Mrs. Mink. No objection.

Chairman Hoekstra. Without objection, the motion is agreed to. Thank you.

Gentlemen, welcome. We have five witnesses with us today representing the Independent Review Board and offering testimony on the effectiveness of the IRB oversight. We have Mr. Grant Crandall. We have Judge Frederick B. Lacey, and Judge William Webster. They are the board members of the IRB. We have Mr. John J. Cronin, who is the administrator of the IRB, and we have Mr. Charles Carberry, who is the Chief Investigator of the IRB. I appreciate all of you for being here, and really appreciate the effort and the time and the energy that I think you have put into this effort over the last number of years. And I think, as Mrs. Mink and I can agree on some things we would recognize this has been a very difficult and tough assignment. And we know that you've been at it for a long time. I believe that each of you are welcome to provide an opening statement, but is it correct that Mr. Lacey, or Judge Lacey, you'll be providing the opening statement?

Judge Lacey. No, Judge Webster.

Chairman Hoekstra. Judge Webster will be providing the opening statement for the board, so we'll only have one opening statement. But, Mr. Webster, before we receive your testimony, we'll ask all the witnesses to take an oath. You should be aware that it is illegal to make a false statement to Congress while under oath.

In light of this, will you please rise and raise your right hand.

[Witnesses sworn.]

Thank you. Let the record reflect that each of the witnesses has answered in the affirmative.

I have paper coming at me from both sides to make sure that I am politically correct and not offensive, and I apologize. I'm just reading the sign in front of me, and, Judge Webster, as having met and spent some time with you before this, accept my total apologies. And I ask unanimous consent that the record be changed, and that my earlier comments would reflect wherever I said Mr. Webster would be changed to reflect Judge Webster.

Mrs. Mink. Without objection.

Chairman Hoekstra. And the sign is also being changed. Judge Webster.



Judge Webster. Mr. Chairman, thank you.

``Mr.'' is a honorable connotation, and I'm happy to accept either one.

It's a privilege to be here today, and to discuss some of these issues with you and to respond to your questions. I should say at the beginning that the Independent Review Board does not have a chairman, and so today I drew the short straw, and get the privilege of presenting a much shorter version, if that's alright, of the rather lengthy statement that we have filed with you, along with exhibits.

Chairman Hoekstra. The entire statement will be submitted for the record.

Judge Webster. Thank you, Mr. Chairman.

Briefly reviewing what the chairman has already noted, on March 14, 1989, the United States District Judge, David N. Edelstein, entered an order on consent in the United States versus International Brotherhood of Teamsters that provided for the creation of an Independent Review Board, the IRB, which would begin operations after the 1991 general election for International Brotherhood of Teamster officers.

The IRB, which began in October 1992, succeeded the Independent Administrator and the Investigations Officer, who under the consent order had been appointed by Judge Edelstein in 1989.

Pursuant to the consent order, the IRB has three members. One, the Attorney General appoints. One, the union appoints, and the third member is selected by the other two. The current members are: Frederick B. Lacey, the Attorney General's appointee, who was originally, as you noted, appointed by Attorney General Barr, and subsequently by Attorney General Reno; Grant Crandall, the union's appointee, and myself.

Mr. Lacey had been the court-appointed Independent Administrator. He is a former United States Attorney for New Jersey and a former Federal District Judge.

Mr. Crandall, a distinguished labor law practitioner and a former Rhodes Scholar is General Counsel of the United Mine Workers Union.

And as you may know, I was the former director of both the Federal Bureau of Investigation and the Central Intelligence Agency, and a former United States Attorney for Eastern Missouri, and a Judge, both of the District Court and the United States Court of Appeals for the 8th Circuit.

I was the third appointee, and because the original members of the board could not agree, I was selected by Judge Edelstein pursuant to the consent decree. Subsequently, I was reappointed with the approval of both of the other members.

Under the court-approved rules for the IRB, the Board has a chief investigator, who directs IRB's investigations and supervises its staff of investigators and lawyers. The IRB appointed Charles M. Carberry, on my left, the former court-appointed Investigations Officer, to this position. He was formerly an Assistant United States Attorney in New York, for approximately 9 years, where he was the head of his Securities Fraud Unit. He also serves on New York City's Commission to Combat Police Corruption, which is a civilian commission appointed by the mayor to monitor the New York City Police Department's procedures for and its efforts at self-policing.

John J. Cronin, Jr., has served in an investigative position under the Independent Administrator, and as the Administrator of the IRB, after over 30 years of experience in accounting and auditing with the General Accounting Office. Mr. Cronin is on my far right.

Mr. Chairman, the provisions of the consent order, under which the IRB was created, was designed to induce or, if necessary, compel the IBT and its Locals to police themselves, under the monitoring and investigative efforts of the IRB. The IRB recommends charges for alleged conduct that is dishonest or corrupt. These charges are violations of the IBD Constitution, Local bylaws, or of Federal labor or criminal law.

As the Commission is aware, there is a separate court-appointed official, the Election Officer, who, with his staff, oversees elections-related matters in the union. From October 1992 through June 30, 1998, the IRB has recommended charges against 229 individuals. In instances where recommended charges against international officers or charges involving organized crime, the IBT has filed the charge and forwarded it back to the IRB for adjudication. It has also recommended to the IBT that trusteeships be imposed on 21 Locals and on one joint council. In each case, the IRB recommendation of trusteeship was accepted by the IBT.

The court has repeatedly declared that the goal of the consent decree is to rid the IBT of the hideous influence of organized crime. The achievement of that fundamental goal, through a variety of strategies, has been the IRB's primary objective.

The first strategy is a direct attack on organized crime presence in the IBT. During the IRB's first five years, 10 IBT members were permanently expelled or permanently resigned when faced with IRB recommendations that they be charged with being members of organized crime.

In addition, 23 IBT members were charged with associating with members or associates of organized, or with other prohibited persons, such as banned former Teamsters. Again, all permanently resigned or were expelled.

These cases show the pervasive and continuing influence of organized crime in some Locals. For example, it was established at an IRB hearing that an individual IBT member served for several years as a conduit to the Gambino LCN, la Cosa Nostra family, for payments received by corrupt Local 282 officials from employers and from instructions from the Gambino LCN family to those corrupt union officials concerning job assignments and other union matters.

Organized crime presence in the union continues, but it is more subtle than it was in the first years under the consent decree. High-ranking officials are no longer members or notorious associates of organized crime.

During the term of the Independent Administrator, Judge Lacey, 48 actions were filed against union officers or members for being members of organized crime or associating with members of organized crime. I believe that the report of the Independent Administrator has been made available to this subcommittee. During the Independent Administrator's term, the union's attitude was summed up the by testimony of an international vice president and head of the eastern conference and New York City Joint Council who, when asked if he had ever questioned a fellow Joint Council officer about repeated public allegations of organized crime membership, he explained he had not because it was none of his business.

Local officer slots, once filled with organized crime members, are now held by their relatives and friends. Associations with organized crime members have become more difficult to detect. Ten charges were brought by the IRB against union members who continued to associate with former members who had been barred from the union, even with some who were in prison. Those so charged as a result of IRB recommendations included Local 282 members, who visited in prison a convicted racketeer and Gambino LCN family associate who was the former head of the Local. The continuing contacts reflected in these organized crime membership and association charges evidence both the strong ties among some union members and organized crime figures and the continuing attempt by corrupt elements to influence the union.

Besides the vast sums the mob makes through labor racketeering, union membership provides a cloak of legitimacy to mob members and associates, as well as a source of health and pension benefits. For example, the IRB charged five Local 807 members employed in lucrative jobs in the Javitts Center in New York City with either being a member of organized crime or knowingly associating with organized crime members. Each of these individuals either permanently resigned or was permanently barred from the IBT.

Mr. Chairman, a second prong of the IRB's strategy is to compel international and Local officials to assume responsibility for removing wrongdoers. Pursuant to the consent order, the IRB has recommended charges to be filed against union officers who have appeared to have ignored their fiduciary obligation to investigate dishonesty or corruption by fellow officers or by union employees. These charges were designed to instill in union officials a commitment to fulfill their obligations to have the union police itself.

The IRB has learned from a variety of sources, including Federal and State law enforcement agencies, its own experiences, and the cases before the Independent Administrator, that the presence of certain conditions or factors in a Local provides a fertile field in which organized crime influence and other forms of corruption take root and flourish. These conditions include sweetheart and sham arrangements with employers, decades of uncontested Local officer elections, a Local's failure to hold membership meetings, nepotism and favoritism in Local appointments and in assigning desirable work, dual unionism, financial misconduct, and members who would accept expulsion from the IBT rather than answer the IRB's questions. Removal of an organized crime-connected union officer, while vital, is often not sufficient to restore control of a Local to its members. As the organized crime family has strong economic reasons to maintain its influence over the Local, it will cause another of its delegates with more subtle and less obvious LCN connections to surface in the Local's hierarchy to replace the organized crime controlled Local officer or employee whom the IRB has caused to be removed.

In recognition of the indebita of troubled Locals, the IRB has brought charges and recommended union trusteeships be imposed to attempt to remedy undemocratic practices and other misconduct that allows Local leadership and the organized crime forces for which it may be allied to exploit the members. In over five years, the IRB has recommended that 21 Locals and one joint council out of the approximately 600 IBT Locals and joint councils be placed in trusteeship. The IBT imposed those trusteeships under the IBT Constitution and Federal labor law. Five the IRB recommended trusteeships involved Locals with trade show or movie divisions. That's Locals 107, 390, 714, 745, and 807, involving industries that have long been recognized by law enforcement agencies as being areas where labor racketeers have a strong influence.

One of the factors the IRB has recognized as signaling a Local wherein conditions are conducive to corruption and to exploitation of the members is where it is dominated by contracts with many small shops, thus creating a Local membership where a few members will have a common economic and bargaining interest. The lack of common concern among a substantial group of members, effectively insulates the incumbent officers from being challenged in Local elections. Decades will pass in which every officer, having been initially appointed to his position is never thereafter opposed in a contested election. Some of these Locals essentially do not serve any function related to employee representation, and are institutional vehicles for corruption. They pursue virtually no contract grievances on behalf of members, and allow wage and benefit portions of contracts to remain unenforced.

As an example of such a Local was Local 240 in New York. There, the Local leadership allowed a former officer with organized crime connections, who was barred from IBT activity under a court order, to stay involved with the Local and have the Local pay some of his bills. The executive board, which had never been challenged in any contested elections, also had ineligible members on it. There was little evidence that the Local was representing the economic interests of the members.

Upon the IRB's recommendation, the IBT imposed a trusteeship. When the IBT took possession, guns were found on the premises, as well as phone line in the Local office dedicated to book making activities.

In some Locals, besides the presence of financial wrongdoing, historical evidence of organized crime influence and anti-democratic procedures, the IRB found a great number of sham, or unenforced contracts that were among the factors that led the IRB to recommend trusteeships be imposed. From October 1992 through June 30, 1998, the IRB recommended charges against 10 members holding international positions or appointments, including the general president, three international vice presidents elected in 1991 general election, an international trustee, the former IBT director of governmental affairs, and the head of the international's car haul division.

In addition, the IRB placed in the public record in 1993 and 1994 reports and underlying exhibits relating to its investigations into allegations of wrongdoing concerning the Local union activities of the IBT general president, Ron Carey, and general secretary-treasurer, Thomas Sever. Because allegations have been made against high-ranking Teamster officials, the IRB released publicly its reasoning concerning why charges would not be recommended in these specific circumstances and the evidence on which the conclusions were based. The availability of the reports and the exhibits on which they were based allowed any member, if he or she chose to do so, to evaluate for his or her self, without dependence on another's interpretation, the challenged conduct of the international officers.

Thus, for those who disagreed with the IRB's conclusions, under the IBT constitution, any IBT member could have filed and pursued charges against either Carey or Sever, with full use of the records and testimony the IRB made publicly available, along with any other information the member possessed. None chose to do so. This inaction, when interested parties had strong motivation to act otherwise, further corroborates the IRB's decisions not to recommend charges in those instances.

Subsequently, based on investigation of allegations of wrongdoing in conjunction with the 1996 IBT election, the IRB recommended to the IBT General Executive Board that charges be filed against Carey. The General Executive Board filed the charges and referred the matter back to the IRB for adjudication. A hearing was held and a decisions was issued on July 27, 1998, finding that the breach of fiduciary duty charge against Carey had been established.

Additionally, charges against the former director of governmental affairs, William Hamilton, were also proved.

In addition to the Carey charge, the IRB recommended seven charges against IBT members for taking money from employers and extorting money from IBT members. It has recommended trusteeships for Locals where, among other things, undisclosed business relationships existed between employers and union officers or their relatives.

Sometimes exploitation of the members is more direct. In several situations, the IRB recommended charges against union officials who extorted money from members in return for work assignments. Some union officials attempted to disguised those extorted sums as gifts from the Local members over whose work assignments they held discretionary authority. Charges for this conduct were recommended against Local officers and employees in two Florida Locals and a New Jersey Local.

Mr. Chairman, the consent order and IRB rules provide that the IRB has two formal means of gathering information to do its work of investigating and recommending charges to the union when wrongdoing has occurred. These are reviews of the books and records of union entities and the taking sworn statements from IBT members and employees. Because the IRB, when it acts, stands in for the union in its internal disciplinary process, no member has a right to refuse to answer questions by invoking constitutional privilege. The sanctions for an uncured failure to cooperate has been expulsion from the union.

Despite that sanction, many members have refused and continue to refuse to testify rather than to answer questions under oath concerning their organized crime associations or their participation in fraudulent schemes. Sixty-five members have refused to answer questions. Fifty-nine were expelled. Six, who later agreed to testify, were suspended for periods of time.

The IRB has found that members of a Local refusing to cooperate with the IRB often is an indication of organized crime influence in a Local.

Under the IRB, the Independent Administrator before it and the Independent Administrator before us, all IBT public service Locals--that's confusing but it--all IBT public service Locals' books and records were examined by the IRB's or the Investigation Officer's staff. Embezzlements were found under the Independent Administrator or the IRB in 6 of the 16 IBT public service Locals. The IRB and Independent Administrator's actions reveal that a pattern of abuse existed in some public service Locals under which the Locals' payments of the officers personal expenses were cloaked from detection by members because of the absence of a disclosure requirement.

As a result, to address this, the IBT has mandated as a matter of internal union procedure that all IBT public service Locals, file on an annual basis with the IBT a form containing the same information other Locals must disclose on the forms LM-2 filed with the Labor Department. This financial information is now available to the members of IBT service Locals.

As it did with the public service Locals, the IRB has focused on other ongoing investigations on Locals in certain industries. Industries were selected in which organized crime influence has been historically present and wrongdoing by union officials frequent. These currently include construction, private sanitation, trade show and the movie industries. The projects are ongoing but some actions have been taken as they proceed. For example, trusteeships were recommended to be imposed on five Locals in the trade show or movie industry, Locals 714, 745, 807, 390, and 107.

Organized crime involvement in some Locals is still present. It is less obvious than in 1989, but it is only so because of the impact of the IRB. Instead of made members as Local officers, some positions are now being filled by sons, daughters, and in-laws. The continued presence is not a mystery. Labor racketeering is profitable, and control over unions also gives organized crime members a source of jobs, pensions, and health insurance for their members, their relatives, friends, and associates. The union lacks the sources of information to monitor and address this issue. The criminal law obviously does not make either organized crime membership or association an offense. In nine years under the IRB and the Independent Administrator 443 individuals have been charged, and 399 individuals have been disciplined for this membership or association, which is not reachable under current criminal law. The only adequate mechanism to address the issue is an independent process, like the IRB, which may invoke the more efficient administrative procedures.

Mr. Chairman, at this time, if I may, I would like to set the record straight on the costs incurred by the Independent Review Board. In testimony before this subcommittee on March 26, 1998, the subcommittee's forensic accountant reported the costs of the IRB to be $40 million from 1991 through 1996, and for the year 1996 to be $5.3 million. For various reasons, these amounts are grossly overstated. For example, the $40 million total cost figure included 21 and one-half months from January 1991 to October 13, 1992, when the IRB did not exist, including $18.5 million for 1991 alone, as well as costs that do not relate to the IRB. In actuality, the IRB costs from October 13, 1992, through December 1996, were $10.8 million. Thus, the testimony almost quadrupled the actual IRB costs. In 1997, the IRB costs were $2.7 million for a total since inception of the IRB of $13.6 million. Further, the $5.3 million reported for 1996 almost doubled the actual IRB 1996 expenses of $2.8 million.

