Serial No. 105-148


Printed for the use of the Committee on Education

and the Workforce





Tuesday, September 29, 1998


House of Representatives

Committee on Oversight and Investigations,

Subcommittee on Education and the Workforce,


Washington, D.C.










Table of Indexes *

The subcommittee met, pursuant to notice, at 9:02 a.m., in Room 2175, Rayburn House Office Building, Hon. Peter Hoekstra, [chairman of the subcommittee] presiding.


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

Staff Present: Rebecca Campoverde, Professional Staff; Patrick Lyden, Staff Assistant; Mark Rodgers, Workforce Policy Coordinator; Dan Anderson; John Loesch; William Outhier; Jean Pirak; Michael Quickel; Michael Reynard; Lisa Rich, Michael Bopp; Matthew Tallmer; Nathan Muyskens; Rob Sterner; Cassie Lentchner, Minority Special Counsel; Michal Berlin, Minority Counsel; Gregory Jefferson, Minority Counsel; Brian Compagnone, Minority Staff Assistant; Daryl Chang, Minority GAO Detailee, and Pat Dugan, Minority GAO Detailee.


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

Today, for the second time in four months, we'll be hearing from Mr. Michael Cherkasky. Welcome back, Mike.


Mr. Cherkasky. Thank you.


Chairman Hoekstra. Good to see you. The man responsible for overseeing the Teamsters' re-run and election, an election made necessary by the Carey campaign's corruption of the 1996 elections. We had also invited U.S. Attorney Mary Jo White of the Southern District of New York. She's been handling the criminal investigation of the Teamsters' election and related issues such as the so-called contribution swaps. Unfortunately, the IBT is appealing a Federal court decision approving the funding and the timetable for the re-run election. As a result, Ms. White, who is a party to the appeal, felt she could not attend this hearing.


Ms. Mink and I will probably be meeting with Mary Jo White sometime before we recess for a status report from the Southern District.




The first time Mr. Cherkasky testified, it was back on April 29. It's getting to be a longer process than we anticipated. And Mike told us about the newly instituted rules aimed at halting a repeat of the corruption that occurred during the 1996 election. He also discussed his plans to proactively investigate campaign spending, including sending auditors into the field, getting daily contribution expenditure reports in the two weeks leading up to the re-run election, and doing spot checks of candidates, vendors, and contributors.

All of those plans are designed primarily to ensure that non-Teamster members could not improperly contribute to the IBT campaigns and hopefully to prevent new and creative methods to circumvent the campaign process.

A lot has happened since that April hearing. Let's start with the funding for the election. As many of you know, a law passed by Congress last year barred the use of Federal funds to pay for a re-run election. Congress essentially believes that taxpayers should not pay for the wrongful actions of Ron Carey and the IBT.

The Federal District Court in New York ordered the IBT to pay the full cost. That decision was overturned by an appeals panel, which held that the government had to pay for the re-run of the election.

Before that appellate court decision, the IBT had agreed to pay half of the $8 million cost of the election. But citing that court decision, the Teamsters abrogated the agreement and refused to pay their $4 million share. Instead, the Teamsters proposed that they run an unsupervised election using IBT employees in place of the election officer, talk about letting the foxes guard the chicken coop. That was an option that we didn't think would be the most appropriate.

The IBT claimed that their plan would cost only $4 million, half of what the election officer had budgeted. According to Mr. Cherkasky, the Teamsters' own 1997 financial report would belie to that claim because the union acknowledged in that document the election would cost $6 million. It should come as no surprise to anyone who's been following this investigation that the Teamsters apparently tried to mislead the election officer and a Federal judge.

The funding issue was resolved just last month in a complicated deal involving the Congress, the IBT, and the Department of Justice. As the deal reads, the government will pay $4 million to offset the cost of the Independent Review Board, which will free up an equal amount in IBT funds. The IBT will pay that $4 million towards the re-run election and kick in an additional $2 million.

Judge Edelstein, the Federal District Court who oversees the Teamsters' consent decree, approved that plan. But the IBT is appealing Edelstein's ruling. It should surprise nobody that the current Teamsters' leadership is going to have to be dragged kicking and screaming into an election. If the executive board members are voted out of office, they stand to lose thousands of dollars a month in extra paychecks, as Judge Edelstein has noted in open court.

Between the last time he testified and today, Mr. Cherkasky found that Tom Sever retaliated against Tom Leedham, a current IBT presidential candidate. Sever also struck out against three other IBT staffers after they supported a slate headed by a Sever opponent.

Recall that Sever replaced Ron Carey as acting Teamsters president as Mr. Carey left office one step ahead of the Independent Review Board. Mr. Cherkasky's decision also found that Sever's explanation about the retaliation was not credible.

All of which brings us to today's hearing. We have called Mr. Cherkasky back before our subcommittee to discuss how he intends to monitor potential improprieties with a budget that is $2 million less than he originally planned and update us on the time table for the re-run election.

We have asked him to describe the steps he is taking to ensure that Acting President Sever stays within the bounds of acceptable behavior during the remainder of this campaign. And finally, we have asked Mr. Cherkasky to tell us about new rules dealing with issues such as protests and investigations and measures aimed at preventing corruption this time around.

But, first, I'd also like to note for the record an interesting story that is developing. There is a piece in the Louisville Courier Journal that reports that the top aide to Governor Paul Patton, the Governor's labor liaison, and two Teamsters leaders were indicted on charges of violating State campaign finance laws.

According to the article, the labor aide ran pro-Patton efforts for the IBT in the AFL-CIO between stints working for Patton. Also linked to the scheme, though not indicted, was the AFL-CIO, which ran a massive get-out-the-vote drive among likely Democratic voters.

According to press reports earlier this year, the grand jury was investigating whether Patton's aides played any role in getting a $10,000 contribution for the A. Philip Randolph Institute, a voter registration drive partially funded by the AFL-CIO and organized labor. They were trying to get this money from the National Educational Association.

There were also hints that the IBT and the AFL-CIO coordinated their efforts with the Patton campaign. During the course of the three-year investigation, the IBT sued to keep a State grand jury from considering the case. The Teamsters and the Democratic Party teamed up to launch a legal effort to block grand jury action. And the labor aide filed an unsuccessful Federal court suit against the State investigation.

I bring this all up because, after having spent almost a year taking a look at the Teamsters, this sounds awfully familiar. It's kind of like been there, done that, and we're doing it here, and they did it in Kentucky.

The 1996 election was invalidated in part because of schemes to trade contributions between the IBT, the DNC, and the Clinton/Gore campaign. A former DNC fundraiser told the Senate that a woman who was asked by the DNC to contribute to the Carey campaign wound up giving her money to a voter registration group that focuses on traditionally pro-Democrat constituencies. Senator Thompson's committee found that the AFL-CIO and possibly other unions may have coordinated their campaign advertising and efforts with the DNC and Clinton/Gore, and the IBT has tried to stonewall us every step of the way with frivolous legal claims.

Maybe the situation in Kentucky is something we should be looking at. At a minimum, it shows that we cannot assume once we've uncovered one Teamsters' scandal that others still aren't lurking around the corner.


Ms. Mink?


Mrs. Mink. Thank you, Mr. Chairman. I'd like to take this opportunity to welcome Mr. Cherkasky to the hearings and look forward to your testimony. And I'm pleased that we are at least on the road to conducting the re-run elections, which have been long anticipated, and I look forward to your testimony. Thank you.


Chairman Hoekstra. I ask unanimous consent that Mr. Goodling's and all other Members' opening statements can be submitted for the record. Without objection, so ordered.


Chairman Hoekstra. Mr. Cherkasky, welcome back. It is good to see you. I didn't think it would take us until almost the end of September to talk about an election that would be happening sometime in the future. I was hoping that by right around this timeframe, you could be coming in and telling us about how you had conducted a fair election, and how the union membership would soon be installing new leadership that they had selected in a fair and democratic process. But we're not there yet, and you can come back in December or January and tell us about that.

As you know, the custom for this committee, I'll now ask you to take an oath. You should be aware that it is unlawful to make a false statement to Congress while under oath. In light of this, will you please stand and raise your right hand.

[Witness sworn.]


Chairman Hoekstra. Thank you. You know, you're limited to five minutes. But you can take as much time as you want this morning to tell us about--I don't think there's any objection.


Mrs. Mink. No objection.


Chairman Hoekstra. No objection to that. Welcome back, and you've got the floor, Mr. Cherkasky.



Mr. Cherkasky. Thank you. I'd ask that my written remarks be made part of the record, and I'd seek to read some portion of that.


Chairman Hoekstra. Without objection, so ordered.


