Serial No. 106-52


Printed for the use of the Committee on Education

and the Workforce














Table of Indexes……………………………………………………………………...157




The subcommittee met, pursuant to call, at 2:30 p.m., in Room 275, Rayburn House Office Building, Hon. Peter Hoekstra [chairman of the subcommittee] Presiding.

Present: Representatives Hoekstra, Norwood, Hilleary, Schaffer, Roemer, Scott, Kind, and Ford.

Staff Present: Robert Borden, Professional Staff Member; John Loesch, Professional Staff Member; Patrick Lyden, Legislative Assistant; Michael Quickel, Staff Assistant; Michael Reynard, Media Assistant; Mark Rodgers, Workforce Policy Coordinator; Rob Sterner, Paralegal; Matthew Tallmer, Professional Staff Member; Gregory Jefferson, Minority Counsel; Cassandra Lentchner, Minority Special Counsel; Brian Compagnone, Minority Staff Assistant; and Pat Dugan, GAO Detailee.



Chairman Hoekstra. The subcommittee will come to order. Today we are here to take a look at a case study.

Teamsters Local 560 in Union City, New Jersey was at one time a symbol of the power and arrogance that organized crime had achieved in this country. For more than 30 years, Local 560 was dominated by the notorious Provenzano family. The Provenzanos, who were linked to the Genovese crime family, used Local 560 to carry out a full range of criminal activities including murder, extortion, loan sharking, kickbacks, highjacking, and gambling.

In 1982, the U.S. Department of Justice in a novel attempt to clean up Local 560 filed a civil RICO lawsuit against 12 individuals. This lawsuit was the first of its kind against the union. The government alleged that these individuals had violated the RICO statute by engaging in a pattern of racketeering activity which included murder, numerous acts of extortion, and labor racketeering. After a lengthy court trial and exhaustion of all appeals, Local 560 was placed into a trusteeship on June 23, 1986.

More than 13 years ago. That is a long time.

On February 25, 1999, after nearly 13 years of close government oversight, a Federal judge in New Jersey ended the trusteeship of Local 560 and returned the union to its members. When the court first imposed this trusteeship back in 1986, no one envisioned that it would take more than a decade to eliminate racketeering and restore the democratic process to the local.

The job proved to be a major challenge and required an evolution of change in the entire culture of the union. We are very fortunate here today to have a panel of witnesses with in-depth knowledge of the Local 560 trusteeship. The subcommittee is looking forward to learning more about local 560's efforts to clean up their union; specifically, what worked, what didn't work, and what criteria was used to determine that the trusteeship should be lifted. This information will be helpful as the subcommittee continues to monitor the International Brotherhood of Teamsters and the 1989 Consent Decree. Mr. Roemer.




Mr. Roemer. Thank you, Mr. Chairman. Mr. Chairman, first of all I would like to start by thanking you for the bipartisan manner in which we were able to conduct the field work in preparation for today's hearing. The cooperation across the aisle has allowed us to compile a fair and accurate portrayal of the history and reform efforts of Teamsters Local 560 over the past 15 years. I am encouraged by the bipartisan working relationship that has developed in the subcommittee and hope to see it continue in other matters as well.

Thank you for your leadership. I would also like to extend my thanks to the members of today's panel. You are representative of a process that has worked and shown that the democratic process can prevail. While it is of the highest importance that organized crime not be allowed to flourish in individual unions, it is equally important that those unions are allowed to manage their own affairs without government interference once they have shown their commitment and effectiveness in eradicating corruption.

Teamsters Local 560 was a different environment 15 years ago. A history of corruption going back to the 1950s led the Federal government to bring a RICO case against the local which resulted in the very first application of a RICO trusteeship. The trustee was to serve as the local's executive board until it had been determined the membership was able to freely nominate and elect its leadership. Today we can say that Local 560 has reached that status.

Thanks to the cooperation of the Department of Justice, the Federal courts and the membership of the local, true union democracy has been achieved after years of accomplishments accompanied by setbacks. With us today is Edwin Stier, the former trustee of Local 560 whom I would like to thank for his dedication to the union during his tenure which won him the respect of its membership.

I would also like to congratulate another panelist, Mr. Peter Brown, the democratically elected president of Local 560 who, despite his own frustration with the corruption that existed around him as a member, stuck to his principles and sought to take the burden of leadership upon himself. Mr. Brown can be proud of the people and the organization that he represents today.

In closing, I would like to thank Chairman Hoekstra and today's participants. I am also interested in hearing success stories, and I look forward to hearing the panel's testimony today.


Chairman Hoekstra. I was not going to go through the introductions again since my colleague so ably introduced Mr. Stier and Mr. Brown, and our third witness is here. She is in the back. She is Dr. Kaboolian, Associate Professor of Public Policy at Harvard University John F. Kennedy School of Government. She is quite familiar with the evolution of reform at Local 560 and through research funded by the National Institutes of Justice, she has examined the strategies of the Justice Department, the court, and the trustee for eradicating organized crime and restoring democracy to Local 560. Good afternoon to you, professor.

Ms. Kaboolian. Thank you, Mr. Chairman.

Chairman Hoekstra. Mr. Stier, we will begin with you.



Mr. Stier. Thank you, Mr. Chairman and members of the committee. I am honored to be here. I am honored to be here on my own behalf. It is always, I think, inspiring to come into the halls of Congress and be asked to testify and provide information to committee. I am also honored, on behalf of the people that I have worked with for 15 years at Local 560 because it is the people of Local 560, the members of Local 560, who deserve the real credit for the successful completion of this trusteeship. My job was to facilitate a process by which the membership could achieve that success. What I would like to do is to spend just a couple of minutes outlining some of the major principles that, I think, can be derived for trusteeships from the experience that I had at Local 560.

You have a copy of my final report to Judge Ackerman that includes a narrative of the history of the trusteeship, an analysis of the various stages that it went through, and my assessment of the conditions at each stage and why I believed at the final stage, just the end of last year, that we had reached a point where I could go to the judge with the support of the Department of Justice, the FBI, and the Department of Labor, and urge that the court release Local 560 from the trusteeship. That is, eliminate the role of the trustee in Local 560.


You also have the transcript of the hearing that occurred when Judge Ackerman considered that application at which representatives of those agencies appeared and described for the court on the record what had led to the trusteeship, what their observations were at each stage of the trusteeship and why they agreed with me that Local 560 deserved to be released from the burden of having a trustee.



There are several important lessons to be learned, I think, from the experience that I had at Local 560. Let me start out with the first of those lessons which is that we need to recognize that a RICO trusteeship is an extremely heavy burden. It is an extremely powerful weapon, and it should be used only under the most limited circumstances to achieve very specific objectives. That is that the whole notion of a RICO enterprise is that an institution that is important to society has been literally taken over by racketeers and is being run by them for their benefit and represents a threat to the general public because of the fact that it is controlled, dominated, and abused by racketeers.

Looking at the flip side of that idea, the processes, the internal controls that we typically rely on in our important social institutions to prevent racketeer exploitation simply don't work anymore in that case. And so we can't rely on the institution to protect the public from its misuse by racketeers. We don't impose a trusteeship because corruption has occurred. We use the criminal process, we conduct criminal investigations and prosecute people when we believe that corruption has occurred. We use a RICO trusteeship when we believe that the institution itself has been corrupted so that racketeering becomes self-generating.

Therefore, the goal is not to punish individual conduct, not simply to take over so that we can remove bad guys from the union. The purpose of the trusteeship is to reform the institution itself so that the institution becomes self-correcting so that the institution can then purge itself of any remaining corruption. I think it is really very important when you go into this sort of enterprise, that is, as a trustee, that the objective be defined very, very carefully, and that measures of success or failure be defined very carefully so that you remain focussed on the objective of helping the institution itself. In this case, help a union reestablish the capacity to protect itself and the public from racketeer exploitation.

The second point that I want to make is that the role of a trustee, particularly somebody with my background, as you may know from the information that you have received, I did not come to this job because I had experience as a labor leader. I was appointed by Judge Ackerman, because of my experience as a law enforcement official.

