Dirty Deal

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POLITICS APRIL 1, 2002

Dirty Deal

It's not hard to figure out why the Bush administration and the Republican congressional leadership are wooing the International Brotherhood of Teamsters. They want the union to lobby for opening the Arctic National Wildlife Refuge (ANWR) to oil drilling. And they really want support and endorsements in states like Michigan and Ohio, where the union's members may hold the balance of power in key House and Senate races—and even in the 2004 presidential election.

Less well understood is why Teamster President James P. Hoffa—who endorsed Al Gore and agrees with the Democrats on most issues—is courting the Republicans right back. Here's a hint: It's not ANWR. There are only about 7,000 Teamsters in Alaska, and none of them work in oil fields. Hoffa is much more concerned about another acronym—one that makes the front page far less often. He's desperate to get rid of something called the Independent Review Board (IRB). And he thinks the GOP can help.

The IRB was established in 1992, three years after the Teamsters signed a consent order settling the Justice Department's suit charging that the union was "a wholly owned subsidiary of organized crime" and had made "a devil's pact with La Cosa Nostra." The IRB, which is composed of a three-member panel and an investigative unit, has the power to force sworn testimony from Teamsters it suspects of corruption or mob association and to expel those it charges with corruption. Over the last nine years it has ousted or suspended more than 500 individual Teamsters and recommended that the international union place 27 locals under trusteeship.

Hoffa and other top Teamsters say the IRB has served its purpose. "We have come full circle and have cleaned up our union," Hoffa told the Teamster convention last June. The union also claims it has put in place safeguards to prevent further corruption and mob influence. Two years ago Hoffa announced an internal ethics-enforcement program called rise (Respect, Integrity, Strength and Ethics), to be run by former federal prosecutor and organized crime expert Ed Stier. "It's time for the government to move out. We've created programs where the union is clean, and it's time for us to get from under government supervision," Hoffa declared last August. "We're going to keep pressing that. And we're going to talk to everybody we can to make sure that happens."

The Teamsters are talking to two people in particular, both Republicans. The first is Michigan Representative Peter Hoekstra, chairman of a House subcommittee that has held hearings into the IRB and the Teamsters. The second is George W. Bush. The president can't shut down the IRB on his own; but, if he recommends it, the U.S. Attorney for the Southern District of New York, a Bush appointee, will follow suit, and federal Judge Loretta Preska will probably comply.

Hoffa has made considerable progress in winning over both men. Grateful for the hearings that Hoekstra had held exposing illegal campaign activities by Hoffa's predecessor and rival Ron Carey, the Teamsters endorsed Hoekstra's reelection in April 2000—even though in 1999 the AFL-CIO had given the congressman a zero rating, and the Teamster local in Hoekstra's district opposed him. Since then, Hoekstra has become Hoffa's greatest booster and the IRB's sworn foe. "I know Jim. He wants the union to have control of its own policing," says Hoekstra. "And he wants to put in place a system his members have confidence in. This guy more than anyone else in the labor movement is focused on his membership." Bush is also moving steadily into Hoffa's camp. At a Labor Day Teamster gathering in Detroit, Bush said, "Let me tell you another thing about Jimmy Hoffa. He's running a good union. And in an above-board way, in an above-board way. And make no mistake about it, people are beginning to notice, particularly in Washington, D.C." And to show just how much people in Washington have noticed, Bush invited Hoffa to sit in the president's guest box at this year's State of the Union address—an honor normally reserved for national heroes.

Hoffa may be close to achieving his goal of shutting down the IRB. Hoekstra, for one, believes momentum is building. But there's a problem with this rush to declare the Teamsters completely clean: They're not. While the union is no longer "a wholly owned subsidiary of organized crime," it is still plagued by corruption; ex-felons and people with reputed mob associations lurk around the edges of key Teamster locals seeking influence over the union. Stier's hiring was a step in the right direction, but rise is not fully functioning, and Hoffa and other Teamster brass have been slow both to police themselves and to cooperate with the IRB.