Mr. Cherkasky. Chairman Hoekstra and distinguished Members of this House Subcommittee on Oversight and Investigations, thank you for this opportunity to testify on the subject of the 1989 Teamsters consent decree and completing the supervised re-run election for the top officers of the International Brotherhood of Teamsters.

On September 14, 1998, United States District Court Judge David Edelstein approved a schedule for completing the re-run election. Under the court's order, ballots will be mailed to the IBT membership on November 2, 1998, and the count of the returned ballots will be done on December 3, 1998. The election office is now performing the advance work necessary to meet those deadlines.

When I testified before you, the subcommittee, on April 29, 1998, I announced that my objective as election officer was to have an election that is fair, honest, and executed with integrity, to have an election that gets more of the IBT membership to participate voluntarily and actively in choosing their top leadership, and to complete the election with the installation of the IBT international officers.

My objectives remain unchanged at this time. And I believe that under the court schedule, the re-run election will be completed in 1998, and the results will be certified shortly thereafter.

Since my last appearance before the subcommittee, the election office has maintained its supervisory role. In June 1998, the election office supervised the supplemental nomination of candidates. In July, the election office announced the final line up of slates and candidates and supervised the publication of campaign literature in the Teamster magazine.

Three slates of candidates, two Canadian slates and six independent candidates are now campaigning to the IBT membership. The election office has also continued to investigate and resolve protests under the election rules. To date, more than 300 protests have been received concerning the re-run process. Decisions have been rendered in approximately 220 of those protests.

The completion of the re-run election is now being accomplished because action taken by the United States and IBT in the court made available on September 1, 1998, approximately $6.3 million to pay for the upcoming election. When I learned this, I reviewed the election office budget to determine whether I could make adjustments to the budget that would allow me to supervise the re-run election effectively with the amount of funds available.

On September 9, 1998, I presented a revised budget to the court and the parties that planned the expenditures of $6,100,000 for the supervision of the election through December 31, 1998. Based on that budget, approximately $200,000 would be left from the cash made available to pay for the additional post-election matters remaining after December 31 and the wind-down of the election office in 1999. I note that several IBT local unions and joint councils have informed the United States District Court they expect to make available $250,000 in contingent funds if that money is needed.

The budget I presented reflects a four-month plan for the supervision of the election in accordance with the consent decree. I proposed this plan and budget for the supervised election because I believe it provides for an election that will be fair, will have integrity and will produce honest and trustworthy results.

The budget for completing the re-run election is less than the $8.6 million budget that I provided to the court early in 1998. Three factors explain the lower amount. First, the $8.6 million was a plan for seven-and-a-half months of the operations from May 15 through December 1998, with the ballot count anticipated to occur in October.

The $6.1 million draft budget covers only the four months from September to December and does not include expenses already incurred, approximately $800,000 for the four-month period May through August.

Second, the $6.1 million budget reflects my judgment that the election office could take a new approach to the use of attorneys and investigators by eliminating certain supervisory positions at the ballot count and changing the use of field staff; I reduced the overall budget by approximately $950,000. While managing within these resources presents a challenge, I have assured the court, the parties, and the IBT membership that I will not hold back on the investigation of serious protests, and that I will investigate all allegations as completely as necessary to protect the integrity of the re-run process.

In making these changes to the budget, I deliberately left in place the amounts budgeted to pay for oversight and auditing of candidate finances and the controls to ensure the integrity of the mail ballots. Specifically regarding campaign finances, the five measures that I described to you in my April 29th testimony will be carried through, through the end of the supervised process.

All contributors to campaigns are being identified to the election office on monthly reports. A field audit program is in place and will seek to verify independently the information that the candidates and slates provide. And in the final two weeks before the ballots are mailed, candidates and slates will file daily reports of their contributions and expenditures.

Third, while the budget for the actual ballot mailing and tabulation is essentially unchanged, I will reduce the amount budgeted for monitoring the locked ballots security by $380,000. The original figure planned on having full-time security guards protecting the locked ballot security room from the time of the first returns until certification. I believe that the ballots can be protected fully and at much lower cost by using electronic security equipment.

The matters I've summarized account for budget reductions of $1.37 million. With the $800,000 in past expenditures, that accounts for the $2.17 million, the difference between the fourth-month and seven-and-a-half month plan.

As I told the District Court, I believe the four-month budget reflects a plan for supervising the re-run election in accordance with the consent decree's objectives promoting democracy within the IBT.

Let me turn briefly to two protest rulings I have issued concerning alleged misconduct of officers and employees of the IBT. On August 14, 1998, I issued a ruling on a protest filed by persons affiliated with the Leedham slate alleging that Acting General President Tom Sever and his executive assistant, Sam Carter, had retaliated against IBT employees on account of their support for Leedham. I granted the protest. As a remedy, I directed Mr. Sever and Mr. Carter to stop the improper activity, and I directed the IBT to provide me with a list each week of personnel actions or other changes in job responsibilities.

Since my ruling, the IBT has provided me with the required list, and I have reviewed the reported actions for any problems that they may suggest. Any follow-up complaints will be investigated. If necessary, I will use my authority to get facts about those actions whether or not a protest is filed, and I will remedy any abuse of authority or retaliation as necessary to protect the integrity of the re-run election.

On September 24, 1998, I issued a ruling on a protest filed by the Hoffa slate alleging the IBT staff and the organizing department in particular had been used to engage in campaign activity, and that this remained a threat for the re-run election.

I conducted an extensive and thorough investigation that included the review of thousands of records that documented the activities of the staff in question, the questioning of responsible IBT personnel under oath. The IBT provided full access to its records so that I could understand the union's long-term organization plan and then determine by analyzing detailed employee travel and time records whether the deployment of personnel and resources was consistent with legitimate union activity.

The allegations were serious, and the evidence was scrutinized carefully. Based on the review, I did not find evidence to grant the protest. In both cases, I believe my rulings reflect a thorough and complete examination of the facts. I ask that you read those rulings for the best explanation of each investigation and its results.

Thank you again for the opportunity to appear before you and testify today. And I'd be happy to respond to any questions the subcommittee may have.

I would just add one thing. In doing the budget, we did a zero-based budget. We didn't look at first blush what we were going to cut. We in fact looked at how much money we had and, in fact, what we could do and where we needed to spend the money for the resource.

In doing that, we came up with this budget. So in some ways, it's a little hard to talk about how we cut different aspects of it. It's really much easier to talk about how we built this budget back up from ground zero, Mr. Chairman.


Chairman Hoekstra. Thank you. We'll go to questioning, to Mr. Norwood first.


Mr. Norwood. Good morning, Mr. Cherkasky. Good to see you again.


Mr. Cherkasky. Good morning, Mr. Norwood. Good to see you.


Mr. Norwood. Let me go to the last part of your testimony since that's fresh on our mind. You recently received a decision on a protest against IBT's acting president, Tom Sever, as you stated. We have a chart over here that quotes some of the pertinent findings from that decision, not that anybody can see it. But it is over there.

How about elaborating on that just a little bit, about what your investigation revealed to you in a little more detail than you could in your opening statement.


Mr. Cherkasky. Sure. Again, I would go back to the decision and obviously reference that. Almost all of the things we're going to be discussing here today, those kind of protests, are on some kind of appeal process, though. I think the Sever decision has been in fact adjudicated.

There was a protest, very specifically, that Mr. Sever and Mr. Carter had in various ways retaliated against members of the Leedham slate--people who, in fact, had been working at the IBT headquarters and who in fact had made the determination in the late spring to in fact join Mr. Leedham.

We in fact got that protest shortly after the alleged action had occurred. We immediately because of the--we consider those kinds of retaliations very, very serious action, particularly when they come from the highest levels of the Teamsters.

That kind of, if in fact unchecked, that kind of stifling of political expression undermines the whole basis of the consent decree and what we're about. So we in fact immediately moved forward, obtained a broad array of documents, including computer hard disks, did thorough searches of those, and then went forward and, under oath--I think Mr. Sever was deposed a number of times under oath--deposed all of the key individuals there.

And at the end of the investigation, we concluded that there had in fact been retaliation and retaliation that we consider serious, that Mr. Sever and others in his administration had in fact intentionally sought to stifle people from political expression.

We made the determination that the remedy would be one that, one, would correct the wrong that we in fact had seen, and, two, prophylactically protect in the future to make sure that that kind of behavior would in fact be less likely to occur. We think the decision chills the behavior, No. 1, in that in fact it was caught and remedied, and, No. 2, the oversight of reviewing all personnel movements allow us a timely glimpse about what's going on with the people who have the authority to make those personnel decisions.


Mr. Norwood. How long did it take for Sever to retaliate against the Leedham candidacy? Was it almost immediately?


Mr. Cherkasky. This was within a matter of days, yes.


