The Associated Press
By LEIGH STROPE AP LABOR WRITER
Tuesday, June 17, 2003
WASHINGTON -- The ousted chairman of Ullico Inc. invoked his Fifth
Amendment right against self-incrimination Tuesday and refused to tell Congress
about a stock purchase program that earned millions for some union officials
and jeopardized the insurance company's financial health.
Robert Georgine, who resigned
under pressure last month from the union-owned company, appeared under subpoena
before the House Education and Workforce Committee, which has jurisdiction over
labor issues.
After pledging an oath of truth,
Georgine refused to answer a question about whether he was the architect of the
stock deals, citing the constitutional protection.
Georgine, his hands clasped on the
table and his lawyer sitting beside him, said: "Mr. Chairman, while I am
confident that I have done nothing wrong, on the advice of my attorney, I
respectfully decline, based upon my rights under the Fifth Amendment of the
Constitution of the United States."
Georgine also refused to answer
whether Ullico's officers directed former Illinois Gov. James Thompson, the
investigator they hired to examine the stock trades, to ignore federal pension
laws in his assessment of potential wrongdoing.
Thompson's report found that the
stock deals from 1998 to 2001 probably violated securities laws in Maryland,
where Ullico is incorporated.
Board members and executives were
allowed to buy stock in the private company at artificially low values and sell
at inflated prices before the shares were revalued. The arrangement netted
almost $6 million for the participating officials. Unions and their pension
funds, which hold 98 percent of the company's stock, weren't offered the
favorable terms.
"What seems clear is that
these officers and members of Ullico's board ... acted inappropriately and
reaped personal benefit at the expense of the very union members and pensioners
they have a moral and legal duty to represent," said the committee's
chairman, Rep. John Boehner, R-Ohio.
The stock deals were approved by
Ullico's board of current and retired union officials. Those labor leaders
didn't object until news accounts last year raised questions about the
transactions.
Tuesday's hearing had big
political overtones. Organized labor is the money and mobilizing force of the
Democratic Party, and several Democrats complained that the
Republican-controlled Congress failed to show such an interest in other
corporate scandals.
Ullico has been an embarrassment
for organized labor, which mounted a campaign after Enron and WorldCom to
obtain tougher laws to counter corporate greed.
Labor is cleaning up the mess,
said Damon Silvers, the AFL-CIO's associate general counsel and adviser to
Ullico's new chairman, Terry O'Sullivan, president of the Laborers
International Union of North America.
Georgine was forced out last month
with most of the board. New members have been installed, and an acting
president also is in place. Some union leaders have returned their profits.
Others have been given 30 days to return theirs.
Ultimately, the scandal caused
little financial harm to unions and their pension funds, unlike the problems at
Enron and WorldCom, where workers lost their jobs, homes and retirement
savings, Silvers said.
"There has not and will not
be the horrifying spectacle of dedicated, honest people being turned out in the
street with no severance or health care while executives wire themselves
severance bonuses, as has occurred at powerful companies many times Ullico's
size," he said.
But Rep. Charlie Norwood, R-Ga.,
said labor laws are too weak, giving only "a slap on the wrist" to
corrupt unions.
"There's no doubt in my mind
that Ullico board members knew that what they were doing smelled like week-old
fish," he said.