Indeed, corruption within the Teamsters may actually have increased in recent years, as Hoffa has resurrected a group of suspect union officials who were ousted by the IRB or relegated to the sidelines under Carey. Hoffa has been in office only a little more than two years, but already the IRB has charged several Teamster officials with corruption and with mob associations. And some of them are close to Hoffa himself.

Take Mike Bane, the president of Local 614 near Detroit, to which Hoffa himself belongs. Bane was convicted in 1977 of embezzling union money; sentenced to six months in jail; and barred by the union from holding office for five years. Once his five years were up, he was hired as the business agent for Local 614 and was elected president in 1989. Ever since 1991, when he tried to get the Teamsters to change their constitution to allow Hoffa—who had not yet served two years in a Teamster trade—to run for president, Bane has been one of Hoffa's most enthusiastic supporters. But he has not broken with his past. In December 2000 the IRB charged that Bane had given "intentionally misleading testimony" about his associations with "some members of organized crime in Detroit and Chicago." The IRB panel stripped Bane of his position last July, despite an attempt by Hoffa and the Teamster leadership to deprive it of jurisdiction over the case.

Teamster Spokesman Bret Caldwell dismisses the Bane case because Bane was "removed for lying to investigators" about events that were "fourteen years old"; but according to the IRB, Bane had maintained and lied about his associations with organized crime figures during the 1990s as well as the 1980s. What Bane did, however, pales before another Teamster corruption case that is currently pending before the IRB. It involves two high-ranking Teamster officials from Chicago who are among Hoffa's staunchest allies. The two officials, with the help of ex-convicts, tried to get a Teamster local in Las Vegas to accept a deal with a nonunion company from Chicago that, in the words of the IRB investigation, "had a history of labor racketeering." The deal would have undermined the union's ability to represent its own members; but well after Hoffa knew what his allies were up to, he continued to back them, firing local officials who opposed them and frustrating the IRB's attempts to investigate. The story of what happened, reconstructed from the depositions and sometimes conflicting testimony given to the IRB and its investigators, suggests that, ANWR or no ANWR, the Teamsters are still not clean.

The Chicago-based United Service Companies provides nonunion workers at low hourly rates to trade shows and conventions. Known as a "labor broker" or "labor leaser," United makes money by paying its workers even less—sometimes near-minimum wage with no benefits—than it receives for their services.The company's founder, Ben Stein, described by one former acquaintance as a "colorful hood," was convicted of bribing union officials and, according to the IRB, "was reported to have ties to organized crime figures," including notorious Chicago Teamster Dominic Senese. After Stein's death in 1996, Richard Simon—-who according to the IRB "also knew Senese well"—became United's president and ran the company along with Stein's daughter. Simon hoped to expand United, a nonunion company, into Las Vegas; and in early 1999 he established United Temps of Las Vegas. But Simon had a problem. In Las Vegas, Teamsters Union Local 631 had a contract with the trade shows, called the "red book," to provide the workers itself.

From the standpoint of Las Vegas workers, Local 631 enjoyed a benevolent monopoly over hiring.Since Nevada is a right-to-work state, workers didn't have to belong to the Teamsters to get a job, but they did have to pay the union a fee of $40 per month. In exchange they got the same wages and benefits as Teamster workers. For the workers, it was a good system: In 1999 and 2000, the lowest-paid made $20.43 per hour if you factor in health and welfare benefits. But the system wasn't good for United Service at all. The trade shows couldn't undercut the red book. And worse still, Simon's own workers could hire themselves out through the Teamsters rather than through United and make much more than Simon would pay.

 

To succeed in Vegas, Simon had to undermine the Teamster monopoly. United had a history of such efforts. In 1966 Stein had been convicted of bribing union leaders, including a Chicago Teamster, to allow United to hire out nonunion workers—whom Stein paid as little as $1 per hour—to job sites that the unions controlled. And so in 1999 Simon set out to persuade the Las Vegas Teamsters to cede part of their labor market, even though by doing so they would violate their own contract. IRB investigators found no evidence that Simon himself used illegal tactics toward that end. What he had working for him was an ally, William Hogan Jr., the most powerful Teamster leader in Chicago—and a close friend of James P. Hoffa. Hogan in turn enlisted his protege, Dane Passo, another powerful Hoffa ally. Together, Hogan and Passo would try to take command of Local 631 and write a contract that allowed Simon to evade the red book. They would later tell the IRB they were actually trying to bring United's workers into the Teamsters. But they rebuffed or ignored Las Vegas Teamsters who suggested organizing them.