Mr. Norwood. That concerns me, and obviously it concerns you, too. On this chart over here, you found that Sever's explanation for his actions in this were not credible. That sounds a little bit to me like they, during the investigation, may have tried to mislead your staff. So now did they in fact cooperate with your folks in this investigation, or did they not?


Mr. Cherkasky. They certainly produced documents as required. They testified as required--I mean, they appeared. We did not credit some aspects of that testimony.


Mr. Norwood. I wonder. I'm not sure I agree with you that this type of action, which sends a very loud broad message about this election won't in the end affect the outcome of the election. Tell me why you allowed him, Tom Sever, to even remain a candidate after this. I mean, we hadnít even gotten started yet, and they're beginning.


Mr. Cherkasky That, as we set out in the opinion, it is a complicated process of doing remedies. And I think it in fact is a process that we've explained in the opinion. We go through--any time in general, not just with reference to the Sever opinion, any time you bar a candidate is a draconian action. It in fact is inherently anti-democratic to bar a candidate from running.

So then in fact what you're doing is you're doing a balance. And what we in fact made the determination as we set out in the opinion is that we did that balance and felt that the appropriate balance was to remedy it, publish it, which we did--publish it immediately through the Titan system. We didn't wait for a magazine when we didn't know when it was going to come out, but had it actually posted across all the locals in the Teamsters and then took the action--the oversight action.


Mr. Norwood. This last question: Is this type of intimidation common in the IBT, or do you think this is just an isolated incident that occurred?


Mr. Cherkasky. I can tell you any time that we see it, any time we hear about it, any time there is rumors of it, we will in fact within our budget--and we have the ability to very quickly respond, this is not behavior that we think is acceptable, and it is an anathema to our process, and we will respond to it.


Mr. Norwood. So you still are under the impression with Sever as president that we can actually have a fair election?


Mr. Cherkasky. I am confident that, as currently structured with the people currently in place with the compliance steps that we have, that we will have a fair election, yes, sir.


Mr. Norwood. Thank you, Mr. Chairman.


Chairman Hoekstra. Ms. Mink.


Mrs. Mink. Thank you, Mr. Chairman. The long impasse with regard to the funding question on how this re-run would be paid and then the compromise of the $6.1 million, could you describe exactly how that money is put together?


Mr. Cherkasky. I can describe generally how it's put together. I believe that there is in fact roughly $4 million which is coming out of certain funds that were inside the Department of Justice, certain forfeiture-like funds which in fact are being used to defray certain costs of the Teamsters in relationship to certain compliance matters of theirs specifically involving the IRB--Internal Review Board. That money was forwarded to the Teamsters to help defray those costs. The Teamsters then forwarded that equivalent of $4 million from there and additionally $2 million to my office.


Mrs. Mink. The $4 million that you first mentioned, those were wholly within the control of the Federal Government and consisted of forfeiture assets and other like funds?


Mr. Cherkasky. That's my understanding, Ms. Mink.


Mrs. Mink. So the $4 million are Federal funds?


Mr. Cherkasky. The $4 million, as I understand, were Federal forfeiture funds.


Mrs. Mink. And then, in addition to that, $2 million were funds that the Federal Government reimbursed the Teamsters where previously the Teamsters paid fully for the cost and operations of the Independent Review Board in this instance through the exchange of funding. The Federal Government is now paying for the operational costs of the Independent Review Board where previously, under the consent decree, the Teamsters had to pay for that themselves.


Mr. Cherkasky. That's my understanding that the $4 million went to the Teamsters. They're using that money to defray the cost of compliance with the IRB and, in fact, have agreed to put the $4 million plus $2 million of their own, to the election office.


Mrs. Mink. What do you mean by $2 million of their own?


Mr. Cherkasky. Well,--


Mrs. Mink. If you had $4 million, and then this is $2 million, that's the $6 million, isn't it?


Mr. Cherkasky. Right. My understanding is there was--but there is $2 million of Teamster money, which has in fact been put in this which is, as I understand it, not being reimbursed in any way by any government funds.


Mrs. Mink. Well, if you had $4 million, plus the $2 million that the Federal Government reimbursed the Teamsters for the Independent Review Board and plus another $2 million, you'd have $8 million. I'm trying to figure out the mathematics.


Mr. Cherkasky. Excuse me, I apologize. I haven't made it clear. My understanding is that $4 million from forfeiture funds were in fact designated and paid over to the Teamsters. The Teamsters then forwarded $4 million under their check to the election office. So that's the $4 million. In addition, $2 million was taken from the Teamster coffers and forwarded to the election office. So that's the sum of money.


Mrs. Mink. What is the relationship of the obligation that the Teamsters had to pay for the Independent Review Board, then? I understood that that was the exchange funding that was obtained, that the IBT expenditures were required under the consent decree to pay for the cost of the Independent Review Board.

In this exchange procedure, the government offered to pay for the cost of the Independent Review Board, and in that sense, reimbursed the Teamsters for expenses that they would have otherwise had to be responsible for.


Mr. Cherkasky. Yes. And excuse me because I'm no expert in this. But my understanding about this is that the $4 million that was moved from the forfeiture funds in Justice, moved to the Teamsters, was in fact that money. It's the $4 million.


Mrs. Mink. Yes, which was in fact to make up for the money that they otherwise--the Teamsters would have had to expend on the IRB.


Mrs. Mink. So the Federal Government reimbursed the IBT $4 million--


Mr. Cherkasky. Yes, ma'am.


Mrs. Mink. Which they had already spent for the payment of the expenses of the Independent Review Board.


Mr. Cherkasky. I don't know if it was--had already been spent or were going to spend or not. But it's my understanding it was $4 million which either before or after was going to be expended by the Teamsters. That's right.


Mrs. Mink. So in addition to that, the Teamsters' Executive Board offered to pay an additional $2 million of their own funds.


Mr. Cherkasky. They have paid $2 million, yes, ma'am.


Mrs. Mink. And I've understood that there is now a lawsuit pending with respect to that financial arrangement?


Mr. Cherkasky. That's my understanding.


Mrs. Mink. Now what was the basis of that lawsuit?


Mr. Cherkasky. Well, it's not something that I think I'm particularly qualified to speak about. But I understand the Teamsters have sued and are--


Mrs. Mink. And who have they sued?


Mr. Cherkasky. They've sued the United States Government.


Mrs. Mink. And who is defending that on the other side?


Mr. Cherkasky. I think the Department of Justice, most specifically members of the Southern District of New York.


Mrs. Mink. And their suit is based upon the $4 million or the $2 million aspects of this financial arrangement?


Mr. Cherkasky. Again, I don't really think I'm particularly qualified to speak about that. My general understanding is that they're seeking to have the government pay the full amount of the budgeted amount of the election office. But again, I'm sorry--


Mrs. Mink. The pending nature of that litigation does not in any way impair your ability to proceed with the election?


Mr. Cherkasky. It does not. There's been no stay. And let me just make sure that my understanding, as I do understand it. What has happened here is the election plan as we submitted to Edelstein which was approved by Edelstein, was appealed, and that's the way, in fact, it's gotten up to the Second Circuit.


Mrs. Mink. Thank you very much.


Chairman Hoekstra. Thank you. Mr. Parker.


Mr. Parker. Thank you, Mr. Chairman.

In your opening statement, you made mention that you had had approximately 300 protests that have been filed.


Mr. Cherkasky. Yes, sir.


Mr. Parker. That you had resolved 220 of those. So that leaves about 80. What is the status of those?


Mr. Cherkasky. They're all in the process of being resolved. One of the things that we continue to ascribe to do is to do them as rapidly as possible. We're on a run rate of approximately 15 a day. So you can see in a week, we're getting 75. So we just have a backlog of--what we actually hope to do is to resolve those within three to five days, any individual protest.

Some of them will go out longer, and some of them can be months if they're complicated issues. But 80 represents some recent filings and a few backlogged longer-term cases.


Mr. Parker. Do you differentiate between the different types of protests? I mean, do you have a threshold on how you make a determination on how a protest is handled?


Mr. Cherkasky. Well, we certainly are--and I would tell you that--we're being a little harder about this and kind of triaging the process harder. Certain--we get a lot of protests which are raised about fairly minor issues. Someone who in fact was called a name, or something was put up in a bulletin board that may have been inappropriate, those aren't things that we in fact need to resolve, but we're trying to in fact resolve those quicker and more economically so that the middle range or the retaliation-type or ballot-type of protest we can in fact focus the attention on the ones that really have some impact.


Mr. Parker. Okay, let's talk about retaliation. Describe a little bit from your perspective because I would think the retaliation problem would be one of the ones that would be more serious. Describe a little bit about--what we are talking about as far as retaliation? When you look at Mr. Sever, and you evidently in your investigation found that some improprieties existed, what type of retaliation are we talking about, and against whom? How did this work?