I had spent 17 years investigating and prosecuting organized crime in New Jersey, at the Federal and State levels, and Judge Ackerman believed at that stage, and I was the second trustee, the first was in place for 10 months, that he needed somebody who would be more knowledgeable about and confrontational with organized crime.

It is a very difficult role. Your job is not to identify and remove criminals. Your job to help the union reform its culture, which is a very different kind of role for a former prosecutor.

You can't impose that change on the union, as a trustee. It must come from the membership itself. So, the strategies that you develop as a trustee must be strategies that include the membership. You must be prepared to participate in an honest, open, and forthright way with the membership in helping to reform the union.

To a certain extent your role is self-defeating. The more active you are as a trustee, the more it costs the union. They are paying for your time and the more you run the risk of stigmatizing those who cooperate with you and support you as government supporters, government advocates, government agents, which in the context of a union, even the most honest union, can hurt union members politically. You have got to be very careful to strike a balance between imposing high costs and stigmatizing the people that you need for support to help the membership reform itself.

In the process, you have to develop an understanding for trade union values and the trade union perspective. You can't set expectations that are based on your point of view as a prosecutor. You have got to look at the world through the eyes of somebody who is a member of a labor union and depends on that labor union for there livelihood and for protecting their livelihood.

The other side of your responsibilities involve dealing with the government, the Department of Justice, the FBI, and the Department of Labor, who are not always on the same schedule you are and don't always see things the way that you do. So, the trustee can become somewhat caught in the middle. It is up to the trustee to maintain credibility on both sides with the government and with the union.

The third point that I want to make is that, as the trustee, you have got to help the membership develop the capacity to reform the culture of the union by defining standards of conduct, goals that are clear, reasonable, and attainable. That is, the membership needs to know what it has to do in order to bring about an end to the trusteeship.

Those goals and objectives need to be defined in terms that the membership can understand, are realistic, and that become part of their culture, part of their value system; not simply goals that are hoops that they have to jump through in order to get rid of the government. They have to truly believe that what you are trying to achieve with them has a value to the union itself. I spent a lot of time working with the elected officials of the union to, assure them that they were going to be judged on the basis of fair and objective standards. In some cases, particularly early in the trusteeship, I was dealing with people who had very close associations with the Provenzano group. My position was that as long as you are not barred from holding office in this union, I am going to treat you as somebody who could remain in this job after the trusteeship is over, unless you violate standards of conduct that all of us agree should control the conduct of a union official.

Basically, the standards that I set were quite simple. You have got to protect the assets and resources of the union, that is, you can't steal from the union or the pension and welfare funds. You have got to represent everybody in the union in an evenhanded way, not taking care of your friends and hurting your enemies, but representing everybody in a way that protects their interests as union members.

Each member of the executive board, each official has his own individual fiduciary responsibility to assure that every other official of that union is behaving in a responsible way. One of the most important provisions of Judge Ackerman's opinion had to do not with the Provenzanos and the others who were guilty of various crimes, including extortion and murder, but with those who sat back and facilitated what they did by failing to respond when it was clear that crimes were being committed that victimized the members and the general public.

The final point that I want to make is that to achieve the successful conclusion of this trusteeship, I had to work very closely with and establish a very open dialogue with the leadership of Local 560, all of the leadership of Local 560. I had to understand how they thought, and they had to understand how I thought. As we worked together over time and as it became clear what my expectations were, more importantly, that those expectations were the same expectations that a leader of any union should have for the way in which leadership should conduct itself, we began to work for the same goal.

That same goal was to bring an end to the trusteeship. That has been my objective from day one. It took 12 years, but frankly, I wish that it had occurred even sooner. My job was to work myself out of a position. As I said over and over again to every leader of Local 560 from the day that I set foot in the union hall, no trusteeship can ever be viewed as successful until it is brought to an end.

That concludes my remarks. I certainly am happy to answer whatever questions the committee may have.

Chairman Hoekstra. Thank you very much.


Chairman Hoekstra. Mr. Brown.





Mr. Brown. Good afternoon. My name is Pete Brown. I have been a teamster for 30 years and a member of Local 560 for more than 20 years. I have been through the trusteeship from the beginning to the end. I am currently the president and principal officer of Local 560.

First, I would like to thank you, Chairman Hoekstra and the other members of the committee for the opportunity to testify about the trusteeship, both for myself and for the members of Local 560. It has been a long and sometimes painful process, but I think that we have learned from it. I think some valuable and extremely important lessons about the union and government and organized crime.

I have two principle observations. I don't believe there is a place for government in unions. A union is for the members and it must be controlled by the members and not by any outside authority. Even less than the government, there is no place for organized crime in any union, for that matter, anywhere in society. I was a member and a shop steward during some of the darkest days of Local 560. I saw and experienced firsthand what organized crime could do to the local members. Members were intimidated from expressing their own opinions and disagreements. They were intimidated from participating in the union. I myself was intimidated and threatened. Sometimes it was subtle, and sometimes it was not so subtle.

The union was a burden that members suffered. It did not negotiate good contracts, good wages, or good benefits. It existed for the benefit of organized crime, members who controlled the union, but not the members. When the trusteeship was imposed in 1986, I had my doubts that it could work, but I was hopeful that it could. In my opinion it worked because we ultimately got the right person as trustee who had the right ideas of the purpose of the trusteeship, and he held to that idea no matter how difficult it was.

The right person was Mr. Ed Stier. Although Mr. Ed Stier was from a law enforcement background, he was cautious about imposing his own ideas on the union and the members. He was willing to listen and learn. And as you know, he hired experienced teamster, Frank Jackiewicz, a man who knew how to run a teamster's local.

The right idea, which Mr. Stier came to hold, was that the only purpose for the government and Local 560 was to eliminate organized crime and its influence to enable the members to resume the real control of the union in its own affairs. It seemed simple to state at the time. It seems simple to state this idea now, but it was not obvious at the beginning and it was often difficult to keep the Government role in the union so limited.

The temptation was always there for Mr. Stier to make decisions himself rather than allow the members to make those decisions. To his everlasting credit, Mr. Stier limited himself as much as possible to ridding the union of organized crime, and he allowed the members to regain control of the union. The key event in the trusteeship was Mr. Stier's decision to allow the members to elect an executive board to run the union.

It was a difficult decision for me to run in that election. Over time the executive board acted to remove officers who demonstrated they were still controlled by organized crime and officers who demonstrated that they would not or could not serve the interests of their members. We, the members, began to gradually resume control of the union. Members were able to express their opinions without fear or intimidation. With the participation of members, we began to negotiate good contracts, good wages, and good benefits. As we all did, we came to realize what a union should be. We came to understand what organized crime had taken away from us.

I am pleased to say that we at Local 560 now have the best wages that we do, the best benefits that we do and the best contracts in the area, bar none. We have doubled the retirement benefit. We have done that in just 4 years time. Our members now have increased health and welfare benefits, and we have some of the best in the country.

We now have come to the point not only that organized crime has been eliminated, but the members recognize what organized crime took from us. They never want that influence back into our union.

Mr. Brown. This fact is demonstrated by the recent election in Local 560. Almost 50 percent of the members voted in that election. The high turnout shows that the members are interested in the local union.

The slate that I ran on, the Brown slate, won 55 percent of the vote. We did this despite a constant barrage of campaign literature from our components that labeled us government men. Men who owe their loyalty to the government not to the members, but the members knew better. The slate headed by members associated with the old ways of Local 560 pulled only 25 percent of the vote. Clearly the members have rejected organized crime and its influence but the transformation of the union came not without great cost. The trusteeship cost Local 560 more than $3 million.

Chairman Hoekstra.Mr. Stier believes you got a bargain.

Mr. Stier. I didn't get it.

Mr. Brown. Even so the $3 million spent on the trusteeship meant that the union was not able to spend the money on things like organizing, education, member seminars, grievance procedures, and other membership benefits. This was a tremendous burden on this local, even though I believe the results ultimately justify their cost.


Mr. Chairman, and members of the committee, I come back to the lessons that we have learned. The only role for government can be to eliminate organized crime.