These overstatements occurred because of a line item in the IBT's financial statements called civil RICO Expenses that contain many expenses that do not relate to the IRB. The erroneous costs apparently arise because in about 1987, two years before the consent decree, the IBT established a financial statement account called civil RICO Expenses to accumulate all costs which it believes should be categorized as resulting from civil RICO charges and related legal expenses. The March 14, 1989, consent decree and court orders in other civil RICO matters included as a part of this account are the IRB direct costs and legal costs of defending or challenging actions of the court or the IRB, election office costs, convention costs relating to the consent orders, and other costs related to civil RICO matters.

Finally, Mr. Chairman, and in conclusion, it is clear to all of us as members of the IRB that there continues to be a need for the supervisory role established for the IRB by the consent decree. There a sunset provision in the consent decree where the union and the government can agree that there is no longer a need for the IRB. We recognize, however, that this is a decision that lies with Judge Edelstein, who continues to have jurisdiction over the consent decree.

Thank you for permitting us to make this abbreviated statement and each of us would be happy to respond to your questions.

[The statement of The Independent Review Board follows:]



Chairman Hoekstra. Thank you. Ms. Toensing is recognized.

Ms. Toensing. Good afternoon. We've just changed. You have become officially Judge Webster, with your new nameplate.

In order to understand the present, we need to go back and understand the creation a little bit, and, Judge Lacey, since you were there at the creation, we have a series of questions to ask you.

Judge Lacey. Before you do, may I ask whether you have a copy of the summary report that I filed in March of 1992. Okay, fine. Excuse me.

Ms. Toensing. Kenneth Convoy, who is the former election appeals master, when he disqualified Ron Carey from the re-run election, he wrote that the consent decree has two--he called it paradoxical goals: on one hand the total elimination of corruption, meaning organized crime, and on the other hand, the return of autonomy and the democratic process to the union's rank and file. I just listened to Judge Webster who said the primary goal is to eliminate organized crime. Judge Webster, Mr. Convoy, how do we reconcile these different interpretations. Judge Lacey, since you were there at the beginning.

Judge Lacey. Well, you've read to me two sentences, and I'm familiar with Judge Convoy's philosophy about all of this because I've known him well, and I have had discussions with him. There are no conflicts if you would read through everything that both have said. There are two aspects of this, and Judge Edelstein lays this right out in the beginning.

First, we must rid the union of the hideous influence of organized crime, and in various words and various phrases that has been reiterated and reiterated and reiterated.

On the other hand, it's also important to return to the membership the rights of members to elect officers to the union, set up for the election process, which was also established, the democratic system of electing officers. So these are not inconsistent. They're not irreconcilable. There were the two principal objectives of this consent decree. I have read it, and I've lived with it. And I've interpreted it from 1989 on.

Ms. Toensing. We know that. That's why you're getting the first set of questions.

Judge Lacey. I appreciate that.

Ms. Toensing. But could they be competing goals. I hope my question wasn't interpreted to mean that they were inconsistent. But at times, it seems to us that one could take precedence over the other. They may be competing. You may have to chose. It's more important to keep more reins of power than to give up some more democracy, would this be correct?

Judge Lacey. I'm afraid I don't understand that question.

Ms. Toensing. Are there times?

Judge Lacey. Not against the background that I understand that I've been working with for eight years, now years now.

Ms. Toensing. Are there times when trying to keep controls sufficient to keep out organized crime, are there times when that goal is inconsistent with creating democracy within a union?

Judge Lacey. No, I don't see inconsistency at all.

Let's go back again.

Ms. Toensing. And it's not inconsistent, but do they compete at all? Are there times that you have to chose between the one or the other?

Judge Lacey. Oh, not at all. Not at all. Not at all.

Ms. Toensing. All right.

Judge Lacey. I have never been conscious of making any choice or any selection whether I was dealing with enforcement of election laws. As Independent Administrator, I sat as the appellate election officer. I had yet over 200 appeals, so I'm thoroughly conversant with that aspect, just as I think you know from reading my report, I'm thoroughly conversant with the other aspect.

Ms. Toensing. Let me ask you about the Teamsters' attitude when, in 1989, when the consent decree was signed, right after they had agreed to the consent decree on the eve of going to trial on the civil RICO case. At that time, did the IBT comply with its terms and conditions?

Judge Lacey. You mean after the consent decree was executed?

Ms. Toensing. Right after, yes. Yes. Was there compliance at that time?

Judge Lacey. That is a question I could spend the rest of the week on. The fought me at every turn.

Ms. Toensing. That seems a good summary.

Judge Lacey. They fought me at every turn, and, indeed, I had the obligation and the right under the consent decree to receive notice of every meeting of the General Executive Board and get a copy of the agenda so that I might attend it. And within the matter of several weeks after taking office, I received a call from a reporter in Washington who said, aren't you supposed to get notice of these meetings? And I said yes. He said, there's a meeting going on now. I established quickly that there was. I set the matter before Judge Edelstein. In about three hours, the General Counsel, Mr. Grady, called me. And it was determined that they'd held a meeting to interpret the beyond reproach clause of the constitution. And by coincidence, with their interpretation the charge we had pending against an international vice president for association with organized crime would not be prosecutable. And I said that under my powers, I had the right to interpret the constitution. Judge Edelstein upheld me as did the Court of Appeals in the 2nd Circuit.

So that was the inauspicious beginning. And that went on for many months.

Ms. Toensing. Our information is that we have a figure of nearly $10.5 million of IBT money was spent in litigation opposing, challenging the provisions of the consent decree. Is that about right with what you understand?

Judge Lacey. I can't tell you what the sum was, but I know they had, for example, initially the March Rose firm was in, excellent lawyer, no Judge Raycold. At another stage, Williams and Connoly, Brent and Sullivan. They had good counsel.

Ms. Toensing. And expensive counsel?

Judge Lacey. Well, I--you said that.

Ms. Toensing. Yes.

When Ron Carey took over in 1991, did this kind of expensive litigation end when the reformer, Mr. Carey, took over the presidency?

Judge Lacey. Initially, we were embroiled. I had a temporary trustee I put into Local 295, studded with mob, in fact, on charges filed by the United Investigations Office, Mr. Carey held hearings, and I expelled the entire executive board for either being members of organized crime or associated with members of organized crime. So it was a vacuum. And that led to the appointment of a trustee, and I had the power to make temporary appointments with Judge Edelstein's approval, and I did.

After Mr. Carey took office, a meeting was held at a AFL-CIO convention here in Miami, attended by the head of Joint Council 16 in New York, Mr. Feinstein, Mr. Genoise, Mr. Carey, Mr. Burke, who was working with Mr. Carey. Out of that emerged a removal, without my knowledge of my appointment, and installation of Manem Genoise. Needless to say, as I think you may have reading, I did not take that comfortably or easily. I immediately conducted a hearing on Genoise. I vetoed the appointment. We did not get off to a good start with Mr. Carey, and that obviously generated considerable legal expense. But I do think--I didn't have that--the opposition, the resistance that I had from Mr. McCarthy when he was president.

Ms. Toensing. Let's go back to the 1989 to 1991 era, which is the time that you were the Independent Administrator--we call that Phase One--the Judge Lacey.

Judge Lacey. So I'll be Phase One.

Ms. Toensing. You are Phase One.

Judge Lacey. Alright.

Ms. Toensing. Describe what you saw as your main function and authority at that time?

Judge Lacey. Well, I was--I had actually three. I had under the consent decree three obligations that were imposed upon me.

One was I had the right to veto all appointments. I had the right to veto all contracts and all expenditures. So that those were three what I'll call three administrative functions. Then I also sat as a judge on hearings of charges that were filed by the Investigations Officer. And then later, as I indicated earlier, once the election process was underway, then I also put on another hat, then. I was the Elections Appeal Officer.

Ms. Toensing. Many hats there. But how then did you interact with the Election Officer and the Investigations Officer? Were you all equal as you all are now? Or was there a hierarchy?

Judge Lacey. It was a different structure under the consent decree. There were three court-appointed officers initially in May of 1989. Judge Edelstein inducted into the order. And I became Independent Administrator; Mr. Carberry, Independent Investigator; and Mr. Holland, Election Officer. And we were co-equals in proceeding on that basis.

Ms. Toensing. You had review authority of the IBT's day-to-day activities, is that correct?

Judge Lacey. I don't no, I wouldn't put it on that basis not day-to-day activities. But in the areas that I've defined expenditures, appointments, and contracts and I worked out methods of, for example, I set a dollar limit. We didn't review every expenditure. We didn't review every contract. On appointments, I would, after a while, worked out letting them go in initially, but subject to being removed after I had FBI checks and the like. But not on--I was not functioning on a day-to-day basis, managing the Teamsters.

Ms. Toensing. You had certain areas over which--

Judge Lacey. No, I had no idea, for example, what might be going between the International in Washington and the administrative work that would be carried on with the Locals. That was not within the spirit that I had until somebody charged that there was a violation that took me into the consent decree where, presumably, Mr. Carberry will then be filing a charge.

Ms. Toensing. A good segue for me to ask Mr. Carberry. What was your role as Investigations Officer during that time?

Mr. Carberry. I was essentially an internal union prosecutor, using the union constitution as the charging instrument. We would investigate possible wrongdoing, and then, if we had sufficient evidence to sustain a charge, we would file the charge and either we'd reach a disposition of the charge short of a hearing or we'd have a hearing on the charge before the Independent Administrator.

Ms. Toensing. I'd like to address a couple of the areas that you all looked at in that time period during the Phase One era. Judge Lacey, in October of 1990, you instructed the Audit and Investigations staff to investigate the IBT's use of two jet aircraft. Is that correct?

Judge Lacey. Yes, that's right. Yes.

Ms. Toensing. And in reading the report, which we have here but you don't need to read it, I'm sure you remember it from that response that you found out that the General President used the aircraft for personal trips, and 48 weekend trips home to Boston cost something in the neighborhood of $528,000. Those same trips would have costs, flying first-class, about $29,000. Aside from this cost differential and saving the union money, did you find organized crime involvement in this or some kind of illegal activity in the two jets?

Judge Lacey. In the jet aircraft?

Ms. Toensing. Right?

Judge Lacey. No just horrible expenditures. And that that's where it was placed, so where it was lodged in my review of expenditures.

Ms. Toensing. So you didn't have a basis of looking at the jet aircraft as far as furthering racketeering or organized crime? It was review authority of expenditures?

Judge Lacey. But all of this has underlying in bedrock dealing with predicate acts of RICO. And if the money of membership is being utilized in this fashion, I regarded this as amounting to a predicate act. This, to me, constituted embezzlement of members' money.

Ms. Toensing. And that was your rationale in undertaking that investigation; that so much money was being spent that you could see this as a basis for corruption?

Judge Lacey. I think that's a fair statement. I could expand on it, but I think that's a fair statement.

Ms. Toensing. In June of 1991, the delegates to the Teamsters convention, this is before Ron Carey's election, because it was the convention to nominate the candidates. Ron Carey was elected that winter. In June of that year, they voted to sell the aircraft. Would that be correct?

Judge Lacey. I think that's accurate.

Ms. Toensing. Was that on their own accord or do you think you nudged them a little by your investigation?

Judge Lacey. Let me call on my memory for a minute. I was at the 1991 Convention in Orlando, and I believe that at least one candidate and maybe more pledged, among other things--one thing was increasing the strike benefits that was prominent. Another was getting rid of the jet aircraft. And either whether that was prompted by my recommendations or not, I don't know. But ultimately it happened.

Ms. Toensing. Today, there's an IRB of three members, would you take any interest at all if the Teamsters decided at the their next board meeting to buy those two aircraft back and use them again? Now, I'm trying to compare your past authority in those two years as the Independent Administrator with now what you three see as your authority as IRB on taking the same subject matter.

Judge Lacey. I think what--I'll speak for myself on that. Against the background that I've described, which obviously puts me more in touch with that kind of a transaction, I'd probably call or have somebody call upon one of the Teamster representatives and say there's a history to this, and are you aware of the history? But the point is--

Ms. Toensing. Judge Webster, would you have?

Judge Lacey. We don't have, we don't have the authority here that we had when I was Independent Administrator.

Ms. Toensing. Your reaction?

Judge Webster. I agree with Judge Lacey. I think that at the initial determination to purchase a plane ostensibly for union business would not be the sort of thing that we had any jurisdiction to prevent or to bring charges about. However, if the abuse of that plane was of the dimensions described by Judge Lacey in the previous instance, which amounted to embezzlement, then, as a matter of corruption, I believe we would have a basis for going forward. So, in a way, we're not telling them what kinds of things they can have, we're seeing whether or not it's used for personal purposes or for the benefit of officers at the expense of union members.

Ms. Toensing. Mr. Crandall, would you agree with your colleagues there?

Mr. Crandall. I would.

Ms. Toensing. You all may or may not be familiar with the fact that we had today's independent financial auditor testify here some months ago, Mr. Levy, who said that, I mean, we asked him the question what if the Teamsters' wanted to buy a Lear jet. How would you look at that as the independent financial auditor? And his response was, you know, I'd see if there was the proper paperwork, but it's none of my business what decisions they make as to what to buy. So, really our question is, is there anyone involved with IBT governmental oversight who would be reviewing or have the authority to nix this kind of a decision?

Judge Lacey. I'm going to--since you've been addressing most of the questions to me I'm, therefore, going to assume I have the privilege of suggesting that Mr. Carberry respond to this because this is a subject that he can address.

Mr. Carberry. Under the consent decree now, imprudent acts would not fall within anybody's oversight. One of the differences that I saw between the Teamsters consent decree and some of the other Civil RICO consent decrees involving other unions of Locals around the country is that, even the initial court officers had certain limits on both their responsibilities and their powers. And Judge Lacey's veto power and, as you know, he didn't veto the jet purchase, I mean, the use of the jets because that was consistent with board resolutions and the Teamsters' constitution at that time, which also allowed the General President to take a vacation at the expense of the union, anywhere in the world, with as many people as he'd like to have with him. You know, there was no violation. He did his report, as you know. So, at now time, could anybody just say, gee, you know, why don't you travel on the shuttle instead of private jet, because if you don't, you know, you'll be charged with an offense, because we just didn't have that type of power.

Ms. Toensing. Well, let me go to something that, Judge Lacey threatened to veto. Mr. Cronin, I think you're most familiar with it, and that is the Teamsters affiliate pension plan, which we'll call TAP here, so I don't to say those words every single time or TAP or the pension fund. And in January of 1991, during Phase One, you were presented with a proposed $12 million expenditure for the Teamsters' 1990 contribution to the TAP. And you recommended to Judge Lacey that this expenditure be vetoed. The bottom line was that instead of $12 million, $6 million was contributed to the fund that year. But the basis for your making that recommendation was that you would talk to various people and found out that the plan was over funded. Is that correct, Mr. Cronin?

Mr. Cronin. That's correct?

Ms. Toensing. Are you familiar with what we have in Tab Two, which is a letter dated January 16 written by you to the IBT. And in it you say, that it may be vetoed the expenditure until the IBT explains why it had proposed a $12 million contribution when the actuary had determined no minimum contribution was required. What is bad about overfunding? Can you explain to us in terms that most of us can understand? Why the overfunding is bad?

Mr. Cronin. Well, let me explain, you know, how I went about this, and try to do it simple terms since--

Ms. Toensing. Real simple.

Mr. Cronin. I'm not an actuary either.

Ms. Toensing. Okay.

Mr. Cronin. When the expenditure was presented to me, it was just on a piece of paper for $12 million. And like I did with many expenditures like that, particularly large ones, I went to union and said, I'd like to see the backup. The backup was what you called the actuarial variation from the Segal Company. I read it. I didn't understand half of it, but some of it, I did understand. Where it said there had been an that the minimum contribution that the union could make was zero. If further stated that the maximum contribution was $10 million. They were proposing $12 million.

I went to the General Secretary-Treasurer, Weldon Mathis, and said, it looks to me, because I'm not the expert here, that this plan might be over funded. Mr. Mathis said, no, I think it's under funded. In my presence, he called to Terry Molonsky who was taking care of the pension plans, and Molonsky told him, yes, it is over funded. So then I told Mr. Mathis I would get back to him.

And I contacted Joseph Applebaum, the chief actuary of the Department of Labor for some help, because there were a lot of things I didn't understand about actuarial evaluation reports, and Mr. Applebaum helped me compose that January letter that I sent to the IBT, which basically was more questioning the $2 million that over what the Segal Company had said was the maximum contribution.