Mr. Cherkasky. Well, in general, what we're certainly looking for, and it can evidence itself in a local union or obviously in the national union, in general we're looking for things like when someone starts to campaign, they no longer get work. The work is taken away from them.

Or benefits are taken away from them. They no longer have access to the union car which they had when they were on the team. So it can be fairly local--it certainly can be in a local area, or it can be on a more broad national scheme. Both of those things concern us enormously.

Clearly, the ability a local leader had to in fact deprive someone of the ability to work or deprive someone of a pay raise or to take away a perk that in fact they had been used to and accustomed to and in fact would have had but for their political support has the tendency to spread the message and chill the behavior.

Those are things that we find unacceptable, and we will continue to look at very hard, and, where we find it has occurred, we will sanction. And this--it can happen for any of the three slates. All three of the national slates have some areas where they control the local unions so that we find potential retaliation and complaints of retaliation really throughout the country.


Mr. Parker. Describe a little bit for us, you've got the acting president of the International, Sever, and you basically found evidence that there was a problem. What did he do? How did he do this? Because that sends a message all the way down the line.


Mr. Cherkasky. Yes. I would just prefer to refer you basically to the opinion because I don't really want to talk outside the opinion. But just summarizing portions of that opinion, Mr. Sever, in fact, we found, retaliated against high level officials by changing their work function by basically taking them out of the process--the jobs that they were in before and moving those responsibilities to others in a very significant way, basically depriving someone of the opportunity to do the function they had been doing before the change of support occurred.


Mr. Parker. I thank the chairman.


Chairman Hoekstra. Mike, what was the differential in the last election?


Mr. Cherkasky. What was the vote differential?


Chairman Hoekstra. Yes.


Mr. Cherkasky. It was roughly 52-48.


Chairman Hoekstra. That was a percentage. But in raw votes?


Mr. Cherkasky. Fourteen thousand.


Chairman Hoekstra. Fourteen thousand between the winner and the loser?


Mr. Cherkasky. Yes.


Chairman Hoekstra. Okay. All right. Mr. Scott.


Mr. Cherkasky. And that's with 1.4 million eligible voters.


Chairman Hoekstra. Yes. I mean, just the, you know, it's not a huge margin, and it's going to be interesting to watch you work through this process. Mr. Scott.


Mr. Scott. Thank you, Mr. Chairman. The chairman's opening statement indicated that the Teamsters abrogated the agreement and refused to pay their $4 million share. Are you familiar with that?


Mr. Cherkasky. They refused to pay their $4 million share?


Mr. Scott. By citing--let's see, before I read the whole paragraph, ``Before the appellate court decision, IBT had agreed to pay half of the $8 million cost of the election. But citing the court decision, the Teamsters abrogated the agreement and refused to pay their $4 million share.''


Mr. Cherkasky. I am aware that there were discussions last fall before I was election officer between the government and the IBT. Obviously, the discussions did not produce a result of funding. That's all I'm aware of.


Mr. Scott. Well, I mean, that was a--was that an agreement or a pre-trial offer?


Mr. Cherkasky. As I understand it, it was discussions before litigation, yes, sir.


Mr. Scott. And when the IBT won, then that pretty well eliminated the need to discuss because they'd won in court, right? I mean, that's not abrogating an agreement.


Mr. Cherkasky. Certainly, the IBT's position became we won, we shouldn't have to pay. That was their position.


Mr. Scott. Now is the IBT--I'm a little confused. Is the IBT appealing the need to put in their $2 million?


Mr. Cherkasky. Well, they ``voluntarily''--they agreed to put that $2 million in.


Mr. Scott. To get the ball rolling. I mean, is this some litigation where they might win a court suit to have the Federal Government reimburse them?


Mr. Cherkasky. Again, Mr. Scott, I am not an expert in that litigation. Having said that, I don't believe that that is part of their suit to get the $2 million back.


Mr. Scott. You know, the funding has cost you a lot of time in trying to get funding for the process. How much time has been lost because the Federal Government failed to fulfill its obligation as required by the court?


Mr. Cherkasky. Well, there has certainly been about a 60-day move back of where we had hoped to be.


Mr. Scott. Are we on track to end the election, I think you said, by the end of the year? That means results and everything?


Mr. Cherkasky. Yes, sir. We hope to count ballots, and we will count ballots in early December.


Mr. Scott. Now the alternative to a federally-funded, supervised election would be no Federal supervision. If that had happened, what recourse would the Leidum slate have had in their protest?


Mr. Cherkasky. If in fact it had not been supervised, it's really unclear what the process would have been. I can certainly opine that there would have been no confidence by anybody that in fact there would have been a fair and neutral resolution here. But we don't know what kind of recourse, if any, Mr. Scott.


Mr. Scott. Now we have subpoenaed certain documents that are being discussed from being withheld because of attorney-client privilege and work-product. Do you know anything about that controversy?


Mr. Cherkasky. I have in fact heard that it's going forward, but I don't know anything. It doesn't involve me, and I don't know the particulars of it.


Mr. Scott. There have been--you've indicated that 300 protests, 220 and some have been resolved, and the rest are in the process of being resolved. You mentioned the Leidum slate situation.

Can you kind of say something about the others, how serious they are, how widespread?


Mr. Cherkasky. Well, again, there are protests from local members throughout the country on all of the three different slates who have in fact--the Hoffa slate, the Mett slate, the Leedham slate who in fact have charged impropriety by the other slate candidates or other local union members.


Mr. Scott. Have the protests been more against the one slate than the other, or is it pretty well everybody's been protesting against everybody?


Mr. Cherkasky. No, I don't think we've really quantified it. And I would certainly say that it's pretty much everybody against everybody else.


Mr. Scott. And how quickly--I mean, once you made a protest and made a decision, do you have confidence that that problem is solved, or do you need to go back and keep an eye on it?


Mr. Cherkasky. Well, it depends. Some of them, we've had issues where they have not been--that while we made a decision, the parties have not complied with what we've required, and in fact we've had to go back. But we do check, and we do follow through, particularly on the ones that are of more moment.


Mr. Norwood. Would the chairman yield for a question?


Chairman. Hoekstra. Sure.


Mr. Norwood. Mr. Scott said that an alternative to the Federal funding of supervision would mean no supervision, and I don't necessarily believe that's true. I believe the original consent decree had the IBT funding--the oversight for the first election. And because this is an election that no one anticipated, no one realized that the election would be thrown out because of the cheating on behalf of the Carey campaign.

It isn't necessarily true that if the taxpayer doesn't fund this election, there won't be oversight.


Mr. Scott. Well, Mr. Chairman, would you just yield very briefly?


Chairman Hoekstra. I'd love to have this debate.


Mr. Scott. I thought that's what the litigation was all about, and the Federal Government lost and was ordered by the court to pay for the re-run. Is that right, Mr. Cherkasky?


Mr. Norwood. That--yes, I'll answer that. Yes, that is right. But we're not through litigating.


Chairman Hoekstra. I thought we'd covered that ground. But Mr. Cherkasky, is this the original election, or is this a re-run?


Mr. Cherkasky. Number one, it's obviously not the 1991 election which was the first election under the consent decree. This is the--


Chairman Hoekstra. Right. Is this the--


Mr. Cherkasky. This is the second election. This is the 1996 election. It is in fact a re-run of that election.


Chairman Hoekstra. So we've had one already?


Mr. Cherkasky. We've had one in 1991. And now, this is a re-run of the 1996 election, yes, sir.


Chairman Hoekstra. So the election that we're holding in the fall of 1998 is a re-run of something we did in 1996?


Mr. Cherkasky. Yes, sir.


Chairman Hoekstra. What did we do in 1996?


Mr. Cherkasky. We had an election which in fact was not certified because of improper conduct.


Chairman Hoekstra. Improper conduct by people in the Teamsters.


Mr. Cherkasky. By specifically Mr. Carey.


Chairman Hoekstra. And how much did that one cost?


Mr. Cherkasky. Approximately $18 million.


Chairman Hoekstra. And who paid for that one?


Mr. Cherkasky. The United States Government.


Chairman Hoekstra. And where do they get their money? You and me. Is that correct?


Mr. Cherkasky. That's correct.


Chairman Hoekstra. Okay, thank you. I just wanted to clarify that for Mr. Scott that we've been more than generous with them in the fore hand, and it may be a lousy agreement. But, yes, whatever. Mr. Ballenger.


Mr. Ballenger. Mr. Cherkasky, I missed a couple of the hearings. So maybe I'm going to ask duplicative questions. But this morning, we got word that Mr. Sever has used his power as the present president of the Teamsters in restricting and punishing members at local levels. I think you made that statement this morning, did you not?