Two, the role of government must be limited to this goal. Government cannot become involved in the internal politics of the union. It must not act to favor one faction or another within that union.

Three, government supervision is fundamentally inconsistent with a union. The supervision is extremely costly both in terms of money and in terms of denying membership democratic control of the union through officers of their choosing, and that is very important. We must have that right to choose our own people. As soon as the influence of organized crime has ended, the government must go.

Thank you again for allowing me to testify. I will be pleased to answer any questions you may have. I have attached for your review at the end, the results of the recent election that was posted in Local 560 in December.

Thank you, sir.


Chairman Hoekstra. Thank you very much and I think one of the real encouraging things as we talked with you and Mr. Stier before the hearing began is the relationship and the partnership that you two have forged over 12 years.

Mr. Brown. He is my friend.

Chairman Hoekstra. That is great. And the process and the results indicate that that kind of partnership does work.



Chairman Hoekstra. Thank you. Professor Kaboolian.





Ms. Kaboolian. Thank you. I apologize for being late. Traffic in Washington is even worse than it is in Cambridge.

Thank you very much for the opportunity to discuss Local the 560 trusteeship and its lessons both for future trusteeships and possibly for the granddaddy of all trusteeships, that of the IBT.

Since 1987, I have closely studied the RICO trusteeship of Local 560, IBT. Ed Stier called the National Institute of Justice and requested that a researcher be found to document his efforts and evaluate them, and I was selected to do so. In addition to Local 560, in much less depth, I have examined the administration of the other local RICO trusteeships and the trusteeship of the IBT and the Laborers International Union. I believe that this research generates lessons for the future.

Immediately, and I can take them right out of the work that I did for Local 560. Immediately following the election in 1988, which returned to power the proxies of the corrupt former leadership of the local, I conducted a telephone survey of 600 members of Local 560 to understand their view of the role of organized crime in their union, the Government's efforts to reform the union, and the reason that bad actors were returned to office.

My survey led to a deeper understanding of the perception of the Government's role and the effect of the Government in Local 560.

For instance, I found as Mr. Brown and Mr. Stier have both said, that the Government was deeply resented by the membership. A resentment that led to quite a lot of resistance to the Government's efforts. The remnants of the former leadership had mobilized opposition to the reform efforts under the banner of, quote, union busting, and their efforts were supported by a foundation of extremely deep distrust of outsiders in general and of the Federal Government in particular.

The membership, to a large extent, believed that the former leadership was in fact corrupt and undemocratic. They were aware or had experienced the Provenzano regime, and I think you heard very eloquently from Mr. Brown, a first person eyewitness description of the lack of union democracy, the intimidation and what kinds of fears people felt if they spoke up. But I also found that these members had joined a union for and felt that they needed the services of a union organization and an organization, in particular, because of the structure of their industries which controlled their employment, managed their pensions, and doled out their health benefits.

For these members it was economic issues and not the pleasures of democratic process and deliberations that was on their mind, both during the Provenzano regime and during the early years of the trusteeship. It is much less clear to members and indeed it is very hard to quantify exactly what the true cost of corruption and organized crime is to a local union. Much clearer to the membership was that the trusteeship was not, quote, Teamster, it was not union and it was financially costly.

I concluded that there was a need for the trusteeship, and of course it was Mr. Stier, to shift the strategy from a prosecutorial focus to an organizational reform effort which focused on structural changes in the union, and Mr. Stier elaborated on this to the development of leadership capacity inside the union. What were needed were leaders that could shoulder the enormous and complex responsibilities of the union with the size and the assets of Local 560, assets that today are probably close to a billion dollars.

What was needed were leaders who were clean but also demonstrated strength and instilled the confidence in the members about their capacity to represent them. Mr. Stier subsequently embarked on a strategy that in part offered natural leaders like Mr. Brown the opportunity to make themselves more visible and become more active in the affairs of the local and in part provided opportunities for new leaders to develop and demonstrate their abilities.

Again, it was a very important balancing act not to favor any one faction, an extreme, maybe with the wisdom of Solomon in many ways, to bring forward people of a variety of factions. He offered people a wide variety of challenges and tasks that would help them to hone their own skills. He also instituted structural reform such as the seniority list for the construction industry which undercut the power of the corrupt elements that were still in place.

Now, I am under no illusions. This was not a democratic process. Indeed Mr. Stier, with the consent of the court, eventually removed all of the elected executive officers and replaced them with hand-picked executive committee members. However, elections did continue at the shop floor level for stewards and it was from this pool that Mr. Stier often found capable candidates and where natural leadership began to rise through the ranks.

In 1998, Mr. Brown and his slate were elected to office in a contested election. I observed the vote count and the reconciliation between the winning and losing factions immediately following the vote. I also witnessed the spontaneous testimonies to Mr. Stier by the winners and losers for having brought the local to this point where they could manage their own affairs. Now, after consultation with law enforcement agencies, and concluding that organized crime had loosened its grip on Local 560, Mr. Stier petitioned the court and lifted control of Local 560 to the executive committee.

Now, this is a very different story from those of the other local RICO trusteeships. While all of these began with very vague and ill-defined goals, all of them had trustees, none of whom had job descriptions, all had been extremely financially costly and in many cases, not Local 560's case, but in many cases were financially ruinous.

Only Local 560 has seen a real transformation. I attribute this difference in large part to Mr. Stier's strategy and to Mr. Stier himself and the way that he conducted himself. But, the Local 560 trusteeship is not a model of union democracy but a well coordinated strategic thinking and execution over a prolonged period with the goal of developing legitimate processes and leaders to take control of the union. It is certainly not a model of a well-coordinated effort between Federal agencies. There are many parallels between the IBT and Local 560, both organizations have been scrutinized by the federal prosecutors for decades, leaders of both organizations obviously have gone to prison, and both have members who are extremely leery of outside intervention and resisted. Even members who are, in fact, in favor of reform are leery of outside intervention and resist it.

The structure of the trusteeships of these two unions are similar as well. Neither had well defined goals, neither could point to a set of measures which if achieved would indicate that success had been attained. Neither offered any guidance to the trustees or held them accountable for their performance. Both relied heavily on prosecutorial strategies for that, after all, is what the Internal Review Board is.

It relies on others rather than on Teamsters to reform the union and it focuses on routing out individual level corruption rather than structural level reforms. The Local 560 trusteeship departs from the IBT in that it was both fortunate to be led by Ed Stier who was both dedicated and hard working, and also with Mr. Stier's strategy in mind, this strategy stressed structural reforms, the development of leadership capacity and most importantly, the shifting of responsibility for reform to the indigenous leadership.

These along with close monitoring by Mr. Stier, I believe, explains the transformation of Local 560. So the lessons that I draw from Local 560 for the IBT trusteeship are several. Would you like me to continue or stop for questions?

Chairman Hoekstra. Please continue.

Ms. Kaboolian. Corruption is deeply routed but not necessarily only located in individuals. The process of routing out corruption requires the involvement of others. It also requires monitoring by external parties. No hero is going to ride into town like a western and reform these organizations, and it would be shortsighted of us to wait for somebody like that to come.

Only individuals who have had the opportunities to demonstrate both their strength of leadership and their competence in the core functions of the union will win the support of members to do the hard work of making change. Change, I believe, can be measured, in part, through the assessments of law enforcement agencies but also, in part, through listening to the voices of the members. Elections with low turnout are very imperfect assessments of the members’ sentiments and must be supplemented by more systematic efforts.

Lastly, corruption in the IBT has held the government's attention; and attempts to reform the IBT have been going on for 40 years in a variety of guises. Should the trusteeship be lifted now, I believe it is unlikely that the opportunity to intervene will occur again in the foreseeable future. It is for that reason that despite the very imperfect reform effort to date, that I believe immediately lifting the trusteeship at the IBT is not in order.

But I do believe that a plan should be implemented immediately which includes the participation of the members and the various political factions in the union, a plan that is organized around well-defined measures that indicate change, and an assessment strategy to measure that change so that the union can as quickly as possible return to control of its own affairs.

Thank you very much.