Then, I got a subsequent letter back from Weldon Mathis that said the board, the union had voluntarily decided to lower it to $6 million. And I notified Judge Lacey, and Judge Lacey said no action would be taken. I don't know if at Judge Lacey's point, there was a serious consideration of a veto under the two RICO predicates that were generally used in the financial area. That would be embezzlement and extortion.

Ms. Toensing. We'll be asking some more questions here in a little bit about the pension plan, but I just wanted to establish for the record that, at least in the old days, under the Independent Administrator, you did involve in pension issues.

Mr. Cronin. Yes, I did. And I hope my answer was simple enough for you?

Ms. Toensing. I didn't want to ask another one, because I understood that one so far,

Judge Webster.

Judge Lacey. I'd just make one amendment or correction. When they--when I was brought in and I read the consent decree you've just made a very significant point. In negotiating this, I understood it when I went over this with government counsel. The IBT was insistent that the pensions be taken out of the consent decree so that the court-appointed officers were not going to be able to look into those pensions, and see how they were structured and the like. So that we didn't have that power. However, I must say that when I would hear something like this or when Mr. Cronin did, he had the obligation to bring it to my attention. And we did inject ourselves into this to this extent.

Ms. Toensing. Thank you, Judge Lacey.

Judge Webster, do you know who Matt Witt is?

Judge Webster. Would you say that again, please?

Ms. Toensing. Matt Witt?

Let me refresh your--you probably--the former just resigned IBT Communications Director? Did you ever meet him?

Judge Webster. I don't believe I ever did. No.

Ms. Toensing. Then I'm going to ask any the IRB members. Have you heard reports, have any of the three of you heard reports that documents are being shredded at IBT headquarters over the recent weekends? Has that fact been reported to any of you three?

Judge Webster. Not to me.

Ms. Toensing. Our subcommittee has been informed that two IBT employees wearing green uniforms delivered an industrial-sized shredder to the office of the IBT Communications Director, who just resigned, Matt Witt, during the week of July 13th; and that the noise of the shredder operating in that office can be heard on Saturday, July 18, when he was in that building. Our concern, and we want to know how you all feel as the IRB, is that a high-ranking employee of the IBT is shredding documents at IBT headquarters when the IBT has withheld certain categories of documents responsive to this subcommittee's subpoena, citing privileges and other objections. Is this something that the IRB would look into? Any of you who want to.

Judge Lacey. First, let me answer the question. I joined Judge Webster in indicating that no mention of that has been made at any meeting that I've been in. I had not heard that.

Mr. Crandall. Nor have I.

Ms. Toensing. And my giving my facts--

Judge Lacey. This will touch Mr. Carberry and Mr. Cronin, too.

Ms. Toensing. I'll ask them for the record.

Mr. Carberry. I was not aware of it.

Mr. Cronin. I'm not aware of it, either.

Ms. Toensing. Hearing those facts, if you knew them to be true or thought them to be true is this something that the IRB would look into?

Judge Lacey. I think it would be my thought that we would want to meet and discuss this with Mr. Carberry and at least ask some questions about it, to find out what had happened. I've been involved in investigations before, and I've gotten calls from anonymous sources like about five years ago, I was down here on investigation. I got a call on a Friday afternoon that documents were being shredded at the Justice Department. It turned out to be nothing to this. And I'm not now meaning to disparage what you just heard, but I'd first want to establish that there was shredding.

Mr. Toensing. Of course, and we would, too. We couldn't march over there either. I would like to yield the balance of my time to the chairman.

Judge Lacey. When did you hear? Just refresh me this was over the weekend?

Ms. Toensing. This past week.

Judge Lacey. Thank you. Thank you.

Chairman Hoekstra. I'd like to just direct your attention to Exhibit 16.



Chairman Hoekstra. It's an affidavit filed on September 12 by Charles Ruff, who is the current White House Counsel. Mr. Ruff filed the affidavit in a civil action brought by a union member against the union seeking certain documents related to services performed for the IBT by the law firm of Covington and Burling, and by Palladino and Sutherland. Mr. Ruff is a former partner at Covington and Burling, and he states in the third paragraph ``as part of the firm's representation of the IBT, it also served as counsel to the IBT Ethical Practices Committee.''

Do you or do any of you have knowledge as to whether Mr. Ruff ever performed services as counsel to the IBT Ethical Practices Committee?

Mr. Carberry. I would have made no distinction between counsel for the committee or counsel for the IBT. And when I dealt with Mr. Ruff, my understanding was he was counsel for the IBT. I wouldn't deal with the Ethical Practices Committee as a separate entity.

Chairman Hoekstra. You would not?

Mr. Carberry. No. I would deal with the IBT. So my understanding was he was representing the IBT.

Chairman Hoekstra. Okay, now Mr. Belk was here last week and made very clear distinctions about what the Ethical Practices Committee could and could not do and who actually could be involved in that. Is that, his description probably accurate?

Mr. Carberry. I'm not familiar with their own internal procedures on the Ethical Practice Committee.

Chairman Hoekstra. Okay. Is anyone familiar with? I've checked. Are any of you aware that Jack Palladino was hired by Mr. Ruff to perform investigative services for the IBT?

Mr. Carberry. Through the public newspaper stories and magazine articles that came out later. At the time, I was not aware.

Chairman Hoekstra. So I'm assuming you did not know what Mr. Palladino did for the $150,000 that was paid to him by the IBT?

Judge Lacey. I certainly am not.

Chairman Hoekstra. Okay. The Teamsters have refused to produce documents to the subcommittee regarding the work performed by Covington and Burling and by Palladino and Sutherland, citing various privileges and a privilege log produced by Covington and Burling. And that's in Exhibit 18.


Chairman Hoekstra. In response to a subpoena from the Committee, it appears that Mr. Ruff and his firm were representing Ron Carey during the IRB's 1994 investigation into Carey's alleged ties to organized crime. The log contains several references to an IRB inquiry. Did any of you have contacts with Mr. Ruff while he was representing the Teamsters?

Mr. Carberry. Yes, your honor. Yes, sir. In connection with the IRB.

Chairman Hoekstra. I wish I would have been as lucky last night in Powerball, but

Mr. Carberry. In connection with the IRB inquiry in to the allegations that were investigated at that time period concerning Mr. Carey, it was my understanding that Mr. Ruff was representing the IBT. And Mr. Carey was being represented by the Cohen, Weiss, and Simon law firm.

Chairman Hoekstra. Judge Lacey?

Judge Lacey. That was my understanding as well.

Chairman Hoekstra. That Mr. Ruff was representing the IBT?

Mr. Carberry. Yes.

Chairman Hoekstra. And that Mr. Carey had another law firm representing him personally?

Mr. Carberry. Yes, that is correct. And I believe if you look at the Exhibits to our report and the Carey depositions, you'll see those representations made at those depositions.

Chairman Hoekstra. Okay. Thank you.

Judge Lacey, in referencing Exhibit 13, it's an April 13, 1994 letter to Thomas Puccio.


Chairman Hoekstra. You refer to a conversation you had with Mr. Ruff regarding Mr. Puccio's request to meet with Ron Carey. What was--can you give us a little bit more background on what that was about?

Judge Lacey. Are you sure you want to know it? It will take a little bit of time to give you the background, but I'm certainly willing to give it. Let me try, anyway.

Chairman Hoekstra. Okay.

Judge Lacey. In, we had had some reports that led us to direct Mr. Carberry to commence an investigation of Mr. Carey. This was in the fall of 1992. This continued along through 1993, and in the early part of 1994, at a meeting, I remember Mr. Ruff coming in, he'd asked to meet with us. And he said that he had been contacted by Mr. Puccio who had been court-appointed trustee of Local 295.

I was familiar with that because I indicated earlier about removing Genoese and how I had taken off the entire Executive Board at 295, so I knew a little bit about 295, and, indeed, I talked with Tom before he was appointed, when he called me to get my ideas about some of the things that might happen if Judge Nickerson appointed him.

Mr. Ruff and Tom, incidentally, was appointed as I recall in 1992. But in any event, we would have conversations about organized crime and what was happening, some of the things he saw. I knew what I had done as Independent Administrator. We both knew each other's background in fighting crime et cetera. So I was surprised to hear what Mr. Ruff had to say. He said that and he had a meeting with Mr. Puccio, and Mr. Puccio said he had a lot of things on Ron Carey that they were going to drop, go public with if the IBT did not agree to have Mr. Puccio's trusteeship extended to another Local, I think it was 851. And, of course, I know from my own experience that 851 was tied in various ways to Local 295 so that there was that connection.

Mr. Puccio wanted to have this trusteeship extended to 851, and according to what Mr. Ruff said, was in effect saying look, if you don't consent to this, the IBT, then I'm going to drop this on Ron Carey. So shortly thereafter I received a call from Tom and he wanted to enlist the aid of the IRB in talking directly with Carey, to persuade Carey to meet with Puccio. I don't recall all of the conversation, but there obviously some gaps because what happened in that period, I can't recall. But Puccio did call me. He knew Judge Webster. They'd been partners, and he asked me to take up with Judge Webster whether we might do something or arrange this meeting. We discussed it, and we agreed we were not going to deal with Carey on this. We'd put it right back to Ruff, which we did.

You see this letter reflects the conversation and, again, I cant' give you precise words, but the substance. I had a lot of respect for Tom Puccio because of all the things he had done. I was familiar with his ABSCAM prosecutions. A good prosecutor. This shocked me, and I said to him, look if you've got things that are solid on Carey, we have an investigation going and anything you want to give us you can give us. You shouldn't be holding it out. But the union is going to turn this on you, and to use this and effect this blackmail is not the way to do it.

Meantime, he had the deputy, who was, in fact, communicating with us, principally with Mr. Carberry. His name was Moroney, he had worked for Mr. Carberry, and he would give various allegations to Mr. Carberry, which Mr. Carberry was developing in his investigation.

To jump this to the next step, I said, you know, based on everything we have discussed over the years, organized crime, except Puccio and I called it the old guard. We understood what we meant. If you've got companies solid on Carey, then come forward with it. But make sure you got it. Because there are lot of people out there, and we used the term old guard, that would like to get back in. And again, Puccio and I discussed what I've been through as Independent Administrator.

Chairman Hoekstra. Excuse me.

Judge Lacey. So that's what all of that means in that letter.

Chairman Hoekstra. All right. Excuse me, I'm out of time, and we're out of time. We've got a floor that I think Mrs. Mink and I have a vested interest in. The committee will recess, and I think we've got two votes, and should be back fairly soon.

Thank you.


Chairman Hoekstra. The subcommittee will reconvene, and minority counsel will be recognized for 30 minutes. We'll suspend and--

Ms. Lentchner. Mr. Chairman, I'd like to yield to Mr. Scott for a minute.

Chairman Hoekstra. Ready to begin?

Mr. Scott. Yes.

Chairman Hoekstra. All right. Minority's recognized for 30 minutes.

Mr. Scott. Mr. Chairman, I'd ask unanimous consent that we allow Mr. Witt to respond to the allegations that were made. He's here and he's willing to make a brief statement, under oath, to respond to the scarless accusations that were made.

Chairman Hoekstra. The hearing--we have witnesses who are here who have prepared. We're going to move forward with the IRB hearing.

Mr. Scott. Was that an objection to the unanimous consent?

Chairman Hoekstra. I hear objection to the unanimous consent, correct.

Mr. Scott. Then I would move that the gentleman be given the opportunity to briefly respond to the scurrilous accusations that were made against him by name, both on the floor of the House of Representatives and in this committee.

Mr. Kind. Will the gentleman yield?

Mr. Scott. And I would yield to the gentleman from Wisconsin.

Mr. Kind. Mr. Chairman, for many, many months now we've heard accusation after accusation about how members of the IBT have been refusing requests to come and testify before us, before this committee. We have a gentleman now whose reputation has been impugned, not only on the floor of the House of Representatives, but in opening statements, and during questioning here today.

He has voluntarily decided to come down and to set the record straight, under oath, subject himselfl, to make a statement in response to the allegations that have been leveled against him which would lead any reasonable person to believe that there's criminal activity being conducted by this person. He's just here, Mr. Chairman, to clear his name and to set the record straight.

Mrs. Mink. Will the gentleman yield?

Mr. Kind. Yes.

Mrs. Mink. I'd like to say that I personally had an opportunity just to have a brief discussion with Mr. Witt, and I have discovered that he's still working at the IBT. He has not resigned; that there is no large equipment that has been brought into his office to do any shredding, and that he has not witnessed any such activity going on at the so-called ``Marble Palace.''

So, in view of the opposition of the chairman to hear these words from Mr. Witt directly, I'm forced to make the statement on his behalf.

Chairman Hoekstra. The minority can proceed. The motion's not recognized.

Mr. Payne. Mr. Chairman, there's a motion out--

Chairman Hoekstra. Out of order.

Mr. Payne. Is there a motion on the floor?

Mrs. Mink.Well, then, Mr. Chairman

Mr. Payne. I second the motion. Let's call for a vote.

Chairman Hoekstra. The motion is not in order. The vote is not in order.

Mr. Payne. I object to the ruling of the Chair and would like to have a vote on the ruling of the Chair.

Mr. Scott. The chairman has objected. I think the point has been made that the gentleman is here, willing to testify, willing to clear his name. He has been accused of criminal activity in this committee, by name. He's here to respond to those allegations, and the chairman is unwilling to even consider a motion so that we can vote so that we can allow him the very brief opportunity to speak. And to that, I'll yield back to the--I'm sorry, were you going to change your ruling?

Chairman Hoekstra. I'm not changing my ruling, no.

Mr. Scott. Counsel will continue.

Ms. Lentchner. Thank you. Well, we were not able to have the opportunity to hear the statement of this witness to refute the allegations that have made against him. But, I would like to take some time to give you gentlemen the opportunity to respond to some allegations that were made against you at an earlier hearing.

In particular, there were allegations made at a hearing on March 26 regarding the work that you have done as the Independent Review Board over the last five years, and allegations relating to alleged relationships that you had with Mr. Ron Carey. Could each of the members of the Independent Review Board please briefly describe how you were selected to serve on that Board?

Judge Lacey. I'll start first.

Ms. Lentchner. Thank you.

Judge Lacey. I guess either because, or in spite, of what I did as Independent Administrator, I received a telephone call from then-Attorney General Barr asking me whether I would continue to serve, but in another capacity, as a member of the Independent Review Board. And, after some consideration, I decided that I would stay in because I felt that, quite honestly, that maybe there was more to be done and I just didn't want to get out at that point.

Then, as Judge Webster indicated in the prepared statement that he read, after five years, then in 1996, Attorney General Reno called me and asked me whether I would be willing to continue to serve and I said I would. And, I guess I turn that over now to--

Ms. Lentchner. One second. I'm sorry, Judge Webster. Before we get to Judge Webster, Judge Lacey, prior to your becoming associated with the IBT as the Independent Administrator, did you have any relationship with Ron Carey?

Judge Lacey. No, no.

Ms. Lentchner. And, Judge Webster, could you let us know how you were selected to be on the IRB?

Judge Webster. I was selected following the inability of Judge Lacey and Mr. Crandall's predecessor, Eddie Burke, to agree on a third person. I believe that Judge Lacey had suggested me among other names along the way, but when they took their impasse to Judge Edelstein, he exercised his right to appoint me at that time.

Subsequently, in the next round of re-appointments, both Mr. Crandall and Judge Lacey supported me, and Judge Edelstein made it his appointment as well, by approving that.

With respect to Mr. Carey, I suppose you will have the same question. I have only met with Mr. Carey one time when he came to introduce himself to the IRB, the Independent Review Board, at our offices. I have had no other communication with him of any kind, with exception of the hearings at which we presided and where we asked some questions.

Ms. Lentchner. Thank you. And Mr. Crandall?

Mr. Crandall. Yes, I served as counsel to Harold Burke when he was a member of the IRB during his first phase. I believe that lasted approximately a year, when he decided to move on and take another position. He inquired of me whether I would be interested and then I was contacted by Mary Joyce Carlson, who is an attorney in the general counsel's office at the IBT, about whether I would be willing to serve. I indicated that I would and that it was communicated to me that I would serve.

I believe I met Mr. Carey before they nominated me. That was the only occasion on which I had ever met him and that was a very brief meeting actually, in a restaurant by chance, a few weeks before I was nominated, and on no other occasion, actually, did I'd meet him other than when he came to the IRB on one occasion to meet with the IRB at his request. I didn't know him personally prior to my appointment.