Mr. Cherkasky. We certainly have issued an opinion about Mr. Sever retaliating against people who had a different internal political persuasion.


Mr. Ballenger. Is there any legal or union rule, regulations that might punish him for doing that?


Mr. Cherkasky. There are--he operates under the context of the consent decree and under the election rules which in fact allowed me the ability to mete out a remedy or to in fact take certain action which I in fact did which was to first try to undo the harm that was done. Secondly, disseminate to the membership all the different--what the findings were about the retaliation. Third, to put in place certain compliance devices which hopefully would prevent an occurrence.


Mr. Ballenger. But actually, he is running for president in this coming election, right?


Mr. Cherkasky. He is running for another office--not president.


Mr. Ballenger. Another office, but it is in the election itself?


Mr. Cherkasky. Yes, sir.


Mr. Ballenger. So in reality, whatever information you posted should--did it go to individual members, or was it just posted in the Washington newspapers, or--


Mr. Cherkasky. No, it was--because the magazine was not publishing at the time, we in fact used the Titan, their computer system, to in fact require a posting in all the local unions of what Mr. Sever had done and our findings.


Mr. Ballenger. And that's the total punishment he got for--


Mr. Cherkasky. No. He in fact additionally--well, there was actually a statement which he had to sign. We in fact now will be reviewing all the personnel decisions that Mr. Sever takes. And we in fact put relatively put people back to the positions that they were before.


Mr. Ballenger. Well, the people--yes, the ones that you put back to where they were before, were these people in leadership of the locals that--


Mr. Cherkasky. No, they were actually in fairly high level positions at the IBT headquarters.


Mr. Ballenger. Was it Mr. Sever's idea for them to run an independent, pay for their own campaign? I mean, is there some reason that--this is me, again, maybe you've gone over this before. But I read that the Teamsters, under his leadership, were trying to run--have been running their own campaign. Am I mistaking that?


Mr. Cherkasky. Mr. Sever and the IBT had taken the position that they weren't going to fund this election and didn't have to, and that they were willing to run their own election, yes, sir, if in fact funding had not been forthcoming.


Mr. Ballenger. Right. Is there any reason you can rationalize--I mean, here's a man that's beating up on his troops and so forth, and then let me just say that I'll be glad to run my own election; you just leave me alone. Is there question that the legality of that effort?


Mr. Cherkasky. It wasn't something that--we obviously--I've always favored a supervised election very strongly, and I think it's good for the membership. I think it's in fact good for the American citizens to have a supervised election.


Mr. Ballenger. Well, let me just ask one question, then. If Mr. Sever is applying pressure to other members of--some fairly high members in IBT in effecting the election itself, Mr. Carey's election got thrown out, I don't know what for, but I know financial finagling, but also maybe pressuring other members. Is there any pre-election punishment aside from just posting notices that Mr. Sever would receive?


Mr. Cherkasky. Well, obviously, what we hope is this is a democratic process. All the IBT membership received a letter about what Mr. Sever had done. I wouldn't think it would be good campaign idea to in fact--


Mr. Ballenger. I'll go along with that.


Mr. Cherkasky. I mean, we--the punishment or the remedy, action that we took, we think, was appropriate. It was a balancing of interests. And the membership will make a determination as to whether they want Mr. Sever in the position he's running for.


Mr. Ballenger. Thank you, Mr. Chairman.


Chairman Hoekstra. Mr. Cherkasky, I am concerned about Mr. Sever. He is the acting president of the IBT. And I'm glad that you've uncovered and responded as quickly as you did to the protests against his actions.

You now have full review of personnel decisions in Washington. Let's talk about another person within the IBT, the independent financial auditor. Marvin Levy appeared with you on April 29. He testified about the role that KPMG Peat Marwick played as an independent financial auditor. They call it the IFA. It's created by an interim agreement between the U.S. Attorney's Office in the Southern District. The IFA reviewed IBT expenditures and contracts and gave him the authority to use such actions if they were found to be improper.

When you were here on that day, I think you were like we were. We were surprised and disappointed by the limited role that the IFA had decided to take in interpreting the interim agreement.

Has that status at all been changed?


Mr. Cherkasky. I honestly do not know the status of the IFA. I had contact with someone from Mr. Levy's firm a couple of months ago within weeks of the hearings. Since then, I have not had any contact with them, nor have I gotten--obtained any information as to the status of the IFA, sir.


Chairman Hoekstra. Because the--you know, one thing is to just now review the personnel decisions. But obviously what happened in 1996 is there were a lot of games played with Teamsters money out of the general fund which the independent financial auditor was, I think, at least my interpretation would have been that that position was created to oversee the expenditures of dollars to prevent what happened in 1996 to prevent that from happening again in 1998.

When Mr. Levy testified here in April, it was kind of like we don't think you're there yet. I don't think the interim agreement had been modified. I don't think there's a final agreement.


Mr. Cherkasky. Mr. Chairman, I don't know.


Chairman Hoekstra. How are you--how can you not know? I would guess that the--you're as concerned about how money flows through that building as you are with how people flow through that building. Do you have another way to track the money flow through that building that the independent financial auditor's not doing?


Mr. Cherkasky. I don't have a way because I'm not internal to track how the union is expending funds. What I do have is, on the other hand, I have the ability and the system is designed to make sure that funds do not--inappropriate funds do not come into the campaigning.

There are not--no expenditures. There's no purchases that wherever the money is coming from, whether it be union money or money from an inappropriate source, inappropriate contributor that in fact not get into this election. So those are the systems that I've set up and the audits that we're doing. We're going to be looking at vendors who are spending the money. We're going to be looking at consultants who are spending money so that in fact we can assure ourselves that money is not coming in.

Now, I think the idea was exactly as you suggested that the IFA is to oversight--make sure that money wasn't being inappropriately expended. That's not something that I am monitoring, reviewing. I can just do it on the other end. So I do it my own way, but I'm not looking at the internal finances.


Chairman Hoekstra. Yes, I mean you're three or four steps down the food chain on that. I mean, 1996 proved that the leadership of the Teamsters was willing to take their own rank and file money and to launder it in different ways into campaigns.

I will give them credit. They're pretty creative, and they probably know your rules. And if they try to be creative again, we don't have--is it correct, we don't have that position in place in the Teamsters monitoring the flow of money the same way that you are monitoring the flow of personnel decisions?


Mr. Cherkasky. I don't know if that's correct or not. I know that I am not in contact and haven't gotten information about that. I know that the IFA was created, and it was clear to me that it was created for exactly those purposes. But I'm not aware of exactly where it is now.


Chairman Hoekstra. But what we heard in April wasn't--what we thought it was created for, it wasn't operating in that manner.


Mr. Cherkasky. It certainly--I certainly had questions about how it was operating.


Chairman Hoekstra. Okay. Can you put in place--do you have the latitude to put in place what you've done with personnel decisions? Do you have the latitude to do the same thing on financial?


Mr. Cherkasky. I believe I do. If in fact we were to find that there is a specific problem that needs to be addressed and that, as part of the sanctions, we could in fact do those things.

Right now, we have--and I'm a pragmatic person, too. Within the resources that we have, we in fact are confident we're spending those resources right now in the most cost-effective way.


Chairman Hoekstra. Can you be proactive?


Mr. Cherkasky. We can be proactive. Obviously, this is a big union that has enormous--cuts enormous numbers of checks, and its finances are complicated to do an appropriate job of oversight, monitoring and reviewing those finances is a major undertaking that I'm confident that the government was trying to address with the IFA.

Now whether in fact--I'm just not, as I sit here, do not know what in fact how that's developed.


Chairman Hoekstra. You weren't confident in April.


Mr. Cherkasky. No, I'm confident that that's what they attempted to address.


Chairman Hoekstra. Right.


Mr. Cherkasky. I cannot tell you whether in fact--I am absolutely confident that that was the intent of putting in the IFA. Now how in fact it has been executed upon, I don't know.


Chairman Hoekstra. Why wouldn't you at this--why wouldn't you call the IFA or the Southern District and ask them what controls they've put in place to follow the money?


Mr. Cherkasky. I don't think that that's a bad idea. In fact, I think that's a good idea, and I will certainly ask the Southern District where we stand with that. What we've tried to do is look at the things that we control and focus on that because certainly the union is a source of money, but there are so many other sources of money which we have to make sure don't get in this election.


Chairman Hoekstra. Ms. Mink.


Mrs. Mink. Thank you, Mr. Chairman.

On the matter of Mr. Sever's intimidations which you found to have occurred with respect to high-ranking personnel, have these individuals been restored to their prior employment positions and functions?


Mr. Cherkasky. The answer is they have fundamentally. The answer is yes.


Mrs. Mink. Can you qualify what the ``fundamentally'' you were thinking of?