Chairman Hoekstra. Fascinating.



Chairman Hoekstra. Thank you to all three of you for being here. I wish you had been here about a year ago, but your work wasn't done a year ago. I think it would have given us some additional insights as we took a look at what was going on at the IBT and those types of things.

I have lots of questions. Mr. Stier, when we were talking earlier, you indicated that one of the roles that you saw as the trustee was to serve the members.

Mr. Brown, you also alluded to it in your statement, I believe, where you talked about how you have been able to improve the benefits, the health and pension benefits for your workers.

Mr. Stier, over the period of time that you were trustee, what happened to the finances of the union?

Mr. Stier. Well, we have to take it in two parts. The union itself became somewhat healthier, that is the union as an entity, somewhat healthier. When we got there, there were no liquid assets and I think when we left, that is 18 months later, I ran the union for 18 months. When Frank Jackiewicz and I left after those first 18 months, I think we left something like $350,000 in the bank.

So, I am very pleased to say in terms of the union itself, we watched every penny and tried to conserve as much as we could, control the cost of the trusteeship and out of the $3 million that Mr. Brown alluded to, I think includes a lot of costs that were beyond the trustee himself, various legal services and accounting services and so forth.

But the more important point, I think, is the condition of the benefit funds. When we got there, the pension fund of Local 560 was headed for bankruptcy. It had been administered by investment managers that had been selected by the former administrations. The fees and commissions were extremely high.

After a good deal of study, we reinvested all of the funds in very conservative ways and I am very pleased to say that after 10 years, and we reinvested in 1988, and 1998 we did a reassessment of the results. We found ourselves a hundred percent funded. We raised pensions. I think that under Mr. Brown's administration we were able to double the pensions, and those pension funds are continuing to grow. Now, one might ask whether that wasn't just a function of the bull market.

Chairman Hoekstra. Mr. Scott would say that it is the result of a Republican Congress and the stock market but go on.

Mr. Stier. Well, we did a comparison. We looked at the performance of the investment managers that had been there over the same 10 years and calculated where we would be if they had remained in place. Our funds now have about $500 million, $550 million in them. Had we remained with them, we would have had $100 million less.

If an earlier decision had been made to invest according to the strategy that we put in place, which as I said was a very conservative strategy, nothing fancy about it, they would have had $150 million more than we were able to generate because there would have been an earlier period of income.

I think that more than anything else had an impact on the members. They began to realize that they had been exploited for the years during which their pension funds were under the control of the former administration. The reaction that I began to see among the members to that was one of the major factors that led me to believe that the membership had reached a stage where maybe it was time for another executive board election.

Chairman Hoekstra. You managed the pension funds, correct?

Mr. Stier. I am the chairman of the pension funds, yes.

Chairman Hoekstra. And you still are?

Mr. Stier. I am at the request of the union.

Chairman Hoekstra. So you have been there for 10 years, and Mr. Brown and the leadership of the union have asked you to continue?

Mr. Stier. Twelve years and they have asked me to continue.

Ms. Kaboolian. Is that just the union?

Mr. Stier. I am reminded by Dr. Kaboolian that it was not just the union trustees but the employer trustees. It was a unanimous decision. The request was made by the union, but all of the trustees asked me to stay on and remain as the chairman because of the working relationship that we have developed.

Chairman Hoekstra. What happened to your monitoring of the general funds of the union after the 18 months that you served as trustee? You obviously still had some oversight. Did you get quarterly statements or yearly statements or did you basically walk away?

Mr. Stier. No, I received monthly trustee reports. Every Teamster local has to issue a monthly report by the three trustees of the union that lay out the current financial condition of the local. I would also receive a copy of the check register, just a printout showing the checks that had been issued by the union that month.

Chairman Hoekstra. Did you ever reach a point where you left after 18 months, the liquid assets were 350, did you ever get to a point where you saw them going the wrong direction, I have to get them in here and say what are you doing? I have got some questions.

Mr. Stier. Early on, early on during the Sciara regime, Mike Sciara is a Mafia member who controlled the executive board immediately before the trusteeship was imposed and whose representatives led by his brother were elected to office in the first election that was held under the trusteeship in 1988.

When that administration was in place, they reached a point where they had spent something like $200,000 in a year on legal fees calculated to end the trusteeship, and I raised a question with them about whether that was prudent on their part to be spending that much money of the membership's dues to fight the trusteeship.

That was the only time that I have raised an issue. They have known that I have been monitoring the administration of the union's financial affairs. There have been many times when members of the executive board, the president or the secretary-treasurer has called me up and told me that they were about to buy some new cars and basically what their plans were. It was much more of an informal communication than it was any sort of formal monitoring.

I kept the accounting fees to a minimum that I might require, didn't have my own auditors in there all of the time looking at the financial affairs of the union, but I felt very comfortable, particularly after the first couple of years when there began to be some changes in the composition of the executive board. I felt very comfortable with the way in which finances of the union were being handled.

Chairman Hoekstra. I am assuming, Mr. Brown, and Professor Kaboolian, that the relationship that Mr. Stier developed and the ongoing improvement in the financial condition, both I am assuming in the general funds and the significant improvement in the pension funds helped to alleviate this fear or this perception of here is the government guy and he is here to help. With a great deal of skepticism, I think, Mr. Stier, you said it earlier, maybe not in the hearing, your view was that you need to serve the rank and file, and by improving the financial conditions in the union's two major funds, they saw that were you helping.

I am going to go to Mr. Scott.

Mr. Scott. Thank you, Mr. Chairman.

Mr. Brown, just a little background, how many members do you have in your local?

Mr. Brown. Approximately 4500 members.

Mr. Scott. What geographical area does it cover?

Mr. Brown. We basically cover central New Jersey, northern New Jersey and some portions of New York.

Mr. Scott. What major businesses are covered by the union?

Mr. Brown. We have a potpourri of contracts. We have a general freight contract; we have what we refer to as white paper contracts who take in for instance chemical companies, food processing companies, general warehouse companies, anything that you can name. We have school custodians, school secretaries, DPWs, construction.

Mr. Scott. The $3 million that was paid over the 15 years, that was paid by union dues?

Mr. Brown. That is how the money was gotten, yes, through union dues. And if I may say, Congressman Hoekstra, and yours with the bull market, we can't attribute it to that.

Mr. Scott. It was actually the Democratic budget in 1993 without a Republican vote.

Mr. Brown. That comes to us mainly through employers’ contributions; and over the last 5 or 7 years, we have negotiated the contracts getting higher contributions in both pension and welfare from the employers.

Mr. Scott. Mr. Stier, you mentioned investment advisers that charge high fees. What do you mean by high fees?

Mr. Stier. Well, we looked at the market for active money managers and hired consultants who knew the marketplace, and we were told that we were paying fees and commissions, that is fees to managers and commissions on the transactions, on the purchase and sale of securities, that were at the upper end of the range within the industry. It didn't exceed the upper end of the range, it was within the market, but it was much higher than funds of our size could have paid. And the test of it was that we went to our money managers immediately and said we are not paying these fees and negotiated dramatic reductions.

Mr. Scott. Usually the fees are around 1 percent of the size of the fund.

Mr. Stier. I don't remember what the fees and commissions were. That goes back 10 years ago now.

Mr. Scott. Were you working full time in this position?

Mr. Stier. For the first 18 months, yes.

Mr. Scott. Where was your office in the first 18 months?

Mr. Stier. I was in the same office that Pete Brown has now, that Tony Provenzano had before I got there.

Mr. Scott. After the 18 months you were not full time?

Mr. Stier. Yes.

Mr. Scott. Where was your office then?

Mr. Stier. I went back to my law firm.

Mr. Scott. Did Frank Jackiewicz remain at the local?

Mr. Stier. No, Frank had retired as the principal officer of another local before he came in with me to Local 560.

He promised his wife that he would take her on a vacation. He postponed that for 18 months while he worked with me; and immediately after the election in 1988, he took his wife on vacation and hasn't come back since.

Mr. Scott. Mr. Brown, you knew that organized crime was involved in the union way back before Mr. Stier was there?

Mr. Brown. Yes.