Ms. Lentchner. Now at a hearing at this committee on March 26 of this year, a Republican member of this committee stated, and I quote, ``In many respects, the IRB attempted to protect Carey and actually was used to punished people like yourself,'' which was referring to a witness who is before the committee, and referring, generally, to political enemies of Ron Carey.

Would you like to respond to the charge that the IRB has attempted to protect Ron Carey and to punish Ron Carey's enemies?

Judge Lacey. The answer is that anybody who's read my resume knows where I stand when I take a public position. Whether it's as the United States Attorney or as a Federal judge or as an appointment of a court to conduct a redistricting in New York State or a B&L investigation down here in Washington. There is no way that anybody is going to influence me from doing what I think is right and, indeed, I'm so privilege to be with people like Judge Webster. I mean, head of the FBI, head of the CIA.

I was privileged to say before Judge Edelstein that this was one of the outstanding citizens in this century in the United States, and that I hoped that I could say that I was going to be serving with him. And, Mr. Crandall, we too and Judge Webster worked with Mr. Crandall.

I can only think of one instance where we departed and even that was only slightly and those of you who have read our opinion recently will see that in a mild departure, I didn't depart from them, but we've seen eye-to-eye on this.

I mean, you're dealing with people of great integrity. And, we've read some of the slurs that have been cast irresponsibly. But, you know I've been in public life, and I know what politics is like, and I know what the party affiliation is like.

The irony here is that you, on the minority side, are asking questions that are addressed to a life-long Republican, Lacey, and I think, a life-long Republican, Webster. We recognize the contribution aspect of this. We deplored it in our opinion. I just read with, not dismay, but with disgust, if the remarks were accurate, attributed to a member of this committee. I just shook my head and said, that's irresponsible.

So, I'm not sparing any words. That's exactly the way I feel. And if anybody wants to take that up with me further now, that's one reason I'm here.

Ms. Lentchner. Thank you, Judge Lacey.

And Judge Webster, another member of this committee, at the same hearing on March 26, stated that ``It appears that Mr. Lacey doesn't really want to get involved too much in learning things that seem to go against his own judgment.'' Judge Webster, in dealing with Mr. Lacey--Judge Lacey; I apologize in connection with the Independent Review Board, would you respond to that statement?

Judge Webster. I really don't know how to respond to the statement because I don't understand it. I have known Judge Lacey for many, many years. We were on the bench together. We've both been United States attorneys. I have regarded him as a man of the highest integrity. Mr. Crandall is one I've known more recently. We have all had one common objective and that is to protect the rank-and-file members of this Union from mob domination and corruption.

There has been no thought of trying to protect any person in office for things that they have done wrong. I think our record reflects that. We have not viewed the Teamster leadership as the enemy as much as it is our responsibility to see that they perform their responsibilities in a way that they promised to do, and were sworn to do, and had an obligation to for their rank-and-file.

Ms. Toensing asked about the priorities over mob domination and corruption and a democracy in the Union. This is maybe an opportunity to say that it was not a question of one to the exclusion of the other. We were trying to remove mob domination and corruption wherever it might appear, so that the rank-and-file could have their votes counted; the rank-and-file could achieve their higher aspirations in collective bargaining with an organization truly dedicated to reform, and that's all that we're interested in carrying out our responsibilities under the court order.

And in doing that, I can say that never has there been a time when I've felt that either Judge Lacey or Mr. Crandall were aligned in any partisan way or any preferential way. We've been trying to do these things as the facts come out based on the evidence that Mr. Carberry has been able to develop with his team, and we've been able to review and evaluate.

Ms. Lentchner. Thank you. And we're glad that you had an opportunity to respond to those charges, and I believe that's why the ranking member of the committee called for you to be given that opportunity at the March 26 hearing.

Judge Lacey. I appreciate having been given that opportunity, and what I said earlier goes; if anybody wants to pursue further the subject while I'm here and not wait until I'm absent, I would welcome that opportunity.

Ms. Lentchner. In that regard, can you briefly explain for us how the IRB does determine what it is going to investigate?

Judge Lacey. I'm going to ask Mr. Carberry to respond to that, if I may, Bill.

Ms. Lentchner. Mr. Carberry, who is the chief investigator.

Mr. Carberry. There are many ways. I mean, essentially, we have nine investigators who work full time for us and we have three lawyers who work full time for the Independent Review Board. We have allegations that come in from members or from other people sometimes anonymously, sometimes with information that we follow up on.

We get information from various law enforcement sources. We're, obviously, very, very dependent upon the FBI to a large extent in organized crime investigations, but when you have that information, New York City Police Department and New Jersey State Police, and various other law enforcement agencies around the country we also get information from the Department of Labor, Office of Labor Racketeering.

In addition, consulting with the Board, we've undertaken various projects to gather information where we have seen patterns in the past which might suggest that this is an area that we should probe into more deeply.

So, that's basically how we do our investigations.

Ms. Lentchner. When determining when to start an investigation and what to investigate, do the political alliances or whether somebody is allied or against the current leadership of the IBT play any factor?

Mr. Carberry. Absolutely not. When I became investigations officer Judge Edelstein appointed me it was an extraordinary opportunity. I took an oath to implement a consent decree, and we've done that, and I've been a prosecutor before that for nine years and have only dealt with charges when the evidence supports the charge. I've never let my personal opinion interfere with my professional obligations.

Ms. Lentchner. Thank you, Mr. Carberry. Now the title of this hearing was ``The Effectiveness of the Independent Review Board,'' and majority counsel started by saying that we needed to go back in time. I think to really understand that question, the effectiveness of the consent decree and the Federal efforts to clean up the International Brotherhood of Teamsters, we need to understand a little bit about what the Teamsters were like before the 1989 consent decree was entered into.

Mr. Lacey, I think you're probably the best one to tell us a little bit about, what was it like in the Teamsters in 1988?

Judge Lacey. Well, Ms. Lentchner, I touched upon that just briefly when I talked of some of the discussions I had with Mr. Puccio.

Judge Edelstein called me. He'd known of my background as United States Attorney, and some of the other things that I'd taken on when I was--once I went on the bench--and asked me whether I would take on the job as Independent Administrator. And, as kind of a humorous aside, I said I don't have the time. I can't get involved in that and he then leaned on a couple of my partners, and they leaned on me, and I then said I would undertake it.

Before I got started, I had my own background and experience to dwell upon, going back in the 1950's. I prosecuted people in organized crime as an assistant U.S. Attorney. I did the same as United States Attorney. In addition to that, I read widely the President's Commission on Organized Crime Senate report. I read everything I could get that had been developed in the Civil RICO case in terms of depositions of the various witnesses, organized crime people, who would turn.

Roy Williams, the former president of the Teamsters who had been placed in the position by Sevella, Nick Sevella, the Kansas City mob, supported by Severno out of New York and Rockschlein out of Cleveland. I made myself a student of what had gone on when Presser was president, and, of course, I went back to the earlier days when starting with Beck and his successors had gone to jail. So, I was pretty well steeped in the whole background and then I got started.

Studded with organized crime, an iron grip on the Teamsters, on the General Executive Board people like Tony Propensano, killer top mob figure in the United States, Cozzo, I mentioned earlier, the mob figure from Pittsburgh. All of those people are gone, resigned, expelled.

I say, quite immodestly, that we just did a fantastic job. And to sit and listen to what questions you put and be reminded what I've read about what some people on this committee had saidnand I'll just talk about me now I can't understand how people who are responsible and who know what we've done here can engage in that kind of criticism.

I understand what's behind it. There's a lot of the Democratic fundraising, and we had to go into that, and the opinion we wrote. But, you know, I tell those who are here that really this is not fair when people take on jobs like this, that you will take up somebody with the reputations that a Judge Webster has or that, hopefully, I have or that Mr. Crandall has or Mr. Carberry has, and behind the scenes describe us as you have, whoever has done it, has done it.

Judge Webster. May I add one word? We've tried to do our work without any specific reference to the elections that have taken place or the one that's going to take place again. I did not have the slightest idea of whether the locals that we were recommending for trusteeship were pro-Carey or pro-Hoffa. Until the ranking minority member gave the list this afternoon, I had never heard it toted up as to what, who was on, which of the locals favored who.

Now that's not our job. Our job is to see whether that local is behaving properly and their leadership representing its members appropriately. And I can assure you that that's the way we have tried to approach our responsibility. I'm sure we've done less well than we'd like to in some cases, but not on that account.

Judge Lacey. Who do you think started the investigation of Carey? The Independent Review Board? Because ultimately we decided there was not substantial evidence to support the charges. The three of us agreed on the decision, or the opinion, that you've read. It was public. Everything we've done is public. Does that sound like we're acting surreptitiously? I can't understand the kind of criticism that you've listened to, and apparently countenanced, from some people who have an axe to grind. We don't have any axe to grind. Thank you.

Ms. Lentchner. Mr. Crandall, do you agree with your colleague's statement?

Mr. Crandall. I would very much agree with that. As someone with a somewhat different background coming as labor counsel for a number of years to a large number of labor unions, quite frankly, one of the issues that we in the labor movement and those of us who believe in a strong labor movement have had to confront is that there have been allegations of corruption within a number of unions. And, I think that disparages us those of us who care about the labor movement. I've always felt that that was a terrible blot on the labor movement as we know it. I felt when I was asked to do this job that that was something we had to take extremely seriously when Judge Edelstein swore us in and asked us and told us that we were not just--we were not the representatives of those who nominated us, but rather we were neutral members of a board, seriously committed to rooting out the kinds of problems that we have seen in this organization. I took that oath seriously, and I do today, and I'm proud of the record that we have.

Ms. Lentchner. Now, I'd like to ask you a couple of questions about another issue that came up at a hearing recently before this committee, and I'm not asking you for any details with respect to a pending investigation. However, I'd like to ask you, is the Independent Review Board, in fact, doing an investigation relating to a memorandum from Jerry Nash to Ron Carey dated January 27, 1997? Mr. Carberry?

Judge Webster. Mr. Carberry can answer it. We've talked of how we anticipated that question, and I think he can best respond to it.

Ms. Lentchner. And I'm not asking for the details.

Mr. Carberry. The Independent Review Board is conducting a very thorough, ongoing investigation into a series of allegations related to the 1996 election. That memo, as you know, was introduced at the Carey hearing and made public at the Carey hearing by the chief investigator.

Ms. Lentchner. Has anybody attempted to interfere with that investigation?

Mr. Carberry. No, but, I mean, most of our investigations no one tries to interfere with. We do have, if you don't cooperate with us, mechanisms to discipline the IBT member who wouldn't cooperate.

Ms. Lentchner. But this okay, now, under the 1989 consent decree, the Independent Review Board is responsible for the internal disciplinary procedures for the IBT. Is that correct?

Judge Webster. We did not supersede the disciplinary authorities within the Union. They are fully capable of carrying out their own discipline. The practice, as I attempted to outline in our opening statement, is to recommend charges with specificity and then have the local or the General Executive Board, or whoever is the appropriate governing body within the IBT, bring the charges. Then they hold the hearings, they make the judgments, and they report back to us on the action that's taken.

If we believe that action is inadequate, we tell them so, and then they must then rethink their position. They come back again and we find it inadequate a second time, we'll take it ourselves and conduct our own hearings and impose our own discipline or sanctions.

And part of that process is something to which I think Ms. Toensing was referring to earlier. How do you go about the business of having the Union grow into responsibly administering its own discipline? And that's the procedure that we've followed under the rules.

Mr. Crandall. I might add, as well, that process is in some way fairly unique in that, when we do recommend charges, we don't simply lay out a charge. We actually forward to those people who are charged the entire record essentially, the direct case against them; that is, the deposition testimony, the documents that have been developed, and the like. So that, not only do they have a general charge, they have the specific factual basis upon which that charge may be based, so that they can prepare whatever response there may be. And, in that way, it's a very open process that permits them to know what their case is and what they have to respond to.

Ms. Lentchner. So, is it--do I correctly understand that the IRB investigates matters which it then refers to the Union, the General Executive Board, to decide whether or not the Union should bring charges against its member?

Judge Webster. That's correct, and I think we should add to that, because this board has the ear and the cooperation of the FBI and other sources that would not be available to the Union; in all cases involving organized crime charges, and similar charges of that nature, the IBT will refer these matters back to us. After they file the charges, they'll refer them back to us for hearing. And we do that.

Ms. Lentchner. So the fact that the Independent Review Board is conducting an investigation into allegations related to the 1996 election, including the Nash memo we discussed before, means that, in fact, an internal investigation for the Teamsters is being done. Is that right?

Mr. Carberry. No. The Teamsters and when you talk about Teamsters, you're talking about a very decentralized entity. I mean, you have the locals, and joint councils, and the internationals. They have their own disciplinary processes. They can still file charges totally apart from the IBT,excuse me,from the IRB, and proceed. So, an IRB investigation doesn't necessarily mean it's a Teamster investigation. It is an IRB investigation.

Ms. Lentchner. And as a result, if the IRB determines that charges should be recommended, the IRB will tell the General Executive Board and recommend that they bring charges. Is that right?

Mr. Carberry. Yes and no. It's right. I mean, if the IRB refers a charge, it will refer it to a Teamster entity. It could be to the General Executive Board; it could be to the general president; it could be to a local, or to a joint council. But, yes, if the IRB has the charge, it will send its report, as Mr. Crandall described it, with the attached exhibits onto the Teamster entity.

Ms. Lentchner. And when the investigation that you're currently conducting is concluded, any record that the charges will, in fact, be recommended?

Mr. Carberry. That would be consistent with past board practices and procedures.

Judge Lacey. And consistent, as well, with the rules that were propounded or promulgated by Judge Edelstein when the Independent Review Board came into existence.

Judge Webster. This may sound a little convoluted to you, but it's really very well-thought-out. It permits us to send to a group that has sufficient detachment from the charge, so that if you have corruption in a local union, and you're sending it, you're not going to send it if it's the leadership of the local union; you're going to send it to a notch higher, such as a joint council, so that they'll be in a position to take the appropriate action and not just brush it under the rug.

Judge Lacey. And, if I may just add one more point to that, from time to time, we've gotten a return with a sanction imposed after hearing by that entity to which, as Judge Webster said, our charge has been recommended and we've decided that the sanction was not sufficiently appropriate; meaning, sufficiently severe. We then sent it back. We find it inadequate and they, then, are given an opportunity to have another hearing and consider the matter again. It comes back to us. If we still find it inadequate, we then, again, under our rules that were laid down for us, we then can proceed to hold our own hearing de novo, and that's what we have done when that has incurred.

Ms. Lentchner. And increased the sanctions at times?

Judge Webster. Exactly.

Ms. Lentchner. Now all of these recommendations for charges, to the extent that they are referred to the international as opposed to a joint council or a local, go to the General Executive Board of the International Brotherhood of Teamsters, as I understand it. And is it your understanding that those recommended charges and details the record that Judge Webster referred to are all reviewed and discussed at General Executive Board meetings?

Judge Lacey. No. I think Mr. Carberry made that point, but, Charlie, do you want to?

Mr. Carberry. The charges are not necessarily referred to the General Executive Board. It could be referred to the general president. What we would get is a notice that a charge has been recommended and the entity or the panel that was hearing the charge, okay, and maybe who the charging party was. All right, so, the procedure, whether they do a phone poll of the General Executive Board or discuss it at meeting, is not something that we are involved with.

We send the charge. They have a certain amount of time to get back to the board, and then the board receives notification as to whether a charge has been filed, and I don't know of any situation where a charge has not been filed. But they have the right not to file a charge and then we would deal with that situation.

Ms. Lentchner. But no recommended charge made by the IRB has ever been rejected?

Mr. Carberry. No charge--no filing of a charge has ever been rejected.

Ms. Lentchner. Thank you.

Chairman Hoekstra. Glad you're here. We may agree on some issues; we may disagree on some issues.

In the statement,I think in a statement, the copy of the written statement that I received, on page 7, I think this is the poll document, and it's in the second paragraph, beginning the second, third, in the second sentence, here's what it says: ``who appeared to have ignored'' you filed against the Union officers ``who appeared to have ignored their fiduciary obligations to investigate dishonesty or corruption by fellow officers or by Union employees. These charges were designed to instill in Union officials, the commitment to fulfill their obligations to have the Union police itself.''