William Hogan Jr. was known in Chicago for running the Teamsters as a family business. "I am living proof that nepotism works," he once declared. Hogan, a short, blustery man with carefully coiffed white hair and gold jewelry, inherited Local 714 from his father in 1990. One of Hogan's brothers, his brother-in-law, and his son were also union officials. In 1994, when the average Teamster was making $25,000 per year, Hogan and his three relatives collected $613,271 in salary. The Hogans ran and owned shares in numerous businesses that hired Teamsters, so that Teamsters—sometimes without knowing it—often worked for Hogan enterprises. And the Hogans assigned relatives and family friends to prime jobs in the union's trade show/movie division, slighting other industry workers. Last year Hogan and his union settled a suit by workers who were hired through Local 714's dispatcher but were not allowed to join the union and were not informed that they could receive health insurance—even though the contractors were paying health benefits for them into the growing Teamster fund.

In 1996 the IRB recommended that Local 714 be placed in trusteeship because of widespread "nepotism and favoritism." Hogan was removed from office, and he withdrew from the second spot on Hoffa's national presidential ticket. But when the local was released from trusteeship in 1998, Hogan's son was elected secretary-treasurer and, thumbing his nose at the IRB, promptly appointed his father as vice president. Hogan was also made president of Joint Council 25, the body overseeing Teamster locals in Illinois and Northern Indiana. And by virtue of his longtime association with Hoffa, Hogan also became a powerful figure in the national organization. After Hoffa assumed office in 1999, he appointed Hogan an international representative—a lucrative position without specific responsibilities. By the year 2000, Hogan was pulling in $210,000 in Teamster salary. Oh yes, and over the last 30 years Chicago newspapers have linked the Hogans, Local 714, and their family enterprises to the Chicago mob. According to the Chicago Tribune, a federal investigator once described Local 714's payroll at a convention site as "a who's who in the Chicago crime syndicate."

Simon had served with Hogan on Chicago's Convention and Tourism Bureau and had known him for decades. But the two men had another, even more important link: Hogan's brother Michael was vice president of United Service. And by enlisting Michael Hogan to persuade Local 631 to let the company into Las Vegas, Simon probably ensured William Hogan's help. Indeed, in June 1999, William Hogan helped set up a meeting for his brother and Simon at Las Vegas's Rio Hotel with Timothy Murphy, Local 631's newly elected secretary-treasurer, and Murphy's dispatcher, the person responsible for sending workers to the trade shows. At the meeting, Simon and Michael Hogan proposed to the two Las Vegas Teamsters that the union allow United to provide workers when the local could not supply sufficient numbers on its own. But Murphy said the local was always able to meet the demand for workers by calling on other unions, including other Teamster locals. Simon also proposed that the contractors pay United Temps a flat fee that was lower than the lowest hourly wage a Teamster received and that they not be required to pay benefits. In exchange, Murphy recalled, United would kick back somewhere between $7 and $10 to Local 631 for each worker hired—far less than the $40 the Teamsters would get from other union workers. Murphy told Michael Hogan and Simon that their proposal "would possibly be illegal" and would "violate" the Teamster contract with the convention companies.

At that point, the only way to get the Teamsters to violate their own contract was to replace Murphy and his dispatcher with people who were more cooperative. Which is where Dane Passo came in. Passo grew up in Chicago and went to work as a truck driver for his uncle, a noted Chicago mob leader who was sent to jail in 1993 for 30 years for conspiracy to murder, among other things. Passo, short and blustery like Hogan but even louder and more prone to expletives, became a Teamster business agent in 1992 in Local 705, but was fired 13 months later when the IRB banned the local's president for embezzlement and other charges and placed the union in trusteeship. After losing his job, Passo became a loyal soldier in Hoffa's political army for the next six years, running the Chicago branch of his presidential campaigns in 1996 and 1998. When Hoffa became president in January 1999, he rewarded Passo with lucrative posts as special assistant to the president and international representative. At his first appearance at an AFL-CIO executive council meeting as Teamster president, Hoffa was accompanied by Passo and Hogan.

