The Trump administration announced new union financial disclosure rules on Thursday that it said would have detected the type of fraud that resulted in the convictions of former United Auto Workers officials for embezzlement of union trust funds.
“The final rule notes the recent convictions of United Auto Workers’ and Fiat Chrysler Automobiles’ officials for criminal acts involving funds meant to operate a training center for union members,” the Labor Department announced, adding that, had the new rule been in place at the time, “these acts would likely have been discovered earlier.”
The announcement comes the same day that U.S. attorneys indicted former UAW President Gary Jones on Thursday on charges of embezzling more than $1 million in union funds by falsifying financial reports. The indictment grew out of an investigation into corruption at the union that began with the trust fund fraud. Jones’s indictment does not appear to involve trusts, however.
The new rule requires that unions file annual reports, dubbed “Form T-1,” covering any financial trusts in which they have an interest. The requirement closes a blind spot in existing union financial disclosure rules that previously only covered funds over which the labor groups had exclusive control. Placing union money in trusts, therefore, allowed labor leaders to have access to funds that were invisible to the government as well as to their own rank-and-file members.
The department highlighted the latter fact, saying the new rule would allow union members to hold their leaders accountable. “Further, this rule is designed to provide labor organization members a proper accounting of how their labor organization’s funds are invested or otherwise expended by the trust. Such disclosure helps deter fraud and corruption involving such trusts.”
The UAW-Chrysler case involved the diversion of $1.5 million in funds provided by union members that were intended for a worker training center to be jointly run by the union and the company. Company officials used the fund as a means to bribe union leaders for favorable terms during labor contract negotiations. An FBI investigation resulted in eight criminal convictions in 2018.
The department extensively cited the case to justify its rule. “The harsh lessons learned from the UAW/Fiat Chrysler scandal, the ability of a union to collaborate with an employer to attain domination allowing for distribution of trust assets, including employer funds, is not to be underestimated,” the rule said.
A Labor Department official said the new rule had been in the works for months and that the timing of the announcement was coincidental.
Republicans applauded the announcement. Reps. Virginia Foxx of North Carolina and Tim Walberg of Michigan said, “Workers who pay a labor union, voluntarily or involuntarily, deserve to know how their hard-earned dollars are being spent.”
UAW said Thursday that “Jones and all who betrayed the trust of our union should be held accountable to the fullest extent of the law, with no exceptions.” The union stated that Jones and others had been ejected from the union when the corruption came to light.