Mr. Cherkasky. Well, one of the difficulties is--and, again, it's a pragmatic difficulty, is that we have one organization which now unfortunately has a series of different factions in it, and these are positions of trust and policy making decisions at time.

Whether we will actually ever function because of the acrimony that's occurred, we have some questions about, and that is one of the fundamental reasons why this union desperately needs to have an election and a certified election because they need to have a unified administration and unified goals.


Mrs. Mink. Now with respect to your finding about Mr. Sever's conduct and the personnel actions that he took, is this a matter that you referred to the Independent Review Board?


Mr. Cherkasky. No.


Mrs. Mink. The Independent Review Board has no jurisdiction over the functions and actions of a union official.


Mr. Cherkasky. No, they do. The IRB certainly is aware of our opinion and got a copy of our opinion. We don't do formal referrals by and large. We in fact give them copies of the decisions that we make, in fact, we think they may have an interest in. And certainly they have the Sever issue. And then how they pursue is really up to them.


Mrs. Mink. But they could--they would have jurisdiction over this matter?


Mr. Cherkasky. They have jurisdiction--yes. If in fact, they certainly could review the activity, and they could independently make a determination as to what Mr. Sever had done in a different context of his membership in the Teamsters Union.


Mrs. Mink. In looking over the contributions that are filed by I think I heard you say daily expenditures and receipts for each of the campaign groups?


Mr. Cherkasky. They will be done daily in the final two weeks of the campaign.


Mrs. Mink. Oh, but not up to now? Not for the present?


Mr. Cherkasky. Right, not in the present. But because we don't want the late rush of improper money to come in, we're taking other actions in the final couple of weeks.


Mrs. Mink. So how do you examine any contributions, and so forth, that have been made to any of the campaigns up to the present time, say, since April up to the current moment?


Mr. Cherkasky. There are monthly requirements of filings.


Mrs. Mink. And those come to your attention?


Mr. Cherkasky. Yes, they in fact come to our attention and are exchanged with other candidates.


Mrs. Mink. And you have examined these filings?


Mr. Cherkasky. We in fact are entering every filing; every contribution is put into a program, a computer program. We examine them to make sure that they haven't gone beyond the limits.

We are also spot-auditing them. We in fact are going back to the contributors. And we're also auditing all three campaigns as well as TDU.


Mrs. Mink. This goes back to what time period?


Mr. Cherkasky. This goes through--this re-run process--


Mrs. Mink. I mean, when did it first start? Back in January of this year or prior to that?


Mr. Cherkasky. No, I think we've entered everything as of January of this year. All the contributions are being entered.


Mrs. Mink. Have you found anything irregular?


Mr. Cherkasky. We find irregular activity, but we haven't seen a pattern of irregular activity, nor has it been of large moment. We occasionally have found a contribution which is over the limit. We find contributions, which are from people who couldn't contribute. They're no longer members. They're retired.

And we redress those situations. So, yes, we have found those, but they have not been of any pattern or any real significance.


Mrs. Mink. When was the last monthly report that you received?


Mr. Cherkasky. The last monthly report was September 15th.


Mrs. Mink. September. So you're current in your review up to September 15?


Mr. Cherkasky. We are in fact auditing the filings of September 15th with a certain percentage of contributors to each of the campaigns. And we'll be going out into the field more actively now that we have the money. Very honestly, certain of the audit activity we did not do, though we kept up with the inputting, we did not do the audit activity until the funding issue was resolved.


Mrs. Mink. Now do you also audit the expenditures?


Mr. Cherkasky. Yes.


Mrs. Mink. And that is current up to September 15?


Mr. Cherkasky. No. The audit--well, we see the expenditures. They're required to also file expenditures with us. We will actually sample audit. We'll audit the central campaigns of all three national slates, and in fact some of the local candidates on a spot basis.

We will also be auditing vendors, large vendors. We'll be auditing telephone banks. We'll be auditing different consultants to in fact make sure that they weren't getting more money than was reported.


Mrs. Mink. Now in your position as the election officer, you have on your staff various attorneys that advise you on legal matters, I assume?


Mr. Cherkasky. Yes ma'am.


Mrs. Mink. The gentleman sitting to your left is one such attorney?


Mr. Cherkasky. Mr. Richard Mark. Ms. Benetta Mansfield is behind me.


Mrs. Mink. Now in your work with these attorneys that are on your staff, are there matters of confidentiality that you're not privileged or able to disclose either to the parties or to a committee such as this?


Mr. Cherkasky. Certainly, there are. There are certainly matters that are confidential which--


Mrs. Mink. Do they go what you find in terms of irregularities, or do they go to your discussions as to conclusions with respect to decisions or opinions that you are making?


Mr. Cherkasky. Well, there certainly are certain work product that the discussion of would be inimical to the process of doing it. It would be something that would make it less likely to be effective so that--


Mrs. Mink. I noted your response to one of the earlier questions about--with the idea of having you explain your decision, and you said you wanted to do restrict your response to the written decision. Does that go to such matters as the work product and how you arrived at your decision as being matters of privilege and confidentiality?


Mr. Cherkasky. We certainly think that that's part of our reasoning. But in fact those are substantively--it's not artificially. We think that discussing those can have a deleterious effect on our ability to function and in fact to do future investigations and get future information, yes ma'am.


Mrs. Mink. So if this committee has subpoenaed your data and information and other work products that led to your decision on Mr. Sever, you would decline to submit those documents or any such material, I assume.


Mr. Cherkasky. I would. The first thing I would try to work out with this committee to provide everything I could possibly provide this committee. And I am confident that I'd be able to work that out with this committee.

There are always--you know, you can have hypothetical situations which could put you in conflict. I haven't had it with this committee. I hope not to have it with this committee, and--


Mrs. Mink. My question was hypothetical, so don't worry. My time is up, I gather.


Chairman Hoekstra. I can just--my own little hypothetical.


Mr. Cherkasky. Yes, sir.


Chairman Hoekstra. If two of your top staff pleaded guilty, if a couple of them took the Fifth, and we found out you laundered a bunch of that $6 million that you have control over, you can damned well be sure we'd subpoena it and we'd get it. And we don't have that problem. We're thankful we don't. And we're encouraged by the work you're doing. Mr. Parker.


Mr. Scott. Mr. Chairman?


Chairman Hoekstra. Yes?


Mr. Scott. Could I--did you suggest that if somebody pleaded guilty that the attorney-client privilege would not attach?


Chairman Hoekstra. I never heard of attorney-client privilege. I said--I heard work product and those types of things. I never heard attorney-client privilege.


Mr. Scott. But you could get the attorney's work product just because his client was found guilty?


Chairman Hoekstra. I'm not saying that--I don't think we ever talked about attorney-client privilege. We're talking about work products.


Mr. Scott. Attorney-work documents that you lose the privilege for the work product because the client was found guilty. If the client is found not guilty, then the work product would be protected--


Chairman Hoekstra. I didn't say it wasn't protected. I just said that if we are doing hypotheticals here, all right, that there's a hypothetical that, you know, I think this is leading to some other discussions we may be having this week.


Mr. Scott. Well, pardon me,--


Chairman Hoekstra. I just wanted to make sure that (1) I never heard anything about attorney-client privilege. I heard discussions about work product, and I'm sure we'll have discussions about attorney-client privilege as we go through the week. But I heard about work product, and I'll yield to Mr. Parker.


Mr. Parker. Well, I thank the chairman. I want to get back to this independent financial auditor. Back in April of this year, you appeared with Mr. Levy in front of the committee and basically some of the things you were talking about--one of the things was the agreement that was reached between the U.S. Attorney's Office in the Southern District of New York and the IBT.

And the agreement passed the IFA with reviewing IBT expenditures and contracts and gave him authority to use such actions if they were found to be improper. Now during your testimony, you stated that you were surprised and disappointed by the IFA's accomplishments as of that date.

Now I'm not trying to cast any kind of aspersions or whatever. But what I--and I'm trying not to sound like Jerry McGwire on show me the money. But it does seem to me that the only way that you can truly follow, since money is the fuel, which makes an election run and a re-election also, that it would be important that you had a closer relationship with the IFA.

And the impression that I have gotten is that you don't have a real close relationship with the IFA as far as coordination. Am I getting the right impression on this?


Mr. Cherkasky. You're certainly getting the right--first, I don't recall testifying that I was surprised and disappointed. But you're certainly getting the right impression that what we have done is focus on what we control and in relationship to the IRB and the IFA, that we in fact have a relationship, but it's certainly not a close relationship.

And I think that the point that the chairman made is probably--is a good one which I in fact will follow up on.


Mr. Parker. But let me interrupt, if I could.


Mr. Cherkasky. Yes, sir.