Hogan, who knew Passo from Chicago, described their relationship like that of father and son. And Passo played a crucial role in Hogan's efforts to influence Local 631. Soon after Passo took office in Washington as Hoffa's special assistant, a former member of Hogan's union began complaining to him about Murphy's leadership of the Vegas union. Passo brought the complaints to Hoffa's attention and asked to be appointed Hoffa's personal representative to Local 631, which would give him authority over Murphy. In November 1999 Hoffa granted Passo's request.

Over the next five months, Passo and Hogan lobbied top union officials against Murphy. And in April 2000 the lobbying paid off. After a climactic meeting at which Passo and Hogan, who had no official responsibilities in Las Vegas, confronted Murphy, Hoffa moved against Murphy—placing his local in trusteeship and appointing James Wilkerson, a retired Teamster official from Las Vegas, to run it.

Hogan, Passo, and Simon mounted a furious campaign to get Wilkerson to sign an agreement with United Temps that would allow it to provide workers to trade-show contractors. After introducing Simon to Passo, Hogan relied on Passo—who had no experience negotiating contracts—to work out a deal with Simon and use his authority as special representative to impose it on the union. (Hogan claims he did not play a significant role; but according to the IRB, Hogan and Passo would confer at least 223 times by phone from April 2000 to November 2000.) By June, Passo and Simon had agreed to terms that they presented to Wilkerson. Under the agreement, United Temps would be paid $8 per hour for its employees without benefits—more than $12 per hour less than the lowest-paid Teamster. As for the actual United Temps workers, Passo says Simon told him that he would pay them $6 per hour without benefits. Passo insisted they would eventually become Teamsters, but how that would happen remained foggy.

Wilkerson explained to Passo and Simon that if he signed the agreement, Las Vegas's trade-show contractors would be legally able to pay Teamsters $8 per hour according to the "most favored nations" provision. That provision stipulated that if one contractor was allowed to hire workers at a lower rate, then all contractors were entitled to hire them at that rate. At a meeting that summer, Wilkerson told Passo, "You're wasting your time with me. You are not going to get anywhere with that piece of crap with me." But Passo and Simon continued to push, and in late August Passo sent a contract with United to the Teamster legal department for approval. (Passo, in his IRB hearing, would insist that what he sent was not really a contract, but he described the emendations in his accompanying letter as "the amended language to the contract.")

Meanwhile, Simon plowed ahead, convincing a trade-show contractor to hire his workers in violation of the red book. The contractors rejected Teamster workers in favor of United's low-wage ones. Local 631 members responded by trying to inform the United workers, most of whom were Hispanic and did not speak English, that they could get better wages by registering through Local 631; but Simon's supervisors prevented their workers from talking to the Teamsters. One Teamster proposed in a union meeting that the local translate its red book into Spanish; but, according to her testimony, Passo escorted her out of the meeting.

After Simon's United Temps workers were hired at a major Las Vegas show, Wilkerson encouraged Teamster business agents to file grievances against the trade-show contractor. Wilkerson also took his own complaints about Passo to the Teamster leadership in Washington.

 

The Teamsters are organized like an elected monarchy. At the top are the king and chief minister—Hoffa and his executive assistant, Carlow Scalf. Beneath them are the dukes—the heads of the Joint Councils, like Hogan in the Midwest and James Santangelo in the West, who oversee the locals in their regions. And beneath them are the courtiers—special assistants like Passo who do the king's bidding.

To build support for Simon and United Temps, Hogan and Passo had gone straight to the top, appealing directly to Hoffa and Scalf. In July 2000 Passo introduced Simon to Scalf at Bally's Hotel in Las Vegas. In the middle of the summer, when Hoffa was in Chicago for a union meeting, Hogan arranged a lunch with Passo, Hoffa, Simon, and himself. (Hogan insisted in his testimony that the meeting with Simon was purely a coincidence, but Hoffa said that Hogan had invited him to lunch specifically because "there is someone I would like you to meet.") Hoffa and Scalf had discussed the United contract in these meetings but took no action to discourage Passo and Hogan from pursuing it. (The Teamster president and his assistant insist they never learned the full details of the contract with United.)

