by John Fund

May 14, 1998

The Teamsters, the nation's largest union, is still being run by followers of President Ron Carey, even though Carey has been forced to step down and is barred by federal officials from seeking re-election. Its former political director, Bill Hamilton, has just been indicted on charges he funneled money to the Democratic Party in an effort to have its donors give money to the Carey campaign.

Meanwhile, the Teamsters have refused to turn over to Congress subpoenaed documents on its hiring of private investigators who have worked for President Clinton's campaign. Congress has voted to bar taxpayer funding of the upcoming rerun of the Teamsters election, but a 2nd Circuit federal court has ruled that the taxpayers must pay the tab again.

Taxpayers have a right to be angry. The Teamsters already have spent more than $20 million on a 1996 election in which Carey won narrowly using an elaborate scheme to funnel outside money to his campaign. But balloting by the 1.4 million members Teamsters for a new president will not end until October, which means a new leader cannot be installed before the November elections. Of course, rather than installing apolitical administrators, the Clinton administration seems content to allow the Teamsters' central office to remain under the control of Carey's discredited followers for one more election cycle.

That control could be worth millions to Democratic candidates this fall. Former Teamster Communications Director Duke Zeller says Teamster officials diverted more than $50 million in union funds to the Clinton-Gore campaign in 1992. In 1996, the Teamsters' political action committee was the nation's

largest, giving 97% of its $10 million in contributions to Democrats. Since the Carey scandals, the PAC has taken in less money but is still a 400-pound gorilla. The Teamsters

contributed $3.4 million to candidates last year and already have some $1 million on hand for the 1998 election.

There is no question the Teamsters are joined at the hip to the Clinton administration. "We ask for and get, on almost a daily basis, help from the Clinton administration for one thing or another," wrote Hamilton, the indicted former Teamster political director, in a 1996 internal union memo.

The Teamsters have been under federal supervision by an independent review board since 1989, when union officials signed a consent decree designed to root out corruption. Mob influence certainly has declined, but political corruption is still a problem.

Kenneth Conboy, the former federal judge who barred Carey from office, said Carey's campaign involved "a federal embezzlement." The diversion of union funds into politics helped the union's net worth fall from $157 million in 1991 to only $702,000 last year. That means the union managed to average losses of $100,000 per working day for more than five years.

The depletion of the Teamsters' treasury raises the question of what else the independent review board missed. Last month, Sam Theodus, a former Teamsters vice president elected on the Carey slate, testified that the union engaged in "high-handed tactics and abuses of power." Theodus said he was ignored when he tried to bring evidence of the abuses to the review board. He says after the board failed to help union trustees gain access to the Teamsters' books, he concluded the board was in "Carey's back pocket."

A legacy of corruption

Carey may be gone, but there is growing evidence that both the Democratic National Committee and other unions were involved in his misdeeds. Mary Jo White, the U.S. Attorney for the southern district of New York, has detailed how officials of AFSCME, the Service Employees Union and the AFL-CIO all were involved in illegal schemes to fund the Carey campaign. She has established that AFL-CIO Secretary-Treasurer Richard Trumka sent a letter requesting $150,000

from the Teamsters. Then the AFL-CIO donated an identical amount to Citizen Action, a left-wing group, which then paid the November Group consulting firm $100,000 to send out last-minute mailings trashing Carey's main rival, James P. Hoffa.

White also has released evidence that DNC officials attempted a similar money-laundering scheme. Trumka twice has taken the Fifth Amendment when asked about these charges. Last month, Rep. Peter Hoekstra's (R-MI) subcommittee quizzed John Sweeney, Trumka's boss, about why he was still in office despite an AFL-CIO rule requiring the expulsion of any official who invoked the Fifth to cover up union corruption.

When asked if he knew why Trumka had taken the Fifth, Sweeney

admitted he had never had a substantive conversation with him about it. "He said he had been advised by his attorneys not to discuss the matter with anyone," Sweeney said.

The indictment of Hamilton shows White is moving up the food chain and could be targeting Trumka and DNC officials. But it is still unclear how vigorously she will pursue her investigation. The departure of Charles LaBella, the Justice official in charge of probing the campaign fundraising scandal, leaves White as the most notable symbol of integrity among professional prosecutors looking at the campaign fundraising scandals. The burden is on her now to show that Justice Department attorneys are capable of handling a sensitive investigation of officials of the incumbent administration's party.

John Fund is a member of the editorial board of The Wall Street Journal. He is also a contributing editor of IntellectualCapital.com.

Related Links

For more information about the labor organizations Fund criticizes, visit the sites of the Teamsters or the AFL-CIO. The Washington Post has compiled this chronology of the Teamsters' fundraising scandal. For a contrasting view of the

controversy, read Alexander Cockburn's "Beat the Devil" column in the current issue of The Nation. The Oct. 16, 1997 issue of IC on campaign finance reform featured a debate between Fund and former Clinton speechwriter David Kusnet on the use of union dues for political contributions.