UAW Case Highlights the Need for Transparency | U.S. Chamber of Commerce

UAW Case Highlights the Need for Transparency

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United Auto Workers logo
Photographer: Jeff Kowalsky/Bloomberg.

The United Auto Workers (UAW) has been in the spotlight recently following its stunning defeat in a representation election at Nissan’s Canton, Mississippi, assembly plant in early August.  After trying to galvanize support from a wide-ranging coalition of activist groups and celebrities like Danny Glover, Senator Bernie Sanders, and Democratic National Committee Chairman Tom Perez., the union managed to lose handily by nearly a 2-1 margin (2,244 to 1,307). 

One of the reasons for the UAW’s decisive loss was the revelation over the summer of a corrupt scheme involving UAW officials and executives at Fiat Chrysler in Detroit. A federal indictment filed on July 26 in the Eastern District of Michigan outlined a litany of alleged federal crimes that underscores the need for transparency in labor organizations.  The revelation of a significant criminal case also gave opponents of the UAW’s organizing effort fodder for their arguments just before the representation election. 

Indeed, the federal government’s allegations against former UAW officials and their associates read like something out of a movie.  According to the government, a former (and now deceased) UAW general vice president and his cohorts are accused of stealing $4.1 million from a UAW training fund to purchase items such as designer shoes, clothing, jewelry, a shotgun, golf equipment, concert tickets, and amusement park tickets for various UAW officials.  For good measure, they also allegedly purchased a Ferrari and two $37,500 Montblanc pens

Even worse, more recent press accounts reveal that the alleged co-conspirators “funneled money through a children's charity and laundered funds through a hospice that wasn't providing services,” leading the government to ask a federal court to allow it to keep $292,000 seized from the sham hospice.

This blog has previously noted that it does not frequently report on criminal cases involving union officials, but this one is of particular interest because it underscores the importance of the reforms to the LM-2 and related forms put in place by former Secretary of Labor Elaine L. Chao.  These forms are intended to provide union members with information about how unions are spending their dues money, thus allowing workers to exercise some oversight of the entities that represent them in the workplace—or, in this case, understand more about a union seeking to represent them.

Unfortunately, it seems that the revelations in the UAW case only came to light due to information received from individuals who became aware of the corruption.  Inasmuch as labor unions are required to report many aspects of their financial dealings to the government, which has led to some high-profile corruption cases, the Chao-era regulation to require reporting on training funds such as the one involved here was rescinded by the Obama administration.

The good news for Nissan’s employees is that they learned about the allegations against the UAW in time to make an informed vote in August.  One hopes that the new leadership at the Department of Labor will restore the reporting requirements for union training funds and other entities to make it easier to root out corruption, which is bad for any work place.