Meanwhile, in early September, Wilkerson took his complaints about Passo and Simon to Scalf and to Santangelo, the head of Joint Council 42 in the West. Scalf was unresponsive, but Santangelo was extremely sympathetic. When Wilkerson told him how upset he was about the arrangement Passo wanted to negotiate with Simon, Santangelo replied, "I don't blame you. I mean, we would be all dead. This would be crazy; you'd kill this whole industry." After his conversation with Wilkerson, Santangelo asked Stier—the former prosecutor who was heading the Teamster rise program—to look into Simon and the agreement. According to Santangelo, Stier "told me to stay away from [Simon] and to tell the Teamsters to stay away from him." Santangelo testified that Stier told him: "the guy is not a nice guy. He's a funny guy. He's got all kinds of baggage." After that, Santangelo and four Teamster vice presidents met with Hoffa to ask that Passo—who, after all, had been negotiating with the man Stier had told the union to stay away from—be removed from Las Vegas. Hoffa dismissed the meeting as a "gripe session."

Around the same time, Stier recounted to Hoffa and Scalf the warnings he had given Santangelo.According to Scalf, Stier and Stier's assistant—a former FBI agent—said about Simon "that they had reason to believe that he was involved with some crime figures in Chicago, that he was a bad guy." Stier also warned the two men about Passo. He showed them a letter from the FBI about Passo, which, Scalf later recalled, "didn't paint a pretty picture."

These warnings from organized crime experts should have spelled the end of Hogan's and Passo's tenure as high-ranking appointees and of their efforts to reach an agreement with United. But they didn't. After the meeting with Stier, Scalf did tell Passo not to pursue the contract with Simon. But neither he nor Hoffa did anything about Hogan's connection with Simon, even though they had to have known by this time that Hogan was deeply involved with, if not actually controlling, the negotiations with United. Hoffa also took away Passo's title as special assistant, which Passo had used to suggest that he spoke for the Teamster president. But incredibly, Hoffa allowed Passo to remain his personal representative to Local 631. Three months later Hoffa gave Passo a raise—from $82,400 to more than $90,000 per year.

The IRB, whose mandate is internal to the Teamsters, did not call Simon to testify, but Simon says Stier's characterization of him was "false, misleading, and defaming." Simon blames Stier for the failure of the contract to go through. His company's workers, Simon says, were "disenfranchised by unsubstantiated innuendo by Mr. Stier." But Stier's charges didn't end United Temps' activities in Las Vegas.

After the September confrontation, Passo, unchastened, once again sought to change the leadership of Local 631. First he tried to elevate his own allies in the union, many of whom had come from Chicago. Wilkerson said it was "almost like" Passo was assembling a group from Chicago to "infiltrate" the union. Perhaps the most interesting of Passo's Chicago buddies was an ex-felon named Vito Locascio.

Locascio had been a member of Hogan's Local 714. He had been convicted for burglary, interstate theft, and passing bad checks. He moved to Las Vegas and joined Local 631 in 1994, and he ran Hoffa's presidential campaign there in 1996. In 1999 he had taken the lead, along with another ex-felon and Passo crony, in pressing for Murphy's ouster. According to the IRB investigation, Locascio was subsequently present at high-level meetings with Scalf and visited Hoffa in Washington. In October 2000 Passo told Wilkerson to make Locascio the head of the Teamster get-out-the-vote drive in Nevada for that fall's presidential and congressional elections, even though Locascio, as an ex-felon, could not vote. When Wilkerson balked at hiring Locascio, Passo got Scalf to order him to do so. Later, Passo would try to make Locascio a business agent for the local.

In November 2000 Passo moved against Wilkerson himself, recommending to Hoffa that he dismiss him. Even though Passo's charges appear to have been spurious and inconsequential—for instance, he charged Wilkerson with ending the practice of giving out free soda at membership meetings—Hoffa complied, and Wilkerson was fired on November 6. Hoffa replaced Wilkerson with a trustee who had no experience organizing convention workers and who, at the same time, served as the secretary-treasurer of a Centralia, Washington local—in other words, a trustee that wouldn't get in Passo and Hogan's way.

