Rick Ouston

21 October 1998

Union dues from some of Vancouver's poorest-paid union members were squandered by leaders of the Hotel Employees and Restaurant Employees International Union, a U.S. investigation has found.

The money, collected from the 12,000 union members in the Vancouver local and 230,000 other members throughout North America wound up paying for a fleet of Cadillacs for union bosses, a private jet for the union's former president and questionable payments to consultants and organizers who apparently neither consulted nor organized.

The report was prepared by former U.S. federal prosecutor Kurt Muellenberg, who said in an interview from Washington, D.C., that it wasn't feasible to send copies of his 85-page report to all union members. But he said he asked all locals to inform their membership about his findings.

"I can't force anyone in Canada to do anything," Muellenberg said, adding that his office has received at least one call from a concerned Vancouver union member who was trying to learn the report's contents.

Nick Worhaug, president of Local 40 of the Hotel, Restaurant and Culinary Employees' and Bartenders' Union and a vice president of the international union, said the report has not been posted in his Burnaby office.

"No one has asked me, Local 40, for a copy of the report," he said. "If somebody comes to me and says they want a copy of the report, they're quite welcome to have it."

The report found union leaders paid themselves extra for attending conventions -- Worhaug received a $2,500 "allowance" for attending a board meeting in 1996 -- allotting $478,150 US in allowances during fiscal 1996-97. But Worhaug said the extra money should just be viewed as part of his over-all remuneration.

Documents filed with the U.S. department of labour showed Worhaug received an extra $49,480 US in 1996 in salary, allowances and travel expenses for his role as vice-president of the international union. That was on top of his $80,000 Canadian salary.

The results of Muellenberg's three-year investigation were made public in the U.S. last month.

The report led to the resignations of more than a dozen top union leaders, several of whom were determined to be tied to organized crime rings, although it makes no mention of any criminal ties in Canada.

Muellenberg noted that Vancouver union members pay an average of about $20 in monthly union dues, $10 of which goes to the international union, whose officers are based in Chicago and Washington.

The dues are collected mostly from low-level hotel, resort and restaurant employees -- some of whom are paid little more than the minimum wage.

But instead of being spent on union business, the report found, the money was used to pay for such things as a luxury condominium in Washington for the exclusive use of then president Edward Hanley and his family, a $3-million private jet for Hanley's use, "consultants" who performed little or no work, and union "organizers" who received salaries but do not appear to have done much, if any, organizing.

There was a fleet of Cadillacs for union bosses and a $100,000 motor home parked near Hanley's house.

Hanley and his personally- appointed union leaders spent union funds on lavish travel, union-issued credit cards, entertainment and seemingly artificial jobs for friends, family members, politicians and people associated with organized crime.

Hanley's wife had her own Cadillac convertible leased by the union, bearing vanity plates inscribed with her initials.

"Union funds are to be held in sacred trust for the benefit of the membership," the report said. "The membership is entitled to assurance that union funds are not dissipated and are spent for proper purposes."

Hanley stepped down from his job as part of a deal in which he did not agree to any of the charges but also did not contest any of the allegations.