On May 21, I wrote to the IRB requesting an investigation of Mr. Sever's unwillingness to conduct an internal investigation of the allegations contained in the January 1997 Jerry Nash memorandum. Those allegations of the corruption and misuse of IBT assets have been ignored by a CEO of a corporation, would amount to a breach of that CEO's fiduciary duty to its corporation and stockholders. What's the status of your investigation or is there an investigation of Mr. Sever?

Mr. Carberry. There is an investigation ongoing and that would be, as I described, a broad 1996 election investigation as part of that investigation.

Chairman Hoekstra. And when would the investigation, that investigation, have commenced?

Mr. Carberry. Actually, perhaps before your letter. I mean, one of the questions that was, again, raised at the Carey hearing, was the response, internally, to the AFL-CIO letter.

Chairman Hoekstra. Well, would it have begun that investigation shortly after the overturning of the election in August of 1996?

Mr. Carberry. I didn't know about the Nash memo. I mean, it depends on what the problem is defining investigation. Defining the investigation to allegations relating to the election, we've been receiving allegations continuously and have been looking at them.

Chairman Hoekstra. I guess I'm trying to get an understanding as to--in August of 1997, I would guess that the IRB understood that there were potentially some significant problems at the IBT. Is that true?

Mr. Carberry. At least by August. I'm having trouble on the chronology.

Chairman Hoekstra. August is when the election was overturned.

Mr. Carberry. Certainly before then.

Chairman Hoekstra. Okay. If I was watching the IRB for 1995 and 1996, and then got to August of 1997, September of 1997, would I have seen the IRB take a much more activist role in its supervision or its oversight of the IBT?

Mr. Carberry. Can I--I'm now speaking for myself as opposed for the board, okay? I don't see oversight and supervision is not how I see the IRB. The way I see the IRB, essentially, is as a function of the disciplinary system. And, therefore, it's always active, but it's always active historically. I mean, you only investigate offenses. And, so, you know, we're always active doing investigations.

Were we doing more investigative work relating to the election come August 1997? Yes. You know, had that increased over time? Definitely. Has it increased since then? Yes.

I really don't know how else to answer the question.

Judge Lacey. Can I just address that as well, or did you--

Mr. Carberry. Well, I'm--

Judge Lacey. Sorry I interrupted you.

Mr. Carberry. Yes, I'm open. Go ahead.

Judge Lacey. All right. We are not an ``oversight'' agency, and I tried to draw at the outset some distinctions which I think you will understand between what we did as Independent Administrator and now.

One of the areas, again, that distinguishes the two functions, I mentioned at the outset that when I sat as Independent Administrator, the last hat I put on, the fourth hat, was the Election Appeals Officer. At that point, I was involved in the election process, the 1991 election. Here we were not involved in the election process. I was an Election Officer, I was an Election Appeals Officer. When cases were referred to us out of that process that would go into our mill, and Mr. Carberry would then undertake investigations on specific allegations that were made--but the violations of the election process,of the election rules, that was not our role, whereas it would have been my role under Independent Administrator.

Now, that doesn't mean when we hear violations that we have now, as you have heard undertaken and are into, that doesn't mean that we don't ultimately get into that, but the immediate process deals with the Election Officer and the Election Appeals Officer, of course, Mr. Carberry, or rather Mr. Convoy now, or Judge Convoy in that role.

Chairman Hoekstra. Ms. Mink.

Mrs. Mink. Thank you very much. I want to, again, repeat what I said in my opening statement, that I have a tremendous sense of admiration for the work that you do and the efforts that you have made to fulfill the mission which the courts have given to this very, very responsible undertaking. And I, certainly, for one, believe that the condition of the Teamsters is much improved today as a result of your firm efforts and your determination to root out corruption and the influence of mobs and other types of criminal activity. And, so, I sit here on this side of the aisle in great admiration for the conduct of your office and for what you have accomplished.

I believe that the Teamsters are much better off today because of the institution, not only of the Elections Officer, but of this Review Board, so that there would be a very steady investigation of all activities that conflict with the orderly, lawful operations of the Teamsters. I think that you've contributed much to that activity.

I think some of the questions that have been raised today occur because there is some question as to the concurrent jurisdiction that you appear to have with reference to your responsibility for discipline, for investigation, for rooting out of corruption, and imposing penalties. That concurrent jurisdiction appears to me to be exercised together with the U.S. Attorney's office and their responsibilities to pursue all aspects of criminal activity that occurred in the conduct of that election that has been now thrown out.

Perhaps you could, as members of the Review Board, elaborate how you deal with this concurrent jurisdiction, or do you see that as any particular difficulty and you both march parallel along with your own duties that do not conflict? They have their job in the Justice Department and you have yours?

Judge Webster. If I may attempt that, first, I wanted to answer that question. It's not unlike other situations in which you're looking at the functional equivalent of civil or criminal action.

The United States Attorney may have some responsibility to enforce the labor laws, but their primary focus, I believe, is on matters that are criminal.

We also look at conduct that, depending on how it's seen, is either criminal or not criminal, but violative of one of the other rules or even the constitution of the Teamsters.

We, not surprisingly, will be talking to the United States Attorney's office about matters that come under our knowledge that would fall within their jurisdiction, and they will be talking to us about who we talk to and who we call before us for hearing in ways that, as Members of Congress, you can appreciate the same problem exists when you're calling people up here, that the Department of Justice worries about grants of immunity or somehow tainting the evidence that makes it difficult to prosecute, which we always have that tension. We try to observe it. We try to work within that framework.

Mrs. Mink. So, since I only have five minutes at this round, but I'll have another opportunity to come back. So, the way to distinguish it is, the Justice Department or the U.S. Attorney's Office has criminal jurisdiction. You may be investigating the same series of incidence, but you're looking at things on the same event. The course of action that you take is something that you seek to rectify by internal actions or imposed actions by the Review Board on the Teamsters. Is that about right?

Judge Webster. That's about right.

Mrs. Mink. Thank you.

Judge Webster. Close as we could come.

Mrs. Mink. Thank you very much.

Judge Lacey. I'd like to take this opportunity to make the point that's just been made by Judge Webster, and that is that like so many other things that some of you have read, it's wrong to say that we are the Government. We are not.

Like so many other things you've read that's wrong, as Judge Webster pointed out earlier, to say that we have a chair person--we don't--as sometimes I've been honored with that sobriquet in the press, but, again, it's wrong. So that you're giving us an opportunity to correct some mistakes, and hopefully, people will pick that up.

Mrs. Mink. I thank you very much.

Mr. Hilleary. Thank you, Mrs. Mink, the Chair recognizes the gentleman from North Carolina, Mr. Ballenger.

Mr. Ballenger. Mr. Lacey, first of all, let me just say I think the quotations you're upset about were probably said by me. I am not sure. Let me just, if I may?

Judge Lacey. I am sorry to hear that.

Mr. Ballenger. Well, so I am. I didn't really mean to be all that--tear you up that badly--but let me give you the context of where that came from. Mr. Theodus was testifying before us here, and he stated that I believe that we have no alternative Mr. Tyne, a Democrat, was asking the question why he came to our committee.

He said, ``I believe that we have no alternative. We have to put confidence in some form of government to oversee this union and to find out what happened to its finance. We cannot go to the General Executive Board because they're all perpetrators of the embezzlement, and they still remain in office. And we can't go to the IRB because we know of their slanted bias? Where do we go?'' And that means he comes here.

Judge Lacey. I am sorry. He said what?

Mr. Ballenger. He said he couldn't go to you because of the slanted bias that came from the Board.

Judge Lacey. And then you said you adopted that?

Mr. Ballenger. And then I said, ``Thank you, Mr. Chairman, listening to this,'' and this is the statement I think that upset you, ``Mr. Chairman, listening to this, I think that you, Mr. Theodus, made the statement, because it kind of reads that way, that the IRB appears to have been an ally of Mr. Carey all the way through it, that just somehow they were the people that were in authority, and your appeal should have caused somebody at least to investigate what was happening. And I know a member of the Board. I was just curious. Were there no efforts on the part of the IRB to back up anything that you four guys tried to get done? Ha anything positive been done as far as what they did?''

And he says, ``Nothing.'' And then finally I say, ``Well, all I can say is it appears that Mr. Lacey doesn't really want to get involved too much in learning the things that seem to be going on, against his own judgment, here.''

Judge Lacey. Let me ask you, why Mr. Lacey? Mr. Lacey is one of three people on the board? Why Mr. Lacey?

Mr. Ballenger. I don't know. Because he mentioned Mr. Lacey.

Judge Lacey. Oh, I see. All right.

Mr. Ballenger. And let me just say, the IBT, I mean, since Carey's first term, IRB has recommended 20 trusteeships. Now, this is what these guys were bitching about. Every time you did anything wrong, your branch of the union got thrown into trusteeships, and they said, ``The IRB has recommended 20 trusteeships.'' Under the consent degree, the IRB has the authority to recommend to the IBT general president that he replace local unions under trusteeship.

Have you had problems caused by the IRB to exercise this authority? Has it caused you any problem, exercising that authority?

Judge Lacey. Has it caused us any problems?

Mr. Ballenger. Yes.

Judge Lacey. No, and it shouldn't cause a member of this committee any problems. If you read in each case why we made the recommendation, you'll see it's thoroughly documented by an excellent report by our chief investigator. We consider that as a very serious step, to place a local into trusteeship, just as I did when I was Independent Administrator.

This takes the control out of the elected membership of the local. We do not take that lightly. We have a thorough and well-documented report before we take what is a very serious step.

But now again, let me take the opportunity to respond to something else that I have read about. I think Mrs. Mink, on the minority side said, ``Somebody has told you folks that somehow we stepped in and made recommendations on trusteeships where they were Hoffa-dominated. Do you have things like that?"

Mr. Ballenger. That was testimony that seemed to go on in front of this committee.

Judge Lacey. And did you believe that?

Mr. Ballenger. Well, it occurs over and over and over again. So, it sounded reasonable.

Judge Lacey. Did you go back, and did you check to see what the vote was of that particular local, to see whether it was Carey-dominated or Hoffa-dominated?

Mr. Ballenger. Let me ask you a question.

Judge Lacey. See, we don't know when we do these things. We have blinders on, as Judge Webster said.

Mr. Ballenger. Let me ask you, has the IRB reviewed the four dozen cases where President Carey put a local into trusteeship, without your recommendation? Could you identify the locals where they were rejected Carey's trustee and trusteeship and explain why you took the action?

Judge Lacey. I am sorry. Where he rejected? I missed the question.

Mr. Ballenger. Let me read--

Judge Lacey. I am sorry.

Mr. Ballenger. I am not a lawyer so I don't read very well.

Judge Lacey. That's why here you're better off.


Mr. Ballenger. Four dozen cases where President Carey put a local into trusteeship without your recommendation. Could you identify the locals where you rejected Carey's trusteeship? What they were saying is, every time they resisted anything Carey wanted, they got thrown into trusteeship, and they felt that it was wasted time to try to go to you because it would do them no good.

Judge Lacey. Well, all I can say is I don't recall and my memory may be refreshed by my colleague, Mr. Carberry, I don't recall anybody ever bringing to us a complaint that a union had been placed in trusteeship that shouldn't have been. Just correct me on that because it may have happened. I may have missed here--

Mr. Carberry. I don't think there was a specific complaint. Under federal labor law, obviously trusteeships are a serious matter. Anytime a local can be placed in trusteeship, they have the right to go to federal court to challenge that trusteeship. You wouldn't go to the IRB to challenge a trusteeship that wasn't imposed by an IRB. Under the labor law, you can go to court.

Mr. Ballenger. Well, the truth of the matter is they were not lawyers either, and they probably didn't know where to go.

Mr. Carberry. I can tell you, I have dealt with a lot of locals. I haven't met one Teamster local that doesn't have a lawyer.


Mr. Ballenger. Well, anyhow, I wanted to get the point across as to why I made the statement that I did. I mean I went to Amherst. He went to Amherst. I don't normally say nasty things about people.

Judge Lacey. You went to Amherst?

Mr. Ballenger. Yes. I am sorry about that.


Judge Webster. I went to Amherst.

Mr. Ballenger. Grant Ford told me to say hello to you the next time I saw you, but in the meantime I thought I should put in some sort of context, where it came from.

Judge Lacey. Mr. Ballenger, I appreciate that very much. Thank you.

Mr. Ballenger. Yes, sir. Thank you, Mr. Chairman.

Mr. Hilleary. The Chair recognizes the gentleman from Virginia, Mr. Scott, for five minutes.

Mr. Scott. Thank you, Mr. Chairman. I think we need to remind whoever may be reading this transcript, putting a little something else in context, Judge Lacey has described in the testimony as a former United States attorney, former district judge, a reputation such that he was appointed by a Republican Attorney General to the position.

Judge Lacey. Initially. That's right.

Mr. Scott. And then subsequently reappointed by a Democratic Attorney General.

Judge Lacey. To the position in the Independent Review Board. Attorney General Barr initially, then Attorney General Reno.

Mr. Scott. And then we have Mr. Crandall, who is a distinguished labor law practitioner, former Rhodes Scholar, General Counsel, very large labor union. Judge Webster, former Director of the FBI and CIA, former district court and appellate court Judge.

I, frankly, find it hard to imagine three more distinguished Americans to serve on a single panel. I just felt compelled to say that. That wasn't really a question.

Judge Lacey. Thank you.

Mr. Scott. In phase one, I understand that's the 1989 to 1991. I think we call that phase one. You were subject to some stonewalling, as I understand it, at the time. Since them, 200-and-some officers you've sanctioned or brought charges against. They were in office at the time there was stonewalling going on. It shouldn't surprise anybody that people with organized crime connections may want to stonewall. The question is, since you've gotten rid of a lot of these people, what it the level of cooperation today?

Judge Lacey. Well, I think the best way to make that point or deal with that point, it goes back to what Mr. Ballenger was raising. Again, my recollections may be flawed here, but my recollection is that not one recommendation for a trusteeship we made was rejected by the Teamster leadership. Am I correct on that?

Judge Webster. That's right. That's correct.

Mr. Scott. So, although it was bad then, today do you feel satisfied that the Teamster's leadership is cooperating fully with you?

Judge Lacey. Well, I don't know about fully. I did give the example of trusteeship because that's definable. We don't know what goes on behind the scenes, obviously. I want to make sure that this is clear; that there isn't one of us who doesn't feel that there is a lot more to be done.

We think we've done an excellent job since 1989, but we don't want you to believe that the job is done. There is a lot more.

Mr. Scott. The people you removed were democratically-elected officials, is that right?

Judge Lacey. No. Did you say democratically-elected?

Mr. Scott. Well, part of democracy is, if you don't show up, and that's part of democracy, if you don't vote.

Judge Lacey. No. If you go back to 1989, Cozzo, I mentioned, was an international vice president on the General Executive Board. Anybody who said that he was democratically-elected--

Mr. Scott. Well, when they have a democratic election, are the locals able to pick people that are not connected with organized crime, if they have the opportunity to a fair election?

Judge Lacey. When you are dealing with every local in the United States, I'd have to say that I don't know the answer to that. All I can tell you is that the old system, where you had officers who came to the conventions and at the convention hall made the nomination and voted and elected, that old system is what gave rise to the Williams and Pressers and the Fitzsimmons and the McCarthys.

Mr. Scott. Let me try to get in another question before my time runs out. The consent decree has a cost-splitting arrangement where the Federal Government will pay some expenses, and the union would pay others. Can you talk to the need for Congress to reverse legislation that has prohibited the Federal Government from paying what it promised to pay on the oversight of the next election?

Judge Webster. Mr. Scott, I don't know whether we should be suggesting legislation or not, but the consent decree did not anticipate what happened here. In the first round the Teamsters paid for their general election. The second round the government had agreed, if it exercised its supervisory option, to pay for the election, which it did.

Now, we have another election, and we have no funding, no Federal funding, and no Teamster funding to complete this election, although the costs I think are substantially less.

Our concern all along has been that--and this goes as much for the challengers as for the incumbents--if I were a challenger, I would be far more concerned about a fair election than if I were an incumbent because they already have considerable power in place. And I would want to know that there was some type of supervision taking place that would sustain the judgment that Teamster rank-and-file members have their votes counted and an opportunity to participate in the process.

So, I've always felt that was money well spent, regardless of who would spend it. The important thing was that it be spent. And in the last round, the division was between the funding for the Labor Department and funding for the Justice Department. There was some backing and filling going on at that time, and we urged them to be sure that the money was there, not new money necessarily, even out of appropriated funds, which is what the Justice Department wanted to do.