Mr. Scott. Why couldn't the normal democratic process of elections vote people out of office that were involved in organized crime?

Mr. Brown. Well, sir--

Mr. Scott. Did you not have secret ballots?

Mr. Brown. You did not. Most of the time you got up at the union meeting, if they suspected you of being an opponent, you would get your head busted at the union meeting and if not there at the freight dock making a delivery. They were very intimidating.

When they did run election, you came to the polling place to elect, it was a physical appearance and you ran the gauntlet of going down to this poll. It was an intimidating process.

Mr. Scott. Was the ballot cast in a secret ballot.

Mr. Brown. It was.

Mr. Scott. But because of the intimidation nobody ran?

Mr. Brown. Because of that type of intimidation and the way that the balloting was set up, most people stayed away. The only people that felt comfortable going there were the ones there to vote in favor of the Provenzanos.

Mr. Scott. How often do you have elections?

Mr. Brown. December was the one that I ran in. Before that was 1989, I believe.

Mr. Scott. Ms. Kaboolian, do you agree that unless there had been a government takeover, that there was no way that anyone could reasonably be expected to vote organized crime out of the union?

Ms. Kaboolian. Yes, I do agree.

Mr. Scott. Thank you.

Chairman Hoekstra. Mr. Kind.

Mr. Kind. Thank you, Mr. Chairman. I want to thank the witnesses for your presence and testimony here today.

Mr. Stier, you keep your work up, you are going to give a whole new meaning to the phrase I am from the government and I am here to help.

I want to commend you for the work that you have done. You and Mr. Brown have established a good and trustful relationship, and it is nice to hear the success that you have reached and all of the hard work is starting to pay off. I am somewhat familiar with Local 560 and how organized crime seeped in with the Provenzano regime and then the work that the McCollum committee did in the late 1950s and the continuation of what took place in the 1960s, and let's say that Local 560 has come a long ways today.

Mr. Brown, my father was a labor leader with Local 990 IBEW in La Crosse, Wisconsin for over 35 years repairing telephones the whole time, and there is probably no finer example of good representative democracy than the inner workings of good local unions and participation of the membership in that, and it is heartbreaking to see some locals being taken over by criminal elements.

I want to compliment you for the courage that you have displayed with the previous administration, speaking up when you saw some injustices and wrong things happening, and for the leadership that you have performed. I think everyone would agree that it takes more than just one person riding in on a white horse to make a union function as it is supposed to, and it ultimately comes to the union membership and how actively involved and people willing to listen to their voices and provide leadership when they can and empower the membership with the choices that they are offered.

Mr. Brown. Thank you for those kind words.

Mr. Kind. You are welcome. The question that I have, what assurances can we have today given how organized crime seeped into Local 560 in the past, what assurances do we have that we won't see a repeat of this in the future now that it is out of trusteeship?

Mr. Brown. From my perspective as the principal officer running this on a daily basis, all business agents are completely trustworthy. If corruption does come back into Local 560 or attempts to come back into Local 560, from previous experiences we feel that it would try to come back in through the construction area. That would be the area that was most prevalent with it. That is where all of the payoffs could be made, the least questions raised about these things.

We have good business agents. Those business agents work hard and they are completely trustworthy. By the way, none have been approached. They would report it to myself, and I would report it to Mr. Stier. In the beginning when we first came in, there were several employers who were told by other business agents that were still in place to watch out and not to deal with us because we were Government men; and I think that persona was given to anybody who was looking to pay off at that time about us and consequently nothing happened.

Mr. Stier. May I respond to that.

Mr. Kind. Yes.

Mr. Stier. The objective of the trusteeship was to make Local 560 as capable as an institution can be of protecting itself from organized crime intrusion. That does not mean that it can't be done, but it means that there are mechanisms in place, there is a culture in place, there are people in place who recognize the danger of organized crime and have the courage to stand up and to stop it before it reaches a kind of critical mass stage where you can't any longer protect the union from organized crime which is the stage that it had reached before the trusteeship.

Unions are susceptible to organized crime intrusion, but they are not the only institutions that are susceptible to organized crime intrusions.

Coming from New Jersey and having spent almost 20 years in law enforcement, I can tell you that virtually every segment of our government and our business community in New Jersey in one way or another back in the 1960s was heavily influenced by the presence of the organized crime. Just as we cleaned up organized crime in other institutions and made those institutions sensitive to the dangers of the organized crime, we have done the same thing now with Local 560.

What it takes now is for the leadership of Local 560, just as the leadership in the business community and the political level of New Jersey, to recognize that it is their responsibility generation after generation to pass on to new leadership the importance of acting with integrity. So long as we continue to do that, I think we will be able to keep organized crime under control. If we let up our guard, organized crime will come back in Local 560, as it will in government and in the business community in New Jersey.

Ms. Kaboolian. I would like to add that organized crime is still there. It is just playing a different role in this sense. It is there. There are numbers running in the area. There is loan-sharking. There is all of the evidence of organized crime activity. There are two big differences. The first is organized crime of the particular ilk that we are talking about, which has been depressed by prosecutions over the last 10 years so that many of the individual prosecutions have put away a lot of the players, and I think there is lots of evidence both in the New York and the New Jersey areas.

The second thing is that the enterprise is not controlled by organized crime, and that is a big difference. You have loan sharking and you have people saying do you want to place a bet, that is quite different from having an organized crime leader sitting in the president's office at the local and using the union as an asset as part of their organized crime empire. So I think that is the big difference.

And I think part of the reason that this union will remain resistant, at least in the near future, is that first there are some structural reforms. There is a lot more transparency in terms of the funds and how they have been managed. People have come to expect transparency. There is an ability for people to actually ask questions. There is information given.

When I showed up in 1987 at Local 560, most members had never seen a contract under that governed the terms and conditions of their employment. Almost none of them had ever seen an IBT constitution to know what their rights were. They didn't know that you were supposed to have elections every 3 years.

So there is a sense in which they have been organized and educated about what demands they could place on leaders, which means that they are going to keep asking those questions. And if they should get a leader who is not as responsive as Mr. Brown, people will step up to the plate because they have much higher expectations.

Mr. Brown made the point that the construction industry is one place where he might have concerns, and I think that structural reforms like a seniority list made an enormous difference. Instead of being able to control access to jobs, now there were fair rules and everybody could see transparency again, whether the rules were being followed. So if you were number three on the list, the third job was yours. In the old days, it was if you knew Joe or you kicked back to Joe. There was no transparency, and you didn't know why you didn't get the job. There was very different information assessments and conditions. I think those kinds of reforms will last.

Mr. Kind. It sounds like we run into similar types of problems in this institution, Mr. Chairman.

Ms. Kaboolian, are you in the process of providing an updated version of your previous study?

Ms. Kaboolian. I would like to once again ask the members of Local 560 after another election about this experience, both retrospectively in terms of what their assessment was of the conditions in Local 560 that led to this trusteeship, their assessment of the trusteeship and its effect on the union and explain why there was a very high voter turnout in 1998, which I think is very important because being elected by less than 50 percent of your membership is not much of a mandate, but Mr. Brown did actually cross over that threshold.

And so knowing more about their assessment and the choices that they had in front of them, not so much in terms of the men but in terms of the capacities, and what gave them the confidence to move with Mr. Brown in a new kind of leadership I think would be extremely informative.

Mr. Kind. Thank you, Mr. Chairman.

Chairman Hoekstra. Are you looking for another grant?

Ms. Kaboolian. Did I say that?

Chairman Hoekstra. I am just asking.

Ms. Kaboolian. Can we talk.

Chairman Hoekstra. I think what you have done in tracking this through for--.

Ms. Kaboolian. 13 years. He had hair when we started.

Mr. Kind. Mr. Chairman, I would certainly encourage a discussion along these lines. I think what has taken place already and getting this written and memorialized could be a tremendous benefit for other locals around the country but also for this committee in particular.

Chairman Hoekstra. I think it could be fascinating. Your grant monies have expired?

Ms. Kaboolian. Many years ago. 1988.

Mr. Stier. She has been doing this on her own.

