National Legal and Policy Center

 

Organized Labor Accountability Project

 

UNION CORRUPTION UPDATE

May 12, 2003

Vol. 6, Issue 10

For Influential Leaders & Important Decision Makers:

 

Information on  America's most corrupt & aggressive unions

 

ULLICO

 

Georgine Out as CEO, Now Faces Hearings in House and Senate

 

 

Robert Georgine gave up his fight to keep his job as chairman of the union-pension-owned Ullico on May 8, recognizing that an almost entirely new board was intent on pushing him out. "I can count the votes and it is clear to me that ULLICO will have new management," he said in a news release.

 

Georgine said he would allow the Board to keep his $2 million severance payment to repay the insurance company for his and other directors' profits from insider deals of Ullico stock. It won't go far toward covering Ullico's pretax loss of $115.9 million last year, much of it due to the free-fall of Ullico stock in tandem with Global Crossing's spiral toward bankruptcy. And Georgine would have done better to not run up $10 million in legal bills, some of it spent fighting the release of a report criticizing the transactions. Georgine's stated willingness to give up his severance is also an about-face from his previous insistence that neither he or the other union directors who profited from selling their shares of Ullico stock before it collapsed were obligated to return their profits.

 

[For a summary of the transactions, see

http://www.nlpc.org/olap/ucu3/05_07_01.htm.]

 

 

 

Replacing Georgine as Chairman is Terrence O'Sullivan, president of the Laborers Intl. Union of N. Amer., one of the few reelected board members, who did not participate in the stock deals. Georgine's problems are not over. A federal grand jury has subpoenaed several board members and company officials. The House Education and Workforce Committee has subpoenaed Georgine to testify about the scandal on June 10, and the Senate Governmental Affairs Committee has scheduled a hearing for June 19. [ULLICO News Release, 5/8/03: New York Times, 5/9/03: Associated Press]

 

 

QUOTABLE QUOTES / ULLICO

 

Now John Sweeney is Willing to "Expose" Union Wrongdoing

 

Unions "must be just as willing to expose and remedy conflicts at Ullico as we have been at other companies in corporate America." [Wall Street Journal, 5/9/03]

 

John Sweeney may wax eloquent about the obligation of union leaders to protect the workers they claim to represent. But he is more than three years too late.

 

As a Ullico director, Sweeney was there in late 1999, when Georgine offered the option of buying Ullico stock "low."

 

And he was there in 2000 and 2001 when the directors were allowed to sell it back "high."

 

Sweeney did not participate in the insider deals. But he apparently did not protest what he must have realized was a rotten deal for the millions of workers whose dues and pensions were tied to the gyrations in Ullico's stock.

 

One possible explanation for Sweeney's earlier silence involves a $24 million debt that the AFL-CIO has owed to Ullico's insurance arm to cover renovation costs at the federation's Washington, D.C. headquarters. During 2000 and 2001, there were no repayments, according to financial disclosure forms filed with the U.S. Department of Labor.

 

In 2002, the loan was converted to a mortgage. Presumably, Sweeney was aware of the AFL-CIO's debt to Ullico.


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