I don't think that I've answered your question, except that my own instincts and experience tells me that without outside supervision, properly funded, that you really do have outside supervision there is a significant risk that the election will not be fair and Teamster members fully permitted to exercise their rights.

Mr. Scott. And if there's to be outside funding, the Federal Government has to pay for it. Is that right?

Judge Webster. If there's outside funding, it's about the only place to go.

Mr. Scott. With outside oversight, the consent decree requires the Federal Government to pay for it if there's to be outside oversight?

Judge Webster. That's correct.

Mr. Scott. Thank you, Mr. Chairman. I appreciate your indulgence.

Chairman Hoekstra. [presiding] I think Judge Webster did say that what happened in 1996 was not foreseen in the consent decree?

Judge Webster. I believe that's right.

Chairman Hoekstra. Thank you. Mr. Parker.

Mr. Parker. I thank the chairman. Gentleman, I think the same of you now as I did before you came in. I have a tremendous amount of respect for you. You have a job that I wouldn't want. I'd turn it down from here on out, but you have taken it.

I think it would be safe to say that since 1989 the Teamsters organization is totally different than it was, but you have also said, Judge Lacey, that there's still problems. You haven't resolved everything.

Judge Lacey. Oh, there's no question about that.

Mr. Parker. We get a lot of conflicting testimony on this committee. I mean this subcommittee, we talk to people, and they talk about how wonderful Ron Carey is. Evidently you think, as the hour be, that you think that, ``Well, he wasn't so wonderful.'' And you may have taken steps necessary--

Judge Lacey. Nobody, well, that's an overstatement. I will put it this way: Nobody feels more regret than I do at what happened because I have put in a lot of time, nine years, and I thought the system had really worked. Whether you like Carey or don't like Carey, the members had a right to vote, and we did go through election appeals, and we had charges, and we found some of the charges were merited in 1991, and we ruled.

I am sure there were the same charges again ruled upon. There were collection violations, but the end result was the members had an opportunity to vote by secret ballet, and when all of this suddenly surfaced, I said, ``Well, a lot of time, a lot of effort, a lot of concern about all of this has gone for naught.''

Mr. Parker. Well, I don't know if it's gone for naught because I think a lot of changes have occurred. That point is that a lot of the testimony we've gotten from people, if they said, ``Carey came in as a reformer,'' that he wanted to make things change, the problem was, is that internalized inside the Teamster organization, the IBT, you had a situation where the bureaucracy had been in place for a long time; there were people there who resisted any changes and thwarted any efforts that Carey made.

Now this always comes from those pro-Carey individuals, and because of that, it was a situation where it was an internal civil war within the IBT. Now, I find that very interesting because some things point that out, I mean, it appears to point that out. And, coupled with the fact that in your situation you had a lot of power, but you also had limited power you couldn't do everything.

You even mentioned, Judge Lacey, that we don't know what goes on behind the scenes, and that is the statement that we have gotten from several different people who are pro-Carey individuals.

Now I didn't have a dog in the race. I didn't support Carey or Hoffa. So, that doesn't matter. I didn't even have a candidate there. So, to my way of thinking, you know, they could do whatever they wanted to. I just feel that they should have had a fair election because the money that we're talking about comes from Teamsters who work very hard every day, and that is the main purpose of what you're trying to do, and what you've been trying to do is take care of that.

But internally there is a problem. Now, my yellow light is already on. So, I am going to get another round after a while because there are some things I want to know.

And, Judge Webster, you are familiar with the memorandum. If you will look at exhibit 14, there is a memorandum--this is dated March 9, 1995--from Judy Scott to Bill Hamilton. I think Bill Hamilton has been indicted. It says, quote, ``This is a reminder that you agreed to call Judge Webster to get him directly involved in the matter of the Justice Department appropriations for 1996,'' unquote.

The memorandum goes on to request that you also talk with Senators Graham, Hollings about this issue and Miss Scott writes, quote, ``We, the IBT, will provide a memo and appropriate materials to Judge Webster that points to the need for the congressional appropriations for the Department of Justice and the Labor Department, a breakout of how much the Teamsters has spent itself as a product of the consent decree, and a copy of the three-year report on cleaning up the Teamsters produced for Ron Carey.''

Judge Webster, can you explain the context of that because the implication is that they are working with you as far as lobbying, and so forth? And I think that needs some clarification.

Judge Webster. I'd be delighted to do that. Do I have time, Mr. Chairman, at this point?

Chairman Hoekstra. With unanimous consent, you are given the time to answer the question. Thank you.

Judge Webster. Yes, thank you. The board members were made aware of the problems of funding through the Justice Department and the U.S. Attorney's office and also from Amy Gladstein, who was at that time the election officer. She was deeply concerned that she was not going to be able to do her job because the money had not been made available.

Our understanding was that the Justice Department did not, was not asking for new money, but simply for authority to redirect already appropriated funds to support the election officer. The U.S. Attorney's office was very much interested in seeing that this was done.

There was also at this point, for reasons that I could recall but don't recall distinctly, some division of opinion as to whether this action should come through the Labor Department or through the Justice Department and whether there should be shared funding, and nothing was happening, and she was coming to the end of her funding ability.

So, she asked our assistance, and she asked us to talk to the people who could manage to get this thing resolved, whether it was in conference or in some other things. This was somewhere between 1994 and 1995.

Mr. Parker. This is Judy Scott?

Judge Webster. No, she being Amy Gladstein, the election officer. Judy Scott was the general counsel, and she came from time to time to board meetings to express her concerns, and she did express her concern on this issue. The fact that the Teamster headquarters was feeling the lack of funding was really immaterial, but she was—apparently--I never saw this memorandum or I never heard from Mr. Hamilton, and so I don't know what they were doing about it.

I am sure that we talked to Judy Scott about it. The two names that I remember contacting were Senator Hollings and Senator Hatfield. I don't remember. There may have been someone else we talked to. The board as a whole sent some letters around to committee members in order to alert them to the need. And I had a discussion with Senator Hollings, and I had a telephone conversation, maybe two conversations along the way, with Senator Hatfield, who felt very strongly that the money should be appropriated, and kept an eye on it.

Our only concern was a fair election, and the ability of the election officer to do funding. The idea that I was dancing from a string of someone over at the Teamsters is just simply off the wall.

Chairman Hoekstra. Mr. Kind.

Mr. Kind. Thank you, Mr. Chairman, and I want to thank you gentlemen for coming here and testifying today and answering our questions. I want to thank you for the work that you've been doing as far as rooting out the organized crime element in the IBT and restoring democracy today to that very proud union.

And from this Congressman's perspective at least, and also from other members of the IBT who have appeared before this committee and testified, we see significant progress in the work that you're doing. While we may not be at some democratic nirvana yet within the IBT, your progress has been steady, and it's been consistent. I want to commend you for that.

I want to tell you today something you probably already know: that the work that you are doing is important to the country. It's important to this Congress, but especially, most importantly, it's important to the roughly 1.5 million members of the IBT, who are by and large outstanding citizens, who work hard and play by the rules and who aren't associated or linked in any way to organized crime, and they deserve a democratic and reformed union.

That's something that you're working day-in and day-out to give them, and people such as Mr. Witt, who was defamed today on the House floor and also at this committee, and when he heard about it, voluntarily came down here right away to clear his good name, people like Mr. Witt deserve an apology. I think each one of you deserves an apology from this committee, and if the chairman isn't willing to issue a formal public apology to you, then I will, not because I personally owe you an apology based on any statements that I've made, but because I think you deserve an apology.

You have been doing an outstanding job. I would hope that members of this committee and counsel and staff, that in the future before we start leveling outlandish accusations or hurtful accusations, that we just take a deep breath and step back and make sure that we've got some facts and evidence to back up those accusations first. We've got to end this character assassination that's been going on for too long in the course of this investigation.

I'd be interested, Mr. Lacey, and also with Mr. Crandall and Judge Webster, if you could just categorize for us right now or just characterize generally what the state of the democracy is within the IBT today.

Judge Lacey. Well, I think that it's been pretty well covered. When you talk about the membership, in the period when I was Independent Administrator, I reported monthly to the membership through the magazine, the Teamster magazine, again, over some impediments that were placed in my way by the Teamster leadership, but I guess in the period I was Independent Administrator, I think I refer in my report because we did a count at one point, I think I had several hundred letters from members, and it brought home to me that there are a lot of people out there who are looking for help that jobs, pensions, it gives real feeling to the job.

And I wanted to be sure that I did make clear that I think the Teamsters is a great union. The people in it are terrific people. They work hard. Whatever we can do to help them, that's what we want to do.

Mr. Kind. Judge Webster, before I run out of time, you indicated in your opening statement that organized crime still continues within the IBT. Perhaps not at the highest level, certainly not what had existed back in 1989, but there's still an element that pervades through the union. Can it be completely rooted out, in your opinion, and how long do you think it's going to take and under what set of circumstances are you going to be able to accomplish that?

Judge Webster. That's hard to say, and I wish I had a more precise answer for you. During my nine years at the FBI we made considerable progress in breaking into the leadership of the major organized crime movement. I think the same kind of effort needs to continue, particularly in organizations such as the labor movement, where opportunities for racketeering and profit-making are quite large.

And the steps that have been taken so far to provide an open and fair election process will play a significant role because the Teamster members will get the leadership of their choice. That doesn't answer the whole question. I think that Ward Acton's rule about all power corrupts and absolute power corrupts absolutely if you have an organization of leadership that is not responsible to its members, then it will be responsible to other people for personal profit, gain, and corruption, and so there has to be a continuing effort and involvement in the membership and the selection of honest, responsive people who cannot be dominated and cannot be controlled.

Thank goodness we don't have any control any more that we experience at the top of the Teamster heap. Many of those top leaders have been made, as the expression goes, by organized crime groups before they ever got into positions of leadership, and there was no way that they could withdraw. I recall Jackie Presser, who was working with the FBI, could not withdraw from those relationships.

And I think we're beyond that point, but we still have, as we said in our statement, more subtle ways of insinuating themselves, and the key to it is to have the kind of leadership that is totally divorced from that.

Mr. Kind. Thank you again, gentlemen.

Chairman Hoekstra. Mr. Hilleary.

Mr. Hilleary. Thank you, Mr. Chairman. I want to yield for about a minute to Mr. Parker.

Mr. Parker. I thank the gentleman.

We had a gentleman on the committee apologize for us, and let me point out something. Gentleman, you've got a tough job. We've got a tough job, too. I've got a lot of respect for you, but let me tell you where Mr. Ballenger's statement came from, and I want to cover that real quick because, I am going to tell you, I think we've got some things being said crossed here, and we just had an apology for me, and I don't need people apologizing for me. If I need to apologize, I damned well will do it.

But let me just point out something. We had two guys come in here, DeRusha and Theodus. Do you all know these guys? Okay, the question was basically this, I am going to just read it from the transcript, this is Cass`` I just was curious. Was there no effort on the part of the IRB to back up anything that you four guys tried to get done? Has anybody seen anything positive that they did?''

Now these two guys were dog cussing you all. He asked them, ``Did the IRB do anything?'' Mr. DeRusha said, ``Nothing.'' Mr. Theodus said, ``I haven't seen anything.'' Then they continued on to dog cuss you some more.

Now the point is this: Cass Ballenger turns around, and all of a sudden I feel that he's been attacked for asking a question from these two guys coming in here. Then all of a sudden somebody else is apologizing for me. I'd be dog--I mean I don't know DeRusha and Theodus from Adam's house guest, but I will tell you this, if you want an apology, you need to be talking to them about an apology because your job is not finished. Neither is ours. When everything is over with, I promise you, if I owe you an apology, I'll give you one.

I yield back.

Mr. Hilleary. Thank you. With what time I have left here, I'll just thank you all for being here.

I wanted to ask you real quickly anybody that was on the board, did you all do an investigation into allegations again Ron Carey and his ties with the mob?

Judge Lacey. Did I hear you correctly? Did you ask whether we did an investigation of Carey?

Mr. Hilleary. Yes, sir.

Judge Lacey. Yes, it's

Mr. Hilleary. Okay.

Judge Lacey. --that we made public.

Mr. Hilleary. Yes. Okay. I just wanted you to be able to say that you had done one. Okay.

Judge Lacey. Yes. Well, I wasn't sure I understood the question. It was so easily answered.

Mr. Hilleary. What steps did you take exactly when you looked into those allegations?

Judge Lacey. Let's go back to our chief investigator, Mr. Carberry, because he made the investigation for us, and he would come back and report periodically. WE would discuss it. We would have other leads, but I prefer now, if you would permit me to do so, to have him tell you everything he did.

Mr. Hilleary. Briefly, please.

Mr. Carberry. Sure. All the exhibits that relate to the report were made public along with the report. I mean, we did normal investigative steps. We took Mr. Carey's testimony several times. We took testimonies from other people. We contacted law enforcement sources. We documented searches and record searches in connection with the allegations. It's all documented, what we did.

Mr. Hilleary. You feel like you did a thorough investigation?

Mr. Carberry. Yes, I do.

Mr. Hilleary. Okay. Do you all remember an article in the Washington Times on September 6, 1993 entitled, ``Teamsters President Probe: U.S. Investigates Talk of Mob Ties''?

Judge Lacey. The answer to that is yes. Yes.

Mr. Hilleary. Okay. And Mr. Cronin, you wrote a letter to the Washington Times in response to that?

Mr. Cronin. Yes, I did.

Mr. Hilleary. I guess the question would be, why did you all write that? Why did you write that?

Judge Lacey. Well, one of the reasons he wrote it is because he is authorized to write it by the Independent Review Board. My recollection, and I am now thinking quickly now about it, my recollection is that we were being barraged at the time with information which would go to Mr. Carberry. Here was the president of this union involved in all kinds of delicate things, dealing with employers, negotiating, and the like.

At that point, and I think that was is September of 1993 that you mentioned?

Mr. Hilleary. Yes.

Judge Lacey. Because our investigation I think finally concluded the following July, but at that point it was appropriate to say that, that at that point we didn't have substantial, credible evidence, and that's why that statement was released.

Mr. Hilleary. Okay. Did you think that affected the perception of independence, or lack thereof, when that letter was sent?

Judge Lacey. Perception of independence of the Independent Review Board?

Mr. Hilleary. Yes, sir.

Judge Lacey. I don't know. That would be, I guess, for somebody like you or somebody who read the newspaper to say, but the point I make is that it was September of 1993, and we still had what? ten months to go.

Mr. Hilleary. Okay. Well, I am out of time. Thank you, sir.

Judge Webster. May I say something here? I probably shouldn't. There's some risk, but during my period at the FBI it was not uncommon for me to have a request by Members of Congress to declare them innocent after articles in the newspaper would come out the FBI was conducting an investigation.

I never felt that was our role. Our role wasn't to declare innocence or guilt, but to collect facts and let the Department of Justice decide what to do with it, but there would be rare exceptions where to say nothing would allow the public to draw unfair inferences, and we usually asked the Justice Department to do what was proper, and try to avoid doing that ourselves.

And we found ourselves from time to time, rarely I hope we don't like to issue this kind of a statement, for the reason I've given, but there was very severe provocations here, and we've given you the reason that it was done. And we took some risk that we would appear to be not impartial, but we felt it was necessary.

Mr. Hilleary. That's what I wanted to hear. Thank you, sir.

Chairman Hoekstra. For the record, to move back to what happened after our recess. I understand that Mr. Witt spoke to reporters in the corridor outside this hearing room and denied that he had conducted any shredding other than normal day-to-day shredding, that he has no knowledge of a shredder at the ``Marble Palace'' other than a little shredder next to a copier in a public place in the building.

This is the kind of situation that demonstrates why we had requested interviews of key IBT personnel, which is why the IBT routinely denied us the opportunity to do so. This is why today we have sought approval for House deposition authority, and during that recess the House granted this committee deposition authority.

We will use deposition authority to get to the bottom of the allegations concerning possible and proper shredding documents at the ``Marble Palace.'' Under the rules that were approved today in the House, the minority obviously will be present at any such deposition, and both sides will have a chance to get to the bottom of that.

Mr. Payne.

Mr. Payne. Thank you very much. Let me echo my colleagues. I have been around government a long time, never had the privilege to sit before such a distinguished panel of jurists, so to speak, and I'd like to commend all of you for the work that you have done. I don't know two of you as well as I have followed the career of Judge Lacey. Being a person from the Newark area for all of my life, I have followed his integrity, and of course Mr. Webster and others here, Mr. Cronin, and so I, too, would apologize for any kind of misstatements that made.