Ms. Kaboolian. Yes.

Chairman Hoekstra. That sounds like even a better deal.

Ms. Kaboolian. You can't do large scale things on your own. You can do a lot of individual level observations but that is not what we want. We want to know on a larger scale because we want to say not just who is willing to talk to Linda. By the way, we did get a 60 percent response rate on our survey which is remarkable.

Chairman Hoekstra. This is something that I will talk to Mr. Kind and Mr. Roemer about. I would identify it as a worthwhile and a meaningful project. I think the insights that all three of you are providing are very helpful.

I was going to ask you, professor, what were the structural reforms, and then you actually went through them. You talked about the transparency on financial data, the transparency on union governance and the openness on communications, the IBT constitution, the seniority list, and the structural kind of reforms that were put in place. Do you have any others that you would say were critical?

Mr. Stier. Yes, I would like to add one more.

At one point, the process by which I was exercising my authority to investigate and to seek the removal of members, who had engaged in some form of misconduct, became too cumbersome. It was taking too much time because I would have to go back to court and, in effect, we would start a new case all over again. It would take years to litigate it, and you would lose the impact.

So I came up with a proposal, I could have gone to the court myself and asked the court for the authority to shorten the process and to adjudicate these cases much more quickly. But instead I chose to do something slightly different.

I worked with the executive board to develop a set of procedures to investigate and to take action against members who violated the constitution and bylaws and there was something very interesting that happened in that process.

One of the steps that I had suggested was that the executive board would get a copy of my report so that they would know why I was taking the action that I was. The executive board asked me for the authority to review and devote on my recommendations and to involve themselves in the process.

You have to understand at that stage for them to do that was something of a political risk. But they wanted to assert themselves as the authority in the union, and they wanted to be directly involved in and take responsibility for the decisions on whether individuals who violated the constitution should be punished, including removed from the union. And that to me showed real character, and it showed a real desire to take the responsibility that they have under the constitution of the union, to police the union.

It was a very strong indication to me that the leadership of the union was ready to assume its rightful role, a role that they had flatly refused to assume in the Provenzano days when you could commit a murder and no one would think that you had violated the constitution or acted in a way that was out of character for a leader of the union. So that was an important institutional change.

The seniority list that Dr. Kaboolian and Mr. Brown referred to in the construction area was another reform in which the executive board participated directly in formulating the rules by which that system would operate. In other words, I didn't come in and say these are the rules that you are now going to have to follow. What I did was to say, look, here is a problem that we have. Here is an area of potential corruption. How about if we create a set of rules that will assure everybody fairness in the way construction jobs are allocated.

We worked on and negotiated a system that was fair, practical, and that is still in use by the union. I suspect that it is going to remain in place for all time because it really works. It was not something that was imposed on them. It was something that was developed in a partnership arrangement between me and the executive board.

You know, I found that in many cases because of the background that I have and the experience that I have and the information that I would get from the FBI or the Department of Labor about corruption issues, that once I communicated that information to the executive board, they would respond to it in a positive way because it would be information that related to protecting the union from some form of exploitation.

And the absence of that information meant that they didn't have the capacity to make the reforms that were necessary in order to protect the union and so rather than imposing things, imposing requirements, what I found was if I brought information to the union, if I shared my insights, if I was prepared to listen to their point of view on those same issues, we could work out an approach, an institutional reform as we have been talking about that would ensure that the union would be protected from whatever form of potential wrongdoing that might occur. That, to me is the kind of relationship that somebody in my position ought to have with the leadership and the members of the union so that whatever reforms are made become internalized within the organization.

That is really the objective, not simply to accept it because that is one of the things that you have to do to satisfy the trustee of the court, but to make reforms because it is right for the union. And if it doesn't resonate with the union, maybe there is something wrong with what I am suggesting to them.

Ms. Kaboolian. I want to add about law enforcement information and its usefulness to well-motivated leaders in a union trying to pursue reforms.

One of the things that I observed over the course of the years, and I was able to sit in on many of its meetings with the law enforcement agencies, the prosecutors and, in fact, oftentimes in highly confidential conversations about their prosecutorial strategies, their petitions to the court and so on, so I have a sense of what that internal process looked like. There was a sense that because of the way our Government is organized, there is a clear sense of division both between the union and the law enforcement agencies and then across the law enforcement agency spectrum.

That led to a big failure of, I think, information that people could actually act on. For instance, because Ed was a former prosecutor and they had known him a long time, he could call up various people and say I have got this idea or somebody came to me with this and does it make sense? Similarly if they had some information, they could call him.

Now there is nobody in a union that is going to call up the Department of Labor or the Justice Department and say something fishy is going on nor are they going to call up a leader and say you ought to start looking at this without going very far down the prosecutorial road. Then it becomes an externally imposed remedy as opposed to giving the leadership a chance to look at it more carefully; think about whether that business agent is as reliable as you think that they are; is something fishy going on there and how many times have you been out there and those sorts of things.

So getting information across that membrane is really important, as well as, getting these organizations to coordinate their effort. This is organizational life in real time, okay. And the Justice Department and the courts do not operate on real time.

Chairman Hoekstra. Amen.

Ms. Kaboolian. So if you gave the reorganization of any private corporation to this fractured legal authority to coordinate, it would be a nightmare. Nobody would say what we need to do is reengineer General Motors so let's call up six Federal agencies and have them prepare a strategic plan.

Ed didn't necessarily know all of the time what was going on. So, it really was a little bit of sort of, you know, crazy cops kind of stuff. It wasn't that people were not dedicated and motivated and all of those things, but this is an organization. If there is a problem in a shop, somebody has to react and those organizations are not well equipped to deal with that. They have to go through their processes. They have to negotiate with each other. In the meantime, people are hanging out there. By the way, that lag effect delegitimizes the Federal Government in the eyes of these members. When things take years and years and years to get resolved and people's lives have moved on and their mortgages have been taken over by the bank, it doesn't matter any more whether the process gave them a good outcome. The outcome is lousy.

Chairman Hoekstra. Do you have any more questions, Mr. Kind?

Mr. Kind. Just one follow-up. It is my understanding that is the process that is working with IBT under the current consent decree. Just to correct Professor Kaboolian, it is my understanding that IBT is not under a current trusteeship, it is a consent decree that was entered into under the Bush Administration. There was an independent review board that was created, also an elections officer position that was created, but the independent review board is the one that takes a look at the operations and structure and process and they make recommendations to the executive board for the executive board to consider and choose to adopt or not adopt as they please. And that seems to be working extremely effectively within the IBT right now.

But what we have moved to now as far as Local 560 is concerned is end of the trusteeship but with the consent decree allowing the court to retain jurisdiction for the next 4 years or through the next election cycle.

My question is how effective or what type of teeth does the consent decree have in regards to court jurisdiction over the current operations of Local 560? Is there anything there that would enable the court to react? Is there a reporting provision or something like that, Mr. Stier?

Mr. Stier. No. There is not. It is purposely written that way because I believed and recommended to the court that there be a very, very clear change in the role of the court in relation to Local 560, in order to make it absolutely clear to the members and to the outside world in which Local 560 operates that it had been released from trusteeship and there were no more strings attached.

The only reason for the court to maintain jurisdiction was so if there is an abrupt change and if our assessment has been wrong, you won't have to start a new lawsuit in order to reimpose some form of control. The Department of Justice can come before the court and present whatever evidence they have that there has been a reversion to organized crime control, and the court can then take immediate action.

That is the only reason for the continuing jurisdiction. But there are no strings. There are no monitoring systems in place. The assumption is and I believe the assumption is very well founded, that the union is as capable of policing itself as any union in the country. And perhaps more so because of the heightened sensitivity to the threat of organized crime that we have in Local 560.

Ms. Kaboolian. May I add something, Mr. Kind? You are absolutely correct, this is a consent agreement at the IBT. I considered it RICO trusteeship because there was a RICO filed and the consent agreement was as a result of that.

On the point about the IRB and the way that it functions, will we have an opportunity to talk about concerns about that in comparison to some of the structural reforms that have occurred in Local 560? Because I think that there are some interesting comparisons and some thoughts about the way that the IRB functions that might be worth thinking about, especially in the next couple of years.