And he didn't. In early January, United workers were once again competing for Teamster jobs at the Las Vegas "Super Show," run by none other than Michael Hogan. But just when it appeared that Simon and the Hogans might finally succeed, the IRB, which Murphy had alerted after his firing in April 2000, began taking depositions in Las Vegas. And with the IRB on the scene, Hoffa and Scalf decided to close down Passo and Hogan's operation. In March of last year, when Hogan asked Hoffa and Scalf to let him negotiate Local 631's new red book agreement, which expired on May 31, Hoffa said no.Hoffa testified that he turned down Hogan "just because of the background of all the things that have happened with the IRB, I didn't think it was a good idea for him to be negotiating that contract." Hoffa's decision ended Hogan and Passo's attempt to manipulate Local 631. But not before they had done considerable damage. They had placed their interests and those of a nonunion Chicago company with past mob connections above the people they were supposed to represent—and in the process almost wrecked the union.

 

The IRB is not perfect. Its power to expel Teamsters simply for associating with mob figures and for refusing to testify before it has drawn the ire of civil libertarians. What's more, the board's three-member panel is not immune from politics: The old panel tarried too long before investigating former Teamster President Ron Carey's fund-raising practices in the 1996 Teamster election. With Hoffa installed, the IRB raised some eyebrows last year by refusing to punish longtime Hoffa crony Larry Brennan on charges that he siphoned off union funds for his own reelection campaign. Who knows—it could even accept Passo's implausible argument that he meant well or Hogan's equally preposterous claim that he was not really involved.

But the IRB is at least independent. While Stier did his job in warning Hoffa and Scalf about Simon and United, his is still a purely advisory role. Says Herman Benson of the Association for Union Democracy, a New York-based pro-labor watchdog group, "With rise, everything rests with Hoffa. The decisions are only recommendations. Basically, it has no power." Teamster Spokesman Caldwell claims that once the IRB is shut down, rise will "ensure that corruption is fully eliminated from the union." But the Teamster leadership's performance in this case does not inspire confidence that it will.

The Teamsters have undoubtedly made progress since the 1980s, when mob families virtually chose their national leadership. But as the United Service episode shows, Hoffa and his cronies have not made a clean break with the past. Historically, the mob has gained a foothold in the Teamsters when union officials have pursued side deals that benefited themselves and their associates at the expense of their members. And that is exactly the culture that Hoffa allowed to reemerge in Las Vegas.

But the newfound Teamster boosters on Capitol Hill and in the White House do not seem particularly worried about that. After Representative Hoekstra assured me that the IRB's current investigations have "nothing to do with organized crime," I asked him if he was familiar with the Bane case. He said he was not. I also asked him about the IRB case against Passo and Hogan. "I am a little bit familiar with it," Hoekstra said. "I don't believe there is any implication of involvement with organized crime. It ought to go through the Teamster hierarchy. In other unions, it would have been handled itself." I didn't bother telling him that the case had "gone through the Teamster hierarchy"—and that the hierarchy had rewarded one of the key malefactors with a raise. But I did ask him what he thought about Simon and United Service. "I don't know of them," he said. So goes the Republican love affair with Hoffa's Teamsters. Like many things in Washington, it's based on willful ignorance.

John B. Judis is a senior editor of The New Republic and a visiting scholar at the Carnegie Endowment for International Peace. 

 

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posted in: politics, economy, chicago, detroit, new york, washington, washington, d.c., after simon's united temps, chicago tribune, local, passo, simon, the teamster, united service companies, united temps, al gore, ben stein, bret caldwell, carlow scalf, dane passo, day teamster, dominic senese, ed stier, george w. bush, james p. hoffa, james santangelo, james wilkerson, jimmy hoffa, las vegas teamsters, michael hogan, mike bane, peter hoekstra, richard simon, ron carey, take mike bane, timothy murphy, together, vito locascio, william hogan, william hogan jr., alaska, illinois, indiana, michigan, nevada, ohio, american federation of labor - congress of industrial organizations, department of justice, republican party, senate

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