Now, I don't know what dog cussing is, and so I guess I've got to talk to my colleagues. I thought that line had been abolished, but I have a little problem understanding some of the lingo, I guess. I would just like to say that one of the things that we do find here is that it's not uncommon that the statement that you heard read by the gentleman who isn't here any longer not my friend, Mr. Parker, but the other gentleman is not uncommon.

A lot of irresponsibility happens up here. You get up here; you've got people there; you're posturing for votes back home; you may want to run for governor; you may want to run for whatever, and so, you take these positions in order to get that generation of a message back to the people that you're trying to engender support from. They say, ``That's my kind of guy. He's really anti-union. I like his stance. That's our man.''

And so, unfortunately, a lot of people, and they're not people in the category that you are in, but these are many times little people. This little fellow, Mr. Witt asked, could he speak. No, you can't speak. Statements read now. If you wanted to talk to the guy, he was here. A waste of time reading the statement about the fellow who may in the past, in the future, be allowed to come here. He was here. He talked to the press outside. I am still trying to figure that one out.

But, this happens a lot, and it's unfortunate. We take advantage of people up here, especially people who are intimidated and really don't have the opportunity to speak back, and so I, too, would like to express the dismay. This used to be some hallowed halls. You know, I dreamt of coming to Congress ever since I was a little boy, and Peter Rodino was there was all my life so I had to wait.


And I used to be his paperboy, so I really liked him a lot, and still do. But I think that there has to be more responsibility put in these important positions, and the dignity that this House used to have needs to come back. I'd just like to say that I think that you've done an outstanding job. We're moving towards a more perfect union. IF anyone thought that, and I don't mean you and your union, but I mean union, the United States of America. It says that in our Preamble, we're moving towards a more perfect union.

And if anyone thought that we could eliminate corruption totally out of a large labor union, we still have corruption all around, but we are moving towards a more perfect union. And I think that the work that's been done, I worked on the waterfront. I saw the Kefaufer crime reports come through, those hearings. I was a driver. I knew Force 72 Teamsters back in the 1950's, Neil Carlin, who became the mayor of Newark. And so I've followed this a long time. It's always been a struggle.

I just have a quick question. There was a gentleman, a Mr. DeRusha, who came came here and he said that he came here March the 26th, and he said that, in the hearing, that the Carey administration prevented the trustee of the union from performing his duties by refusing access to financial documents on deterioration of assets at the IBT. He claimed that he sent evidence of this obstruction to the IRB and that the IRB took no action due to their ties with Carey. I guess that's you all.

Then another fellow, Robert Simpson, came, a former trustee of the union, Simpson accused by the IRB of having continuing contact with mob-connect Donald Peters, in violation of Peter's individual settlement in terms of the USV IBT civil RICO suit. Simpson was permanently banned from being a union official, but was allowed to retain his union membership. The decision was affirmed. Simpson alleges that the charges against him were politically motivated and that the IRB's opinion was tainted by their relationship with Carey. I wonder if any of you on the panel could respond to that because that's a matter of the record that's in the transcript, that's in the records.

Judge Lacey. Let me deal first with the Simpson matter, as an isolated matter, and then my colleagues will address the trusteeship aspect.

Yes, we did hold a hearing on charges on Simpson after the matter was referred back by the IBT. Again, our decision, public, full opinion. I remember it quite well because I think I wrote a lot of it. Sustained by Judge Edelstein. Excellent lawyers, by the way. Wasn't Webb the lawyer in that, who dealt with the Poindexter, Reagan, Winston, Strong Firm. Upheld by the Court of Appeals of the Second Circuit.

Peters had been one of the signatories to the consent decree that was tied up with the Chicago mob. Allen Dorfman for example. Implicated substantially by Leonardo who turned and gave all kinds of testimony in order to save himself some time. Dorfman assassinated.

All that growing out of the conspiracy attempting to bribe Senator Cannon to avoid deregulation. That's the whole history of all of that.

Peters then was out. Simpson nonetheless continued to associate with him. Indeed, used him to help campaign. We proceeded against Simpson on the basis that he knew all this but was bringing reproach on the union by continuing to have relationships with Peters.

Now that's so much for Simpson. Now I'd ask if my colleague, Mr. Crandall, address the law involved with respect to the trusteeship.

Mr. Crandall. With regard to the trustees, they did ultimately make a complaint to us about their access to records, and we did take that matter seriously, referred it to Mr. Carberry for investigation.

He ultimately came back to us, and there was essentially two major points that they were making. One was that they were not timely getting these records, and the second was that they had been excluded from meetings of the International's Executive Board, and we looked for legal authority on both of those matters because we were concerned about it.

The problem was that their allegation that they were being excluded from these records was inconsistent with how those records had always historically been given to the trustees. In other words, there was a quarter lag, that is a three-month period lag, in the way those records were reviewed by the trustees historically, that had existed for many years well before this, and what we had to find if we were going to get there was that that was not what was being done here.

Mr. Carberry looked into it and reported back that that was not inconsistent with the prior situation, which we had to look into, and the Constitution. That's what the Constitution required, that there was no inconsistency. We have to find a legal consistency for us to move forward.

The second about the exclusion was they are not members of the International Executive Board, and while by custom they had sat in, the constitution did not require them to sit in. So, we were looking for violations. What we couldn't come up with was that direct legal violation.

What we were aware of, however, was the Labor Management Reporting and Disclosure Act, which is a Federal statute, requires that if a member or, for that matter, an official within a union feels that he is improperly being denied access to any sort of revelation, disclosure, that they are permitted to have, that there is a direct right, first of all, from the Department of Labor, and secondly, to sue on your own behalf, to obtain that.

And so, knowing that, we assumed that since we didn't have a direct violation of the constitution or past practice in giving them those records that they, having counsel, would go forward and bring that action.

And, frankly, to be honest with you, I think I was surprised, and I believe the rest of us were that they never did bring that action because the Labor Management Reporting and Disclosure Act gives them that right to do so if they think that they can show that they've been improperly denied access.

And they didn't bring that. We were not in a position because there was not a direct violation of that which was within our jurisdiction. And so, we had a situation where we could not act, and that was based upon the recommendation of our investigator. And we did so respond to them, that we were not able to act.

Mr. Payne. Thank you very much for clarifying some of this matter. Thank you. I'll continue if my time hasn't expired.

Chairman Hoekstra. The time has expired. During our hearings we believe that we've uncovered evidence that the IBT may have manipulated pensions to avoid showing the union as being insolvent while at the same time preserving a special assessment which brought in about $17 million per year.

Specifically, are you aware that the discount rate for the Teamsters affiliate pension plan was changed, allowing the union to avoid appearing insolvent on their books?

Mr. Carberry. We're aware of the allegation, and the Board has directed me to investigate that, and that is a matter under investigation.

Chairman Hoekstra. So, you are currently investigating that? You are going to take a look at how that would have affected their net worth and how that affected the assessment and how those numbers and rates were actually determined?

Mr. Carberry. To do it, how I do it with my mind, we will look to see if there was conduct which it was either fraudulent or in some way violated; you know, it was designed to corrupt, which is the jurisdiction we have under the consent decree.

Chairman Hoekstra. Thank you. We also believe that the IBT may have illegally used general treasury funds for political purposes. There is under I believe it's Document 11, Tab 11. Please look at the document provided to the subcommittee by Grant Thorton with the Bates number of GT960390.

The document states, quote, ``The IBT had significant contribution expense in fiscal year 1996 due to the election year causing drive to have to use most of its money. In order to support some activity general fund dollars were used. We noted the support for these contributions included memos from Bill Hamilton noting specific political contests and party and candidates.''

Have you seen this document prior to it being introduced in a hearing of this subcommittee?

Mr. Carberry. Not prior to it being introduced at the hearing.

Chairman Hoekstra. Are you aware that under U.S. Code section 441(b)(a) states that it is illegal for any labor organization to make a contribution or expenditure in connection with any election at which a senator or representative in Congress are to be voted for or in connection with any primary election or political convention or caucus?

Mr. Carberry. Yes, your honor.

Chairman Hoekstra. Under the heading Recommendation, the document states, ``We recommend that memos to support such distributions not highlight the political nature of the contributions in order to protect the exempt status of the organization.''

Are you aware of whether the IBT has subsequently disguised any expenditures to avoid revealing that general treasury funds are being used for political purposes?

Mr. Carberry. The general subject of IBT contribution during the last national election, which overlapped the IBT election, is a matter under investigation, and that was part of it with the Carey charges, and there are other areas we continue to look at.

Chairman Hoekstra. Under the current system, individuals within the IBT were apparently able to improperly use general treasury funds for political purposes. We are trying to determine what changes could present misuse of general treasury funds from ever happening again.

Do you have any recommendations or changes which you believe might help you detect such activity when it happens, as opposed to years later or perhaps prevent it from occurring at all?

Mr. Carberry. For us to detect it, we have limited powers under the consent decree. So, under the current consent decree, our role is to look violations which in and of itself is something that has occurred already. So, other than the general deterrence hopefully of incidents and discipline that one would hope to create as well as a healthy culture. In terms of what we are allowed to do under the court under, I can't think of any.

Judge Lacey. I think you've obviously put your finger on what is a very troublesome area, and this is where you've got to basically rely on an accounting firm doing the kind of job it should do. That's about the best we can do under the powers or lack of powers that we have as a member of the Independent Review Board.

Chairman Hoekstra. As members of the Independent Review Board, you really can only--and I think Carberry said that earlier--that you can only work on historical actions. Correct? On past actions. You don't have a proactive role?

Mr. Carberry. Well, we investigate wrongdoing.

Chairman Hoekstra. You investigate wrongdoing. You don't

Mr. Carberry. Wrongdoing has to occur for us to investigate it.

Judge Lacey. But we do in fact--Charles, you prepared that report that is kind of a recommendation on the review of the books and the like.

Mr. Carberry. Right, but we can't take any action.

Judge Lacey. We can't take any action. We felt that this was something that would be helpful and maybe you can best describe it, Mr. Carberry.

Mr. Carberry. Well, at the Board's direction, we reviewed--in the international they have a position known as international order whose duties involve looking at the records of the local. They're not accountants. They use the term, but it's a defined Teamster term. We looked at the procedures they use when they did that and how they were implementing various suggestions that Judge Lacey has made as Independent Administrator.

And I prepared a report on that for the Board, which we gave to the union and asked them to address some of the issues that we found in the report. We could have not have had any power to make them implement our suggestions.

Chairman Hoekstra. Mrs. Mink.

Mrs. Mink. Thank you. I have really no further questions except for us to join on this last question, with reference to recommendations that you say from time to time you have made to the IBT in order to protect against further corruption and other kinds of things that you have discovered.

In the course of making these recommendations, since the failed election of 1996 has the IBT refused to comply with these recommendations? Does it take actions that you felt that were appropriate?

Mr. Carberry. The only suggestion we made since then involved the internal order. Most of the suggestions we made were incorporated into their procedures for the internal order.

Judge Lacey. If I may add to that?

Mrs. Mink. Yes.

Judge Lacey. Again, I hate to keep going back to that Phase 1. When I closed out Phase 1 in this report, I made some recommendations drawing not only on my own concepts but relying upon Mr. Cronin who sits on my right whose auditing experience, working with Congress and the agency you are familiar with.

One of the things we felt we should recommend was that they adopt a budget. We know that--

Chairman Hoekstra. Excuse me. What did you recommend that they adopt

Judge Lacey. That they adopt a budget. This was back when I closed out in my role as administrator.

Mr. Kind. Is the IBT or for Congress?

Chairman Hoekstra. What year was that?


Chairman Hoekstra. That was in 91?

Judge Lacey. I'm not going to get into that one, but what they did was adopt--they call it a spending plan, but our recommendation was not adopted.

Another thing that I suggested was that there be an inspector general within the agency as sort of an ombudsman, and that was not adopted. But I just thought I'd mention that to complete the picture.

Mrs. Mink. Now in the course of the work that you've done since the failed election of 1996, I assume you've made many inquiries to the IBT leadership to produce documents, come to your hearings, and so forth. Has there been any occasion where any of the leadership at IBT has declined to cooperate?

Judge Lacey. I think we've got to call on Mr. Carberry, who was preparing the investigation that led to the Carey and the Hoffa charge. That might be a good way to start that anyway.

Mr. Carberry. The consent decree provides an explicit provision that failure to cooperate with the Independent Review Board is in and of itself a specific offense. We have used that over the years. So, I will say not just the International but the locals usually, and everybody cooperates because they really don't have too much choice.

But that's been consistent. I would say that the fights we had in the beginning over the consent decree where we just were continuously worrying about access to information--records or people. So, that's been consistent because of the ability to take some action, if there's a refusal to cooperate.

Mrs. Mink. So, in line with your responsibility to investigate these matters that are internal to the union, you have no difficulty in obtaining the records, documents, testimony, depositions, and so forth.

Mr. Carberry. Well, we have no difficulty getting testimony. We may have scheduling issues, and we believe we get the records, but, like everybody else, you know, wherever you are when you issue a subpoena, you know what's complied with. You may not know what's not complied with, but that's just when we deal with anybody in the union at all.

We have had no formal resistance to our legitimate means of gathering information.

Mrs. Mink. Thank you very much, Mr. Chairman.

Judge Webster. If I could make a comment, Mr. Chairman, here. There are procedures in the Teamsters constitution which require a number of separate and independent looks and approval for expenditures of a political nature. The problem has seemed to be the extent to which the players who had that responsibility took that responsibility seriously.

And I don't have an answer to what more is needed, but in the corporate world the internal auditor has that responsibility to see whether or not the expenditures are being scrutinized and appropriately approved by senior officials. Whether that requires legislation or whether it requires something else is probably beyond this board, we haven't really thought about it.

You can have all the procedures in place, and if the people are not determined to follow them, money will go where it's not supposed to go unless there's yet another place with no interest in the outcome, a totally disinterested person charged with say blowing the whistle and saying this is not being down properly.

Judge Lacey. I think, Mr. Chairman, just a brief minute. The irony here in the Carey election problem is that the election rules and structure are what uncovered the violation, and then that was picked up by the United States Attorney of the southern district of New York, and of course you know the rest.

But I think it was the rules structure that picked up the TCFU account, went to the southern district, Mary Jo White's office, and the rest is history.

Chairman Hoekstra. Interpreted a number of different ways.

Judge Lacey. Yes.

Chairman Hoekstra. Mr. Hilleary.

Mr. Hilleary. Thank you, Mr. Chairman. Judge Lacey, I want to take you back to this Puccio letter that I think was talked a little earlier

Judge Lacey. Yes, sir.

Mr. Hilleary. when I wasn't in here, but it's tab 13 I think on the briefing book, in the second paragraph there you talked about I guess, quote, ``During our conversation I told you that I thought you and Mr. Moroney ought to have in mind what would happen if you brought Carey down,'' and it goes on and on and on. Can you explain what you meant by that whole paragraph?

Judge Lacey. Well, I went into it at length before you broke for that recess.

Mr. Hilleary. Oh, okay.

Judge Lacey. I don't know whether you have enough time, but I can go over it again if you want.

Chairman Hoekstra. Mr. Hilleary has five minutes.

Mr. Hilleary. Well.

Judge Lacey. I'll be glad to. I don't--

Mr. Hilleary. Just briefly.

Judge Lacey. I can't do it briefly, but I'll go till you stop me. I was familiar with the 295 situation where it wiped out the entire leadership, created a need for a trustee, and Puccio got it. Mr. Puccio got it. Along the way, he and I had a lot of conversations. We'd known each other well before this. He was a prosecutor, and I had been, and I respected. He had the Abscam procedures.

We had a lot of discussion about what the Teamsters was like. It started with the organized crime or riddled is a better word riddled with organized crime. We had to discuss what I found at 295 and why I had taken the action I did. He knew and I knew that when the election occurred, the Shay ticket lost and the Durham ticket lost to Carey.

Both tickets were backed by what we call the old guard. By the old guard we mean to some extent organized crime or organized crime supported, but not totally. There are a lot of people that aren't organized crime or organized crime associate, but nonetheless these were well-entrenched people that go back to the Williams days and the Presser days and the like, and including the McCarthy days.