Mr. Kind. That might be another topic for a future hearing, Mr. Chairman, if you want to go down that route.

Chairman Hoekstra. You went down the same route that I was going to go, but you came from a different perspective. My perspective of the IRB is very, very different because I am not sure that it is working all right. When I listen to the criteria that has been laid out here, everybody agrees that a trusteeship and in this case the IRB or the governance of the IBT we found out has been very, very expensive to the union.

What Mr. Stier focused on as part of his responsibility was to enhance the strength of the union because if you sap the financial strength of the union you really sap the life blood out of the union plus you build in all of the mistrust of the members about the Government people who are in there which is exactly what has happened at the IBT because of what has happened to their net worth and that the IBT under the consent decree, and we never really got into it, the question is still hanging out there over the last 10 years what has really happened to the pensions at the IBT because in the union, that is where the money is. We know that it happened in the general finances, but we don't have an answer as to what has happened to the pension revenues.

And the question that I was going to go down because I think what Mr. Stier and Professor Kaboolian, Mr. Brown, you have all indicated that the key here over the years and restoring Local 560 wasn't finding every bad guy.

Mr. Brown, I am glad that you think that they are all gone. I am not sure that they all are, but you have focused on putting in place the structural changes that if they are still there or if they get back in, you structurally have changed the actual workings of the union and you have changed the culture of the union that you have a better chance that you are going to win, that you are going to catch them and get them out of the union and that they are not going to come back in power in the union.

I am glad for the progress that we have made at the IBT, but I am not sure that the IRB focused on making the structural and the cultural changes within the union over the last 8 or 10 years that needed to be done. Professor, I don't know if you have a thought on that.

Ms. Kaboolian. The thought that came to my mind after your comment, Mr. Kind, was that when I think about how the IRB has performed, and I say this without as much hard data as would make me comfortable to draw a strong conclusion, I am comfortable that they have been effective in removing a good number of bad guys.

Ms. Kaboolian. What I am not sure about are the following two things.

Well, let me say, when removing bad guys, we have, thankfully, a system where people have a right to go to court and ask for review of that process. So the possibility of a false positive, you are accused and they find you a bad guy, the idea that you get thrown out of that union as a result of an IRB recommendation to the executive board as being unwarranted is very small. But what about the false negatives? What about the bad guys that the IRB hasn't thought about? What protects the members from those people?

My concern about the IRB is not just about how it functions. It is about that big area of activity that doesn't really take into account and that is what else other than a group of outsiders sitting in Washington making recommendations to an elected executive board stands between a member and a bad guy? That is worrisome to me because I haven't seen and I don't necessarily think this was an individual leadership problem.

I don't think in the last administration that the IBT, that that administration had the leadership capacity or the resources to actually develop a real organizational reform plan and carry it out. I think they were holding on by their teeth or the skin of their teeth.

But I do think if we were sitting here and talking about good policy for a union like the IBT, we should be talking about what the characteristics of a plan should look like that go beyond the quasi-judicial body like the IRB and what could actually shore up and over time develop within the union, legitimate in the eyes of members, mechanisms that they would call on to use. That is the area that I am thinking about.

Chairman Hoekstra. Do you have some suggestions?

Ms. Kaboolian. Well, if somebody called me and asked me right away what I would suggest, the first is I would suggest that there be the plan and process for this to include the variety of factions in the union. And that to leave this to a single faction is, in fact, going to create a kind of adversarial process that says, as Mr. Brown has pointed out, if you cooperate or go along with this, you have a label that makes you politically a eunuch. You can't do a good thing because that means that you are politically powerless.

That I think is very scary. Whereas if we could negotiate a process among the variety of stakeholders an that union and with, obviously, the stakeholders representing law enforcement and congressional oversight, then I think that we might actually have a deal which has to be representative of that body and that would avoid the kind of ostracization of leaders who decide to do the right thing.

Chairman Hoekstra. What kind of relationship do you see between the IRB and the teamsters that needs to exist?

Ms. Kaboolian. One question that I have about the IRB, and not informing this on my data, but I am informing it on what I think are good models for things like IRBs, I would have liked to see rotation of the membership of the IRB. I would like to see something other than what we have in our federal judiciary system, life-long tenure, so that there would not be either a suspicion of or a tendency to have vested interest develop among such an important internal body.

But let's say a several year long-term that was rotational, that was staggered, so that people were coming in having fresh eyes looking at things; not, in fact, tied as closely to the international organization as I currently believe that the members are now. That is a bit worrisome to me. Just in terms of general structural changes to avoid corruption, we know that rotation is the number one thing. Police departments do it, the FBI does it. There is a real reason for rotation, and I would like to see rotation as the number one reform of the IRB.

Chairman Hoekstra. And I agree with you. I am not sure exactly how you do a rotation. There is a situation right now in the IRB that I am a little uncomfortable with. That is the way that the IRB was set up --I see them as evolving into--Mr. Stier had a very good relationship working with parts of them. I am not sure about every part of the local, but overall very well accepted and those types of things.

I am not sure that, like on the IRB right now, you have a teamster’s appointee, there is a government appointee, and then a person agreed upon by the other two. The current teamster’s appointee is an appointee that was appointed by the last regime. I am not sure that that even gives the current IRB, excuse me, the current IBT, a voice on the IRB, and you just sit there and say how does that work? I agree with you.

What I am hoping is that that you can't set the expectation that you are going to get every bad person out of the union. But what you can set for the expectation is that we have put in place the structural changes that they have got a much better opportunity to police themselves. That policing themselves in a democratic organization is going to be a whole lot more effective than continuing to take that money and plow it into another set of people that aren't part of the union.

Ms. Kaboolian. That is right. It might include things like having some standards for the percentage of the membership that has to vote in order to make an election acceptable. I think, well, there are other things like that that would give everyone a stake in generating participation.

Chairman Hoekstra. I think, in the last IBT election, the voting percentage was in the low 30s.

Ms. Kaboolian. Yes.

Chairman Hoekstra. It would be interesting to find out why it was in the low 30s. It is a very easy process. It is a mail-in process.

Ms. Kaboolian. Very high profile election and a very easy process, and every reason to believe that your ballot was secure. A voter turnout in the low 30s is very, very problematic if you want to be a reformer. What kind of mandate do you have? What percentage of the membership actually voted for a new president? That is a political resource that either has to be mobilized or increased and augmented or something, but it is an important thing to pay attention to in terms of policy issues.

Chairman Hoekstra. I think as we went through the hearings on the IBT during the last cycle, it was apparent that the structural changes weren't in place. When you talked about the transparency on the financials and those kinds of things, it is just not there. It wasn't there for us.

We had a hard time figuring out exactly what was going on. And so the communication wasn't necessarily there. Then you found the illegal dealings going on directly within the union and it is too bad because we are now 10 years after a consent decree and the focus has been over here. You have a new president, or a president coming in who is now going to take a look at putting in place the things. I hope that the IRB and others read what you have to say today about let's focus on changing the culture and changing the structure because that even takes time.

Ms. Kaboolian. It takes a long time.

Chairman Hoekstra. It takes a long time. We spent 10 years, and I am not sure that we spent enough time on that. We have a lot of expectations on where this union could go. Mr. Kind.

Mr. Kind. Mr. Chairman, I have to move on actually. I would just like to thank the witnesses for your testimony. It was very interesting. Mr. Brown, particularly, I wish you and the membership of 560 much progress and much success in the future.

Mr. Brown. Thank you.

Chairman Hoekstra. I would like to thank the three of you. This has been very informative. We have clear goals.

Ms. Kaboolian. Measurable and clear.

Chairman Hoekstra. The IBT today, I couldn't tell you what the hurdle is for them to become an independent union. Mr. Brown, did you have in 1995, back in 1988 or after 18 months, did you have a clear understanding of what the expectations were for you to get over that hurdle and to get your union back?

Mr. Brown. No. I mean we--

Chairman Hoekstra. Mr. Stier, did he have clear objectives? Didn't he hear you right?

