By STEVEN GREENHOUSE

May 21, 1998

The federal government unsealed an agreement on Wednesday in which Edward Hanley, the longtime president of the nation's largest union of hotel workers, agreed to retire after being pressured to do so by a court-appointed monitor.

In a news release on Monday, Hanley announced his retirement from the Hotel Employees and Restaurant Employees International Union, but the statement failed to point out that he was stepping down under federal pressure.

Faith Hochberg, the U. S. attorney in Newark, N.J., said the agreement was just the latest development in sweeping federal

investigations that began with a successful 1991 racketeering suit against the union's Atlantic City, N.J., local.

Under the agreement, Hanley, who has been president since 1972, must repay $13,944 relating to the purchase of a union-leased Cadillac Allante, a $60,000-plus sports coupe, as well as several other cars. The agreement also relieves the union of having to pay premiums on a $500,000 whole life insurance policy for Hanley.

In addition, the agreement bars Hanley from influencing union affairs and from accepting any future union compensation except for vested benefits. The agreement also states that Hanley's resignation and other actions do not constitute an admission that any expenditure by Hanley was improper.

In 1995, the federal government filed a civil racketeering lawsuit against the union, accusing officials of misappropriating money from benefit funds and hiring ghost employees associated with organized crime figures.

After the lawsuit was filed, the government appointed Kurt Muellenberg, former chief of the Justice Department's organized crime section, to monitor the union. Muellenberg and Hanley signed the agreement in February, but it was not unsealed until Wednesday.

While federal prosecutors have linked Hanley to organized crime -- links he has repeatedly denied -- union officials say he has revived the 255,000-member union by having it aggressively recruit new members.

John Wilhelm, the union's secretary-treasurer, has been chosen to succeed Hanley, effective Aug. 1. Wilhelm, a Yale University graduate, is highly regarded for spearheading a drive that organized more than 20,000 hotel and casino workers in Las Vegas, Nev.

"The court-appointed monitor has obtained an agreement that will substantially change the landscape of this union," Ms. Hochberg said. "We are committed to insuring that local and national labor unions serve their members without corruption or undue influence from inside or outside."

Muellenberg, who ended his monitorship in March, declined to comment on the agreement, but said he would issue a report in a few months on his efforts to clean up the union. Hanley's lawyer, John Joseph Cassidy, also refused to comment.

Muellenberg has brought civil charges against Hanley's son, Thomas Hanley, the union's organizing director and head of its Chicago local, charging him with embezzling union funds. He has also filed charges against John O'Gara, who announced his retirement last Monday as the union's general vice president.

In a news release issued on Monday, Hanley said he would remain as chairman of the union's pension and welfare funds "for at least another year," but the unsealed agreement states he is to step down from those posts by July 31, 1999.

Copyright 1998 The New York Times Company