He and I would use the term ``old guard,'' and what I meant was, to sum up the categories I've just mentioned, and he knew what that meant. What I was concerned about is that if he had something solid, he couldn't use he shouldn't be using it in a form of blackmail is an ugly word but what was told to us and what he confirmed was that they had something on Carey, and unless the IBT consented to Mr. Puccio having his trusteeship extended to another local, 851, which I also knew about it, that he was going to drop this information public.

Among other things I said to him in this telephone conversation, again in substance, I said ``Look, if it's good, you can't say you're not going to use it unless they do this. That's wrong, and they'll kill you with that. If it isn't good, remember, to bring down Carey is going to give sustenance to this quote old guard and come back.''

I also noted for him that we were conducting this investigation, which has started in late 1992, was going through 1993 and into 1994. He was familiar with that because Mr. Moroney who had formerly worked for Mr. Carey when he was investigation's officer Mr. Carberry, I mean, when he was investigations officer, again in Phase 1. Moroney had worked for him under certain circumstances and no longer worked for him.

Moroney would give information, allegations and the rest, and each time Mr. Carberry got an investigation conducted. That was what this was all about.

Mr. Hilleary. Okay.

Judge Lacey. And I was concerned that, as I expressed here, that I didn't like what was happening in the first place. Now ultimately Mr. Puccio made an application before Judge Nickerson to have his trusteeship extended to 851. The IBT opposed it and made some slanderous accusations, if that's not redundant, and Judge Nickerson appointed somebody else as trustee of 851. That's the whole story.

Mr. Hilleary. Okay. Well, I appreciate that, and just for the record

Judge Lacey. Can I just take one thing let me take what I have resented all the way through is that somebody takes this letters and says, ``Ah, ha, Lacey,'' if I could bring along my two colleagues with me that ``Lacey thereafter showed he was a partisan of Carey.''

Mr. Hilleary. I understand.

Judge Lacey. This is after I beat Carey up on the Genoese nomination and had written some strong things about him.

Mr. Hilleary. Real quickly, for the record, did you ever say that Ron Carey was, quote, ``A bum,'' that, ``He is our bum,'' unquote?

Judge Lacey. You saw what I said on the second page. Of course not.

Mr. Hilleary. Okay. I just wanted you to get that on the record.

Judge Lacey. No, but I appreciate your giving me the opportunity to say it.

Chairman Hoekstra. Mr. Scott.

Mr. Scott. Thank you, Mr. Chairman. We're doing another round, right?

Chairman Hoekstra. We're on.

Mr. Scott. Judge Lacey, if I were to ask you if the organized crime was involved in the swap deal, would that intrude on an ongoing criminal investigation?

Judge Lacey. I don't think I'll say, I'll put it this way, I don't think I should respond to that question because I do know that there obviously is an investigation underway.

Mr. Scott. You don't have to explain. Don't explain.

Judge Lacey. Thank you.

Mr. Scott. Since we have such a distinguished panel, and I've got five minutes, could the panelists advise us what Congress could do to help clean up unions. You've been on the job for several years. Are there any laws we can pass or hearings that would actually be constructive to help?

Judge Lacey. I think a lot of that has been developed here. I have had a very narrow role in all of this.

Mr. Scott. Well, let me ask it more directly.

Judge Lacey. What I've had to say is said in this report. Unfortunately, perhaps it's too long, but it's there. Then we had a five-year report that we published, the Independent Review Board published. We filed that with Judge Edelstein, and I guess that's the best reference work that we have where we lay out some of the things that we think should be done.

Bear in mind that what we did with the Teamsters, that was precedent-setting. When I was appointed in 1989, I had no pattern. Mr. Carberry had to carve out what he was doing. Mr. Holland had to carve out what he was doing. I don't think there's been anything to match it since.

Judge Webster. The invitation is almost too good to resist, but the inspiration to respond is slow in coming. I might suggest that this is something perhaps your staff could be in consideration, but as you may know, under the provisions of the consent decree and that's what the parties would agree to we have no authority with respect to pensions funds, where there is considerable opportunity for corruption.

I am suggesting that you give our boys any this is a very productive court decree, but if you want to be sure that all bases are covered, perhaps you should look to see what kind of police mechanisms are there to protect the pension funds.

Mr. Scott. Isn't there a board that deals with that directly?

Judge Webster. Well, you have, I supposed that you have ERISA and some other things, but as far as the ability to the kind of authority that we have to discipline, remove, expel and so forth, I don't believe that that's there.

Mr. Scott. The Pension Benefit Guarantee Corporation?

Judge Webster. Yes.

Mr. Scott. Isn't that their job?

Judge Webster. No.

Mr. Crandall. It really does not do that, just to jump in, it deals essentially with failing pension plans is what it ends up dealing with. The Department of Labor has a relatively small body of people whose jurisdiction would include that. It's my understanding that the number of times they can review pension matters and whatever, because of the number of folks that they have, is very slim.

And as a result, there is not, as a practical matter, a lot of day-to-day oversight in the pension area. Not that there isn't in theory, under the statute some opportunity, but the actual enforcement personnel, frankly, is not there, as I understand it.

Mr. Scott. I'll yield to the panel the balance of my time, if they want to take it. Otherwise, I will yield it back to the chairman.

Judge Webster. I have one sentence. I want to thank the chairman and all of the members for the manner in which this hearing has been conducted and the courtesy that's been extended to this board.

Judge Lacey. May I add one other note to this? During the period that I have been involved in this magnificent project, I have said over, and over, and over again that I, as an independent administrator, and now a member of the Independent Review Board, could have accomplished virtually nothing had it not been for a strong, brilliant United States District Judge David N. Edelstein. When I was opposed, stonewalled, instance after instance, I would put matters before him, within a matter of hours, he would address them. Along the way, he had a horrible disabling stroke, physically disabled him. His mind is still sharp. He's well into his 80's. But I didn't want this hearing to conclude, first of all, thanking you for the opportunity that we've had to present our side, without putting that in the record because that man deserves every bit of praise I can give him and that we can give him.

Thank you.

Chairman Hoekstra. Yes, thank you for that. I have not had the opportunity to meet Judge Edelstein. I've seen his work, reviewed his work, corresponded with him, and, as some of you may have read his opinion or statements or reports of some of the actions that he took earlier this week, he may have had a disabling stroke, but his mind is as sharp as a tack, and he minces no words and I thought had some very insightful comments.

Judge Lacey. Lawyers will be familiar with what this means but case after case that I would take to him, joked a little bit about the only time he was reversed by the Second Circuit is when he reversed me.


But the citations run a full page as they litigated everything we tried to do, always affirmed by the Second Circuit. Tough decisions. He applied in one case the All Writs Act, initially they were suing Mr. Carberry and me as court-appointed officers around the country. The theory was that we were traveling to Dallas, and Chicago, and Cleveland, we couldn't do anything else. He applied the All Writs Act,

which meant that all of these cases then flowed into his court and that stopped that hemorrhaging.

There were other just very courageous decisions he made. And I really am grateful for the opportunity of being able to tell you that.

Chairman Hoekstra. Thank you. You're not done yet.


Oh, I'm sorry that Mr. Scott misled you with his closing comments, that you thought you were done. But the leading of witnesses by Mr. Scott is famous on the subcommittee but inappropriate at this time.


And we're going to Mr. Parker yet.

Mr. Parker. Well, first of all, I'm sorry my colleague from New Jersey is not here but the definition of dog cussing is casting aspersions on someone's character. So just so you know exactly what that is.

I firmly believe that if you had had more power, you would have been able to do more as far as the IBT. Now, I believe that. I also believe, and using your words, there's still a lot going on behind the scenes. Now, my goal, and I'm speaking individually here, I think is the same as yours, and that's basically to give this union back to who it belongs, and that is the rank and file of the union. That's the ultimate goal.

And there's got to be more than when you talk about, Judge Webster, about the pension fund.

To my friend from Virginia, the Pension Benefit Guarantee Corporation, the last I heard, was $40 billion underfunded. So I'm not going to depend on that a whole lot.

My personal recommendation, and I'm going to recommend this to the chairman, I personally feel that we're going to need another hearing because there are other questions that I have, and I think that the members of the committee have, that you can help us with from the standpoint of how we should view this and the changes that are there and the changes that need to occur.

Were you aware that the board meetings were being taped? Were you, as a board, did you know they were being taped? Because you are aware of our request for the tapes from the IBT?

Judge Lacey. I'm not sure. Are you talking about our Independent Review Board meetings?

Mr. Parker. Right. Were you aware that these tapes existed? The GEB, I'm sorry.

Judge Lacey. I would not be surprised to hear that they were because that's frequently done at meetings of organizations like that, but I can't say that I had knowledge one way or the other. Put it another way. I wouldn't be offended if I were to hear that they were taped.

Mr. Parker. Okay.

Judge Lacey. As long as I knew they were being taped.

Mr. Parker. Yes. This subcommittee has investigated questions that have been raised by the Jere Nash memo with regard to IBT officials, paid by the IBT, spending their time campaigning for Ron Carey. We asked the acting president of the IBT, Tom Sever, whether he had conducted an investigation into this matter. And I asked him this question repeatedly. He said not only had he not conducted an investigation, but he had no plans to conduct one.

The IRB received a letter from this subcommittee requesting that you look into Mr. Sever's failure to investigate apparent wrongdoing in the IBT. What has the IRB done in response to that request?

Judge Lacey. Mr. Carberry?

Mr. Carberry. We had discussed that a little bit earlier.

Mr. Parker. Yes.

Mr. Carberry. We have been conducting an investigation into the allegations relating to the election and then some post-election events. Some of the items we were investigating were started before receiving a receipt of the committee's letter. The committee's letter pointed out one more area for us to investigate, and we do have an ongoing investigation.

Mr. Parker. When do you expect that investigation to be completed?

Mr. Carberry. I expect to complete the investigation relating to the election and events growing out of the election to be completed some time in early fall.

Mr. Parker. One final question. Judy Scott, we had a statement made by Aaron Belk, who was head of the ethics committee, or I don't know the exact--

Judge Lacey. I think it was Carey's executive assistant as well. We know who you mean.

Mr. Parker. But Mr. Belk said, he said, ``Judy Scott ran the union.'' Now, that's what he said. Now, I was interested, Judge Webster, whenever you made the statement that Judy attended a lot of the board's meetings.

Judge Webster. No, I didn't say a lot, I said some, some. If she had something to report, she would come. And then she would leave.

Mr. Parker. Okay. So then it wasn't a situation that she just attended the meetings and-- Judge Webster. No.

Mr. Parker. She would stay there?

Judge Webster. No.

Mr. Parker. Okay. I was interested in that because there's a big question on this $475,000 check that it's my understanding that Ms. Scott basically urged Mr. Sever to sign this check that went on to the Citizens Coalition, or whatever.

Judge Lacey. Citizen Action.

Mr. Parker. Citizen Action.

I thank you very much. I appreciate you coming, and I think that we need to learn more from you as far as some of the things that have been done. Thank you very much.

Judge Lacey. Thank you.

Chairman Hoekstra. Just a quick follow-up question, Mr. Carberry. Have you ever listened to any of the GEB tapes as part of your investigations?

Mr. Carberry. No, I have not.

Chairman Hoekstra. So you did not know that they existed?

Mr. Carberry. I'm trying to recall if I knew they existed or not. And right now I don't think I did, but it may have been that years ago I knew they had been taped, but I just don't recall.

Chairman Hoekstra. Will your investigation of Mr. Sever include that he may have ignored his fiduciary obligation by not doing an investigation when he knew of potentially significant corruption within the Teamsters?

Mr. Carberry. One of our charges is the failure to investigate, and that is one of the matters under investigation.

Chairman Hoekstra. Okay. Mr. Kind?

Mr. Kind. Thank you, Mr. Chairman. I'll be brief. But Judge Webster, I can't let you go without posing this question to you. During the course of your career, what have you found more difficult, running the CIA or your work with the IBT?


Judge Webster. I know there's an answer in there somewhere.


Mr. Carberry pointed out we have a very potent weapon and that's failure to cooperate. If anyone refuses to give us an answer, that's grounds for removal from the union and we have exercised it. So I know your question had some humor to it, but our problem has not been one of being able to get either cooperation or get rid of people who won't cooperate. That doesn't answer all the problems but it's a big step and a big club and we exercise it.

Mr. Kind. Yes. Mr. Chairman, given the late hour and the fact that these gentleman have been very gracious with their time, and given the fact that we're all mortal and probably very hungry, let me just conclude by asking, or perhaps suggesting, that when you all wrap up your business with the IBT, I think it would be great if you just get together and collaborate and write a book about your experience because you got a heck of a story to tell. I could probably think of about a million and a half people who might be interested in reading about that.

But thank you again for coming today.

Chairman Hoekstra. I thought Mr. Kind was going to ask Judge Webster whether it was easier to get rid of people at the IBC or at the CIA?


But that's probably a road we don't want to go down.

Mr. Parker, I believe, has one more last question.

Mr. Parker. I don't want to leave this. The cooperation, you can force cooperation, but you have said that you had problems with implementation of things that needed to be done because you couldn't force implementation.

Mr. Carberry. If I can just make the distinction. They have to provide us information. That's the cooperation we can force. They have to answer a question or allow us access to documents. If we have some suggestion apart from a disciplinary charge, we have no power to enforce that.

Mr. Parker. Okay, that's what I was wanting to clarify. Thank you.

Chairman Hoekstra. Assuming we're all done, anybody else got any questions? All right. I want to thank you for being here. We'll take a look at Mr. Parker's statement that he might want to have another hearing and have you back, and we'll leave the light on, right?


But we appreciate your being here. Reflecting on the series of hearings that we've had, there's some of us that maybe get a little frustrated and it's probably not necessarily with you, but it's the way that the structure was set up in that you have a tremendous amount of power as it deals with organized crime and you know if you don't cooperate, if you don't give information, and these kinds of things, you're out. You have a tremendous amount of power as it deals with organized crime. And I think what many of us would and you've gotten a lot of credit for rooting organized crime out of the Teamsters. At the same time, when you talk about some of the internal operations of the Teamsters, the financial controls, the financial irregularities and those types of things, you don't have nearly the kind of control there. And I think sometimes it kind of transfers over, and say, well, they got all this power to root out organized crime, they must have all of this power on a day-to-day basis to root out cooperation and to save this union for its members, but in reality, you don't. And that's what, I think, makes it sometimes hard for people to understand the exact role of the IRB, saying, you're at the cutting edge of rooting out organized crime, but you're at the tail end of responding to illegal activities if it's the financial doings within the Teamsters, which is really what has spurred much of the interest, and much of the work here in this committee. We haven't looked at the organized crime effort.

Judge Lacey. If I can give you--

Chairman Hoekstra. Yes?

Judge Lacey. --a clue to all of this. It's found in the consent decree.

Chairman Hoekstra. Yes.

Judge Lacey. And as I used to tell people afterwards, when I was trying to get some work done under that, I didn't draft it and I didn't participate in negotiating it, but always you go back to what this lawsuit was all about. It was a lawsuit novel and theory at the time under the civil RICO statute which meant it had to be linked to what are called predicate acts, acts of racketeering, that's the statute. It's 1361, I think, of Title 18.

So that when they negotiated the consent decree and provided for powers to be exercised by the court-appointed officers, again it was rooted in that. You had the power to do things, but they had to be things that were somehow going to transgress in that area, 1361, Acts of Racketeering. And so that then gets carried along into where we are now. We don't have that broad power to go in, we discourage use of the word ``oversight,'' for example.

Chairman Hoekstra. Yes.

Judge Lacey. We react, again tied into that consent decree, that's the basic document on which we stand for better or for worse.

Chairman Hoekstra. Yes, for better or for worse, and probably worse for the reputation of the IRB because I think there are certain people that will infer that that is a responsibility of your's and, perhaps, incorrectly or may be, matter of fact, incorrectly.

Judge Lacey. Well, if we've done nothing else here today, we hope we've instilled that thought in you and your colleagues.

Chairman Hoekstra. And the problem is that in much of what we've talked about and what we've uncovered over the last number of months, that is an area that, perhaps, where the Teamsters need the oversight. There may be some disagreement here on the panel but I think that the evidence would say that there is some need for some oversight.

But thank you very much for being here. Thank you for your work. Mrs. Mink, I don't know if you have a comment?

Mrs. Mink. No.

Chairman Hoekstra. No closing comment. Without objection, all documents referred to in this hearing shall be included in the record. All members will have three legislative days to submit material for the record.

The hearing stands adjourned.

[Whereupon, at 6:50 p.m., the subcommittee adjourned subject to the call of the Chair.]