Mr. Parker. The chairman in asking a series of questions a while ago basically laid out and you answered him and you said we do have the authority to follow the money if we deem that's necessary.


Mr. Cherkasky. Yes.


Mr. Parker. Now with that being the case, you do have that authority. Why haven't you moved in that direction? You're saying that you see some benefit in what the chairman has said. But what I'm looking is why hasn't that been done up to now? I mean, have you seen this as a problem in the past, or we're just bringing it up?


Mr. Cherkasky. There are really two issues. One, we probably need to have a closer relationship with the IFA to determine what kind of information they can provide and be helpful. We'd had some discussions early on, and I didn't pursue them.

Secondly, while I have the authority as part of an ongoing process, if there was an allegation we found to warrant as part of a sanction to go inside the Teamsters and look at their finances, I think we have the power to do that. I would be reluctant to spend the resources that that would require to do that effectively for a whole series of reasons.

One, just the resource issue. It is a large organization. I have some experience with auditing or monitoring these large organizations. It costs literally hundreds of thousands, if not millions of dollars to do.

I don't have the luxury of having that money that in fact would allow me, nor was it specifically my mandate. So what we've in fact have been directed as opposed to doing one specific thing and preventing that potential problem, we in fact have stepped back and said we think more effectively on a cost basis that we can do it by looking at the campaigns themselves and see where monies flowing in, whether it be from Teamster sources or all kinds of other sources.

One of the things that I think we all recognize we shouldn't be fighting the last war. We need to look at what could be happening now and do a kind of step back assessment. Our step back assessment is that we need to put these in place for any potential improper source of money.


Mr. Parker. But isn't it a fact that the IFA is looking at things now also? And as you've got scarce resources to deal with, doesn't it make sense that if you had a closer working relationship with them, that you could do this in a very cost-effective way because they're doing one part of it, you're doing another, and correlating the two would just seem to enhance what you're trying to do.

Now I'm just throwing that out, and I don't know the inner workings. But I see my time is expired.


Mr. Cherkasky. I just want to say absolutely it does make sense. I think that it makes sense, and I will follow that up.


Mr. Parker. Thank you. Thank you, Mr. Chairman.


Chairman Hoekstra. Mr. Ballenger.


Mr. Ballenger. I was just looking here at the contingency fund. I don't think that's been discussed. And local union chapters have pledged $250,000. I don't know how many chapters pledged this.


Mr. Cherkasky. It's a group of locals that in fact have agreed to do this. The court has set certain parameters so in fact they don't by the giving of money have any impact or leverage, that the money has to be put into an account by October 15th or 16th. And then they have--again, it becomes general resource money.


Mr. Ballenger. Is that basically just operational money for the election itself?


Mr. Cherkasky. Yes, sir.


Mr. Ballenger. I mean, who generated the idea of doing that?


Mr. Cherkasky. I don't know specifically who did, but I think that there was in some circles strong feeling that this, as we discussed earlier, that this should be a supervised election.


Mr. Ballenger. Right.


Mr. Cherkasky. And that it should be a supervised election with sufficient funds to make sure that we did the job. I think that some locals got together and felt strongly about it that they were willing to put up the money. We are confident in the money that we have. While we've made some hard choices, we're confident that the money we have outside of that, that we do this election fairly and thoroughly.

But it is certainly a nice gesture that, one, we're willing to accept to have that money as a contingency.


Mr. Ballenger. When this is all over, when the election's all over, are you going to have the financial capabilities of examining how it was run and so forth in the same manner that Carey's election was found to be dishonest?


Mr. Cherkasky. Well, we will certainly have certain sums of money. And while I can't anticipate all eventualities, I would not be honest if I said that if I had to do an investigation as we did with Mr. Hoffa or I think as we did with Mr. Carey that there may not be a difficulty with the funds we've set aside.

But we think we can do a serious effort of oversight after the election with the kind of funds we expect and hope to have available.


Mr. Ballenger. I mean, do you have the authorization to continue your investigation after the election?


Mr. Cherkasky. We have the authorization to complete the protest process so that if it is an election which is a close election, we may in fact have to do a recount. We may in fact have protests which are, if it's a very close election, which are pivotal as to whether--how the election is determined.

We have in fact put in our budget with the expectation that we would be able to do that. Again, we think we've budgeted for the reasonable level of difficulties that we may face.


Mr. Ballenger. You're saying also that the donations of $250,000 per whatever union organizations should have no effect on the election itself?


Mr. Cherkasky. Yes, sir.


Mr. Ballenger. The money is under your control?


Mr. Cherkasky. It will be.


Mr. Ballenger. It will be. Thank you, Mr. Chairman.


Chairman Hoekstra. Mr. Cherkasky, every time we have taken a look at the Teamsters, you know, we peel it back and we hope we hit a dead end. And every time we peel back another layer, we find about three or four more rows to go down, many of which we won't get to this year, some of which we will, and others of which we'll get to in the future.

But I am concerned about--and, you know, when we had talked earlier through the summer and the fall about what a minimal budget would be, I heard $8 million a lot of times, and one of the reasons I agreed to $4 million because I heard the number would be $8 million. I thought that was a pretty good deal. Not a good deal, but a better deal than paying all of it

But you're not looking into the contribution swaps or the other alleged misconduct in 1996, is that correct?


Mr. Cherkasky. We in fact have fundamentally closed the investigations of 1996. We are only looking in things that will affect the re-run election of 1998.


Chairman Hoekstra. The Southern District has taken a look at 1996, I believe, yet.


Mr. Cherkasky. I don't know anything more--I don't anything more than I read in the papers.


Chairman Hoekstra. All right. Then we get into this whole thing in Kentucky which I'm assuming, again, you haven't looked at.


Mr. Cherkasky. I hadn't--in fact, wasn't aware of it until actually last night when I read some press clippings.


Chairman Hoekstra. All right, and that gets to be pretty ugly. And that's what I said it's almost--this is the 1995 election. The chief of staff, the labor liaison for Governor Patton, now he's indicted on charges of violating restrictions on campaign contributions.

The president of the Teamsters Local No. 89, the union secretary-treasurer, they're indicted. And it's three years after the fact. The Southern District now has been struggling with this for a couple of years. We've struggled with it for the last 12 months.

The original election was overturned after what, after eight months, six months?


Mr. Cherkasky. The regional election was never certified.


Chairman Hoekstra. Yes, well, okay. Yes.


Mr. Cherkasky. Which was--the decision not to certify was I think in August--


Chairman Hoekstra. August 27, if I'm right.


Mr. Cherkasky. Right.


Chairman Hoekstra. Which was how many days after the--it was a number of months after the election.


Mr. Cherkasky. Eight--December to August, eight months.


Chairman Hoekstra. Yes. And you put that all together, and you say, you know, I don't know whether you got--I think you're going to run as good an organization and as good an election you can for $6 million. Are you sure that that's enough?


Mr. Cherkasky. The answer is yes. It is enough to--literally for me to stake my reputation on that this will be done in an appropriate, professional manner that is required by this consent decree.

There are hard choices that we had to make. And, yes, would I have preferred to have had more money so that some of--if some contingencies come up that are hard to anticipate, I could have more of a cushion, I would.

But I think the way we've reorganized it, the way we've structured it, we can in fact get the job done consistent with this consent decree. And understand, it was a little bit of--well, it wasn't a Hobson's choice, but it was a choice between supervision or no supervision, and I am absolutely confident that the American people and the Teamsters Union are far better off with a budget where it is right now, the $6-plus million, having this done under that than in fact not having it supervised at all.

But having stepped back, the bottom line is I believe that myself, my staff, we are confident we can run this election, run it fairly, run it with integrity, and be able to certify a winner of this election with that budget.


Chairman Hoekstra. You'll certify--when is the date you're supposed to certify the election?


Mr. Cherkasky. There's not a specific date. But the ballots come in December 3. Then there's a process of counting, and, again, you can't anticipate how close it is or whether you need to recount. But we think that we should be able to within days, hopefully in 1998, certify an election.


Chairman Hoekstra. Even with all of the protests that may or may not come in?


Mr. Cherkasky. Even with all the protests, depending on the nature of those protests. Again, it's hard to anticipate. You know, if there's a protest of major voter fraud, you're right. We could have a problem.

What we hope to do is not wait for that protest, but in fact catch it and make sure we're involved in that process so that anything we see or hear we've already in fact reviewed.


Chairman Hoekstra. My concern on this is we've seen a pattern. In 1995, you maybe see what they've done in Kentucky. In 1996, we see what they did in their own election. In 1998, you've seen what Mr. Sever has--the ruling or the--yes, the ruling that you've handed down. And then, other than the case with Mr. Sever and each one of these other ones, it has taken us a significant period of time to get to and find out what actually has happened.