Go ahead.

Mr. Brown. We just put our head down and started working. And as we moved along, he didn't walk in there and say here are these pieces of paper, these are the goals I hope to achieve. Some things he did right, some things he did wrong. It was a learning process for Mr. Stier as well. We talked about the construction referral list. And they have been referring to it as a seniority list; it is actually named the construction referral list.

Fundamentally that works, but there are things that are wrong with that also that we can only find out through the process of doing it. We always understood right from the beginning that the process was going to take a long time and the goals were to rescue our union from these evil doers of which we have succeeded. But it was a daily process and to wake up in the morning and what could be repaired today and where can we patch it up and go on. I think that we have done well over the time. As Mr. Stier said, when he left there was $350,000 in our coffers. Today we have about $850,000 in there.

We watch what we spend. We are responsible. And the goal is just like everyone else's goal, it is to pursue your life in happiness, go out in the morning do your job and come home at night and enjoy your family. I think those goals have been basically achieved here. As you said before, you thought and maybe I misled you when I said that all organized crime is out of the local. Indeed, I believe it is. As Linda was saying, if you are talking about a guy who is taking a book on the job or shylock or stuff like that, that is one thing. But organized crime perceived by me and this union that have control over our funds and our other moneys, that is another matter. You are not going to stop book makers, you are not going to stop shylocks, but we did stop the organized crime.

Mr. Stier. If I could just--.

Chairman Hoekstra. You told me he had clear goals.

Mr. Stier. When I am done, I think that he will acknowledge that he did.

Chairman Hoekstra. He will acknowledge that you were right.

Mr. Stier. Well, I think that you need to work backward because it was clear from the beginning to everybody that our goal was to end the trusteeship. Now, it may seem obvious, but that is not always clear, that the objective is to bring this to an end. So the question is, well, how do you get there.

Well, the next step is that in order to get there you need to be sure that the union is capable of responding to evidence of organized crime, to problems and the potential capacity of organized crime to control the union. And so that becomes the next goal. I think that that was made clear to the executive board.

How do you get to that stage? Every member of the executive board has got to demonstrate his or her capacity to hold every other member of the executive board responsible for doing their job effectively. I made that clear and everybody understood that.

A willingness to confront the presence of organized crime in the union and not to back away from it, to acknowledge it, that was also a goal. That has been achieved. If you would look at the videotapes of the membership meetings, you will see at a certain point that it became clear that Mr. Brown was prepared to stand up and to attack those who were advocating going back to the old days for the reason that they were trying to bring back into the union the presence of organized crime, and he wasn't going to put up with it. You could see that happening.

We talked about how that was one of the goals of the trusteeship. So if you start out with the proposition that the ultimate objective of this trusteeship was to transfer responsibility to the union from the government, to protect it from organized crime, a lot of very specific objectives and goals then fall into place. And from day one, at least from the first election, actually before that. When I was running the union, I made it clear what it would take to get the union out of trusteeship. The dialogue began even in those days.

And so there was always this recognition on the part of the executive board that in order for them to demonstrate that we had reached the stage where I could go to court and ask the judge to end the trusteeship, that there were very specific things that they and the membership in the union would have to do.

Is it clearly measurable? Not easily because you are talking about cultural change, about values within the union changing, about a willingness to confront certain kinds of problems.

Do you know it when you see it? Obviously.

My job was to facilitate that process, to help starting with the very first executive board that was elected, even the ones that were dominated by Mike Sciara, to help define for them what it would take for them to end the trusteeship. I said to them, you guys can do it if you are willing to run this union honestly, protect the membership, everybody in the union, not just your political friends, and you don't steal. If you do those things, I will go to the judge and tell them that the trusteeship ought to end. If I catch you doing the opposite, then I am going to take action against you.

Everybody was told the same thing. And as the executive board evolved, we finally got to a point where Pete Brown and the others who were there as part of his administration finally took that responsibility and had learned enough about how to run a union so that the membership felt that they were the ones who could properly represent their interests. When those two conditions converged, that is, you had leadership that was prepared to do the things that it would take to be responsible for protecting the union and you had the membership that had enough confidence in them to support them, when those two things converged, I felt that it was time to go to the judge.

Chairman Hoekstra. It is kind of an interesting observation because if you technically have leadership that is not committed to its membership, you may actually have a leadership in place that would benefit from a trusteeship staying in place.

Mr. Stier. Absolutely.

Ms. Kaboolian. That is right.

Chairman Hoekstra. Because you know, like you said, it is self-explanatory. It appears to be self-evident that everybody agrees that getting a union out from a trusteeship is something that everybody can agree on. But that is not necessarily true. If you have got a leadership in place that has not focused on serving its members, it potentially could have a vested interest in the trusteeship staying in place because that may be the only thing keeping them in power.

Mr. Stier. That is absolutely true.

Mr. Brown. I am sorry about jumping in here, but that is one of my bad things.

You run the risk, too, of putting a trusteeship in place that has his interest at heart so he can grind out a good living off the backs of the working people. He did not do that but there are trustees out there willing to do that, sir.

Chairman Hoekstra. I think it was interesting when you were talking about the clear objective, when I go back, I will have to go back and take a look at some of the things that we heard on the IBT, I need to take a look at what happened because one of the facts that we have there is that the financials went down, the leadership stole a million dollars or whatever.

A million dollars happened to find its way illegally into some places where it shouldn't have been. In plain English, to me that is leadership stealing their members' money. You maybe have gone to a point where you are saying that the IBT there might have been people with a vested interest in keeping the trustee or keeping the IRB and keeping the consent decree in place and not moving to an independent act or an independent union. I haven't formed all of my thoughts on that, but that is an interesting line.

Ms. Kaboolian. I also want to say that the last point this leads us to that, Mr. Brown also alluded to, in fact, this is a policy, public policy to impose trusteeships or negotiate consent agreements, then I think it is incumbent on all of us to start thinking about what a good trustee is and what a code of conduct for a trustee and what standards we would want to hold them accountable so that we can actually make more democratic the process of reforming these institutions to a trusteeship. My look at the trusteeships, other than 560, and I am not talking about the international unions now, but the local level, is that they do not look good in the light of day.

Very often these are people who did not go to the union hall, who essentially got reports from second parties and wrote them and sent them to judges and asked them for money or actually billed the unions for doing the work. I think it is a great concern to me that people would rush to do the job of trustee. If they really knew what the job was and how it would be done well, I am not sure that people will be lining up to take on the job. But that doesn't seem to be the case.

Chairman Hoekstra. Yes, and it gets to into a whole range of questions when you start thinking about that people may not have as their ultimate goal getting out from under a trusteeship or getting out from under a consent decree as quickly as possible. The whole question at that point in time, what do you do with political contributions because at that point in time you are under government supervision and should you or should you not give contributions? If you do, where do they go and why do they go to certain places?

You have given us lots of food for thought. I appreciate very much you being here.

Professor Kaboolian, you have given us one assignment that, I think, I would love to have you study that kind of issue. It is a little late now, but to go back and take a look at some of the stuff that went on at the IBT in some of the areas that I have talked about; was it agreed upon to move them out from a trusteeship or was it for the last 5 or 7 years; what is the relationship between the governed and the Government and those kinds of things and were there other clear goals?

Hopefully, one of the things that we will learn from here is that we can communicate with the IRB and those types of things. Let's really focus on putting in the structural changes within the IBT and let's get that union back on its feet. They may be on their feet, but let's get them out from under Government control because that is where you start at that point in time, then the membership can make their political decisions as to where their money goes. It is the membership watching it, it is the membership watching their pensions, it is the membership watching their general funds, it is the membership electing their leadership and controlling their union without all of these other outside influences coming in place.

As soon as you put that overlay of the Federal Government in there, it just skews everything else that goes on within that union, I believe, and for a period of time that can be very positive. But the sooner it is pulled away, the sooner you can get a union that is focused on its membership and focused on what its real job is.

Thank you very much for being here. I appreciate it.

The subcommittee will be adjourned.

[Whereupon, at 4:25 p.m., the subcommittee was adjourned.]