Cloud of corruption around Democrats' union patron

AFSCME and its President, Gerald McEntee, have given party more than $3.6 million

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As the Democratic National Convention gets under way in Los Angeles, the American Federation of State, County and Municipal Employees is once again leading the way in soft money donations to the Democratic Party, pouring in just less than $2 million to the party over the 2000 election cycle, according to numbers compiled by the nonpartisan Center for Responsive Politics. AFSCME's unparalleled support of the party (it is the largest soft money donor this cycle to the Democratic National Committee and related committees) continues the Democrats' tradition of keeping close ties to the labor movement. But while the news media focus on the union's financial generosity, little attention has been given to AFSCME's checkered history.

By 1996, there had been much mutual back-scratching between the Teamsters, the White House, and the Democratic Party. And so a deal was struck, a complicated scheme that happens to have been illegal:

The Teamsters would continue to pour unprecedented sums into the Clinton-Gore campaign and Democratic Party committees, and in exchange, the Democrats would help to finance Teamster President Ron Carey’s own re-election campaign. They couldn’t do that directly, of course, so the money was laundered through a liberal public-interest organization, Citizen Action, and through other groups, including the National Council of Senior Citizens and Project Vote.

Federal law prohibits employers from contributing to any union election. More than $4 million in Democratic National Committee money moved to Citizen Action and other groups, and at least $885,000 in union funds was illegally diverted into Carey’s re-election campaign.

Today, the carnage from this scandal casts a pall over the entire labor movement.

Three individuals pleaded guilty to embezzlement, mail fraud, and conspiracy and cooperated with the federal prosecutors. (One of them, Michael Ansara, continued to do major consulting business with the DNC via his company, the Share Group .) A fourth, William Hamilton, a former political director of the Teamsters union, was found guilty in November 1999 and sentenced to three years in prison. The AFL-CIO’s No. 2 official, Richard Trumka, who as secretary-treasurer signed some of the checks, has asserted his Fifth Amendment right against self-incrimination—to federal prosecutors, to a court-appointed labor investigator, to a congressional committee, and even to AFL-CIO president John Sweeney.

It’s difficult for many labor insiders to accept that Trumka hatched such a plan. No one seems to know for sure how the high-level labor conversations exactly went with respect to the illegal scheme involving the Democratic Party and the Teamsters, but Gerald McEntee, the president of AFSCME and the chairman of the AFL-CIOs political committee (a position he assumed in 1995), certainly was involved.

He has had a close personal friendship with Carey. McEntee retained an attorney, paid for by AFSCME, to represent him in the Teamsters matter and admitted to federal prosecutors that he sought a campaign donation of $20,000 to the Carey campaign from the owners of a company that does major business with AFSCME. Kelly Press, Inc., is barred by federal law from contributing to a union campaign, and McEntee apparently broke government-imposed rules for union elections by soliciting an AFSCME supplier. Paul Booth, an aide to McEntee who’s married to Heather Booth, a former DNC official and a founder of Citizen Action, also has said that he raised tens of thousands of dollars for Carey.

“What we did, according to our attorneys, was nothing illegal,” McEntee told the Center for Public Integrity. “We cooperated fully and completely with the people who were investigating this case, and that’s about the size of it.”

But there is, as they say, much more to the story.

McEntee has been the president of the nation’s largest union of public employees since 1981, after the death of Jerry Wurf. Wurf, who boosted the union’s membership from 200,000 to roughly one million—organizing police officers, firefighters, sanitation and hospital workers and other government employees from coast to coast—was enormously respected for his honesty and his independence. A case in point: He opposed the U.S. involvement in the Vietnam war, to the consternation of George Meany, then the president of the AFL-CIO.

Under Wurf, AFSCME became known as a pioneer in aggressively recruiting women and blacks. It is a forgotten footnote of history that it was the mostly black, striking garbage workers who in April 1968 drew the Rev. Martin Luther King Jr. to Memphis, where he was assassinated, were AFSCME members.

In McEntee’s two decades of stewardship, AFSCME’s membership has grown only modestly, and no one seems to know the exact number. The union’s annual reports to the Labor Department have suspiciously listed the same membership figure for the past five years: 1.3 million. As in many unions today, secrecy reigns. It is not well known that the progressive union respected for its commitment to civil rights and diversity — it once brought Nelson Mandela to speak to its national convention — was sued by 10 employees for race discrimination. AFSCME settled all the cases out of court.

“McEntee was made aware of the situation and he did not take steps to deal with it,” a union insider told the Center. “If you set a permissive environment, if people get a sense that discrimination doesn’t matter, then it will reverberate throughout the organization.”

Long considered one of the “clean” unions, a cloud of corruption has now begun to surround AFSCME. Besides the Teamsters scandal that’s swirling around McEntee and his aide Paul Booth, in recent years no fewer than six AFSCME international vice-presidents have been forced to resign. Consider the following:

In New York City, Stanley Hill, the executive director of AFSCME District Council 37, retired after spending several months on unpaid leave pending investigation. Two of his top aides resigned following their admissions that they had helped to rig the vote on the locals 1996 contract ratification. Also in New York City, Albert Diop was removed in 1999 as the president of an AFSCME clerical workers local. Diop and three others charged more than $1 million in personal expenses on their union credit cards and spent nearly $1.2 million on undocumented “hospitality” payments when traveling. Diop spent more than $600,000 to rent a penthouse apartment and ran up $162,431 in hotel charges in New York City for 446 nights, including 128 on weekends, even though he has a residence in the city. He also spent nearly $135,000 over three years to lease a Lincoln Town Car even though he already had a $665-a-month automobile allowance.

In Connecticut, Dominic Badolato was expelled from AFSCME for using illegal strong-arm tactics against his political opponents. In Boston, Joseph Bonavita had to leave his union after an audit revealed he had been paid $82,416 in unauthorized bonuses and undocumented reimbursements. In Iowa, Don McKee was convicted of helping himself to $43,000 in union money. And in Pennsylvania, Earl Stout was convicted of racketeering, embezzlement, and mail fraud.

“Wherever we have found this [corruption], we have rooted it out, and we have either suspended or dismissed the union leaders that were involved,” McEntee told the Center. “We are a good union, we are a clean union.”

Perks have increased

When Wurf died, he was making about $108,000 a year in salary and allowances and had refused a raise. By 1998, McEntee was making $375,000 a year, and he also got his friendly board to adopt a deferred compensation plan so that when he retires he will receive nearly 100 percent of his salary. “I think you ought to get decent pay, a decent pension, decent benefits,” McEntee told the Center.

AFSCME also provides McEntee with a car and a chauffeur as well as an $1,800-a-month automobile expense allowance. Sources told the Center that McEntee spends more than $100,000 a year in AFSCME funds to travel around the United States on charter jets and stay in the finest hotel suites, and he is a fixture at such “power lunch” expense-account restaurants in Washington as The Palm, where his caricature is on the wall. None of this information, of course, is in AFSCME’s annual reports to the Labor Department .

Referring to McEntee and, in general, the unseemly extravagances of todays union leaders, a veteran AFSCME member who asked that his name not be used told the Center, “They think they’re becoming the captains of industry, for chrissakes! . . . I guess they forgot what they’re supposed to be doing.”

Benefited from vendors

The Center has learned that McEntee personally benefited from the generosity of certain AFSCME vendors, a violation of union rules.

Consider the case of Kelly Press, which contributed $20,000 to the Teamster election at McEntee’s urging. Over the years, the company has gotten millions of dollars in printing business from AFSCME . McEntee and Paul Kelly, a co-owner of the company, frequently play tennis at Congressional Country Club in Bethesda, Md., where Kelly is a member, and sources told the Center that McEntee has been an occasional guest on the Kellys’ fishing boat. The relationship goes back at least a decade: When McEntee was remarried, Kelly arranged for the wedding reception to be at Congressional.

“The only way that you can have a wedding there is that a member has to sponsor you,” McEntee told the Center. “So the Kellys sponsored us.”

Close to President Clinton

No union president is closer to Bill Clinton today than McEntee; the two men have assiduously courted each other for nearly a decade now. AFSCME was the first national union to back Clinton, even before the 1992 New Hampshire primary, when he was still a dark horse. Clinton had spoken to the AFSCME board, and he brought along a letter of support from 840 AFSCME members in Arkansas. He even showed them his own AFSCME membership card. Days later, McEntee assigned three staff members to work for Clinton in New Hampshire. And so it began.

Since 1993, McEntee has reveled in his personal access to the president. From the private St. Patrick’s Day party at the White House and various Rose Garden events, to trips on Air Force One and Friday night bull sessions at the White House mess, McEntee, to quote a veteran union insider, “got lost in space over that stuff.” (“I’ve only been on Air Force One maybe six times—that’s six times in eight years—so it’s not like I take a trip every three weeks,” McEntee told the Center.)

At McEntee’s 60th birthday celebration a few years ago at Washington’s Capital Hilton hotel, Clinton spoke warmly about how McEntee had always been there for him. McEntee and AFSCME have certainly been there financially for Clinton and his party, more than anyone else in America, to the tune of more than $3.6 million.

The union has an elaborate get-out-the-vote operation, a voter registration effort and an extensive phone bank system, in addition to the contributions to politicians that it has made at all levels of government. McEntee led the AFL-CIOs highly publicized $35 million ad campaign in 1996. And McEntee, the Center has learned, called a meeting to personally urge higher-ups at AFSCME to make contributions to the presidents legal-expense fund.

Unfortunately, such access comes at a steep price. On policy issues of greatest concern to AFSCME’s members, in public McEntee has been largely silent. McEntee doesn’t criticize Clinton by name, and if he feels obligated politically to criticize the administration, which is rare, he has sometimes called the White House in advance to explain it and quietly warn Clinton and his staff.

Ralph Nader vs. McEntee

Take, for example, the subject of national health care insurance. For years, AFSCME had advocated the liberal “single payer” plan with the greatest government role—not surprising for a union whose largest contingent is 325,000 health and hospital workers. But under the Clinton-McEntee spell, the union muted its public advocacy for this policy and fell in line behind the White House. As the Center described in its 1994 study, “Well-Healed: Inside Lobbying for Health Care Reform,” just weeks before Clintons inauguration in January 1993, there was a high-level, unusual confrontation at AFSCME headquarters between Ralph Nader and McEntee.

Nader invoked the example of Franklin Roosevelt, after he had been elected president, telling his supporters, “You elected me, now go out there and make me do it.” Nader argued that advocates of a single-payer approach could not squander the opportunity and had a moral obligation to speak out forcefully. By contrast, McEntee stressed the extraordinary access they all now had after 12 years of being completely shut out. The basic response was, “Were going to handle this our way, behind the scenes.”

AFSCME chose not to wage a postcard campaign, or to support a very public bus caravan to Little Rock, Ark., to promote the single-payer option. And in early 1993, at a meeting of the AFL-CIO health care committee, McEntee and AFSCME voted