In Kentucky, it may be two-and-a-half to three years. The certification of the 1996 election took about six to eight months, or the decision not to certify the election. And the Southern District has been working on it for two years.

Nothing seems to go very fast in this area, and part of it may be because I don't think the Teamsters are all that forthcoming and willing to come up and clean up their own house. I mean, if you had to do some protests, wouldn't you technically run out of money? I mean, when do you run out of money? You run out of money in January, February? I mean, you can't go on indefinitely.


Mr. Cherkasky. I can't go on indefinitely, and it depends on the level of activity. What I can say to you, Mr. Chairman, is that we, in fact, have--I'm a military historian. I can't tell you I have a two-ocean Navy, but we think we have a good one-ocean Navy. We think the things that we can anticipate, we're confident we can handle and that means during the election and post-election, to get this done. And if, in fact, there are things that we don't anticipate, we're just going to have to handle that at the time. But the reasonable--the things that we can anticipate, reasonably do anticipate, which, in fact, have some major protest activity involved, we can handle under this budget the way we've constructed it. I would love to have a greater margin for error about that, but I don't.


Chairman Hoekstra. I mean, that is a concern. I don't think you have much of a margin for error. Your analogy may be right. I think the last two or three times we've gone through this, whether it's Kentucky or the 1996 election, we've always maybe had a one-ocean Navy and they've had--and they've been in two or three oceans, or we've been in the wrong one and we end up having to do it over.


Mr. Cherkasky. The only other thing I would say is that it certainly, when there's axioms of law, that justice delayed is justice denied--and we are--it's like on our protest activity, we try to do this within five days, three to five days. So, we're trying to get these right out.


Chairman Hoekstra. I think we need to go to Ms. Mink, then I'll go to Mr. Parker.


Ms. Mink. Okay, then I'll go to Mr. Parker.


Mr. Parker. Thank you, Mr. Chairman. Let me bring up just the Nash memo just a minute because I'm getting the idea--

Mr. Cherkasky. I thought I would get out of here without talking about the Nash memo.


Mr. Parker. No, I don't think so. The impression that I am getting is that the Nash memo concerned the 1996 election which was never certified. Therefore, you are looking at the coming re-election and not looking back at the 1996. Now of the 50 people that were listed on the Nash memo, you've basically just looked at the director of organizing, Mr. Muehlenkamp. So you have not looked into these other individuals as far as seeing exactly what went on during that campaign. You basically--you're in a situation where you were leaving it up to the Southern District of New York--their U.S. attorney up there. Is that a--


Mr. Cherkasky. Well, it's certainly fair to say that this is involved in active litigation right now, is our understanding, and it also is fair to say that our focus is the 1998 election. Having said that, as the decision indicates to the extent that history is a predictor of the future, we, in fact, went back and did look at certain of the activity that was going on in 1996 to determine whether--what's the likelihood of having the same kind of activity going in 1998. But you're absolutely right; our focus is 1998; our resources are devoted to 1998, and that we're not fundamentally going to go back and look at what happened in 1996.


Mr. Parker. One of the main problems that memo indicated was that you had union employees being paid by the union. Instead of doing their job, they were campaigning. Now that is a fundamental problem. Can we be assured that in what you have done, getting ready for this new election that is coming up, that that will not be repeated? And the reason that I point that out is because history does tend to repeat itself, and we're talking about 50 individuals who, the vast majority of those individuals are still in high positions of power within the IBT. If they did it one time, there may be a possibility that they'll do it again. Are you looking at that?


Mr. Cherkasky. Well, it was an enormously disturbing memo, and it was something that it took us a long time to resolve because we spent a lot of resources in it. It is certainly one of the most significant issues. That is our challenge to make sure it does not occur. It goes without saying, but I'll say it: It's completely unacceptable to have the union pay for partisan political activity as long as that's what they're paying for. Now, the proof of that is difficult. When, in fact, you have someone who is doing a union--a legitimate union activity, and he or she also may be doing something that also has ancillary positive impact on someone's campaign, the proof is difficult. But it's something that we are--I think it's fair to say we are all over that kind of issue.


Mr. Parker. Okay. What steps are being taken to make sure this does not occur during this re-election?


Mr. Cherkasky. I think that the steps that--I think Sever is a pretty good example of what, in fact, we're willing to do to make sure that this kind of politicization of the Teamsters headquarters does not occur.

One of the things that we have going right now, very honestly, it's a problem for the union, which is that they're not--the headquarters is not unified, but it also is--allows us to have access to people of different political persuasions who are going to talk to us about what's going on in that union, where things are occurring. And we certainly have a number of different individuals who, in fact, do talk to us about different things that the union leadership--or local unions--are doing as to politicize this process.


Mr. Parker. So you think you've got a handle on this?


Mr. Cherkasky. You know, this is one that I don't want to be arrogant about. This is tough stuff, and there is no silver bullet on this. We understand the problem. Certainly, I think the IBT understands, their membership understands that this is a terribly serious thing. I think that, as much as we can, we're there, but I'm not going to tell you that it's not going to be kind of an ever-vigilant struggle, because it's tough.


Mr. Parker. Mr. Chairman, can I ask one more very brief question?

This $250,000 contingency fund, the majority of it's been raised by Mr. Hoffa, who's a candidate. I understand there's no limitation on you as far as how this money is spent. So if a situation came up where there was a complaint against Mr. Hoffa, would you feel any hesitation whatsoever as far as using that $250,000 raised by Mr. Hoffa to investigate a complaint?


Mr. Cherkasky. I don't want to split hairs with you about who raised it. It's certainly my understanding that Mr. Hoffa was very much in favor of having this election supervised, though I think that all the candidates, in fact, said they were very much supportive of that. But it, in fact, is not coming from him specifically; it's coming from certain locals that I've heard have connections to him. But I don't know that.

I think that the District Court was concerned with that issue and the District Court, in fact, very specifically has put in some kind of safeguards which it believes effective, and I believe are effective, in having that money deposited so that it can't be withdrawn if, in fact, we were to go out, have a serious allegation, and investigate Mr. Hoffa, or those local union leaders. We're in no way beholden to them for their money. And, so, it's easy for me to say that, no, I don't believe it will have any impact on us.


Mr. Parker. Well, let me just mention, the reason that I asked that question is because you can bet your bottom dollar--this just being from somebody whose been around politics a little bit--that whoever's investigated, and if they're not a Hoffa person, they're going to immediately say that Hoffa is forcing the situation. So, I just--


Mr. Cherkasky. Mr. Parker, I've learned a little bit during this period of time.


Mr. Parker. I'm sure you have--learned more than I would want to.

Thank you, Mr. Chairman.


Chairman Hoekstra. Thank you.

I'm assuming that, as different people go through the process, you do read all of this stuff about what's happening in Kentucky or what the Southern District is doing or what we're doing, and you try to learn and figure out what may or may not--what you may or may not--what you should or should not be looking for?


Mr. Cherkasky. We try to do it from all sources that we can possibly have as to information about the Teamsters. We literally have our computer runs picking up whatever information is out there, yes, sir.


Chairman Hoekstra. Because I agree with you; I think you've got a tough job. I think we've probably got the right person in the job--better you than me--and that we're going to stay on this. There are a number of issues that we want to take a look at yet, that would go well beyond what is--today we've been focused pretty much on what has gone on within the Teamsters.

We haven't taken a look at the money swaps. We haven't taken a look at involvement with Federal agencies and those types of things, or even what's going on here in Kentucky. But those are things that are now moving to the forefront as we complete an interim report. We'll move on to some of these other issues where it's as ugly, if not uglier, than where we've already been.

But it would be a significant help to the process when you get your work done, when you have a legitimate election that is completed, and we have an election that's certified and we have a new president, whoever that may be, within the Teamsters, but at least we have somebody who then, at that point and time, has legitimately been elected.


Ms. Mink, do you have any comments?


Mrs. Mink. No, Mr. Chairman.


Chairman Hoekstra. Okay.

So, we'll stay in touch. We'll continue our observations and oversight and feedback from you. Ms. Mink and I talked with you last night about some of the things that we would like to perhaps have out of a statement from you at the end of this process about what you've learned about American labor law; what we might need to take a look at legislatively to clean up this process, not only for the Teamsters, but for other unions and other organizations in this type of arena. You're going to know more about this than what you ever probably wanted to know. And you'll have done it and so we'll be able to learn from you.

But we wish you success over the next two-and-a-half, three months. We're here to work with you in whatever way we can to support your efforts to make sure that you get the work done and get it done well.

Thank you very much.


Mr. Cherkasky. Thank you.


Chairman Hoekstra. The subcommittee will be adjourned.


[Whereupon, at 10:39 a.m., the subcommittee adjourned subject to the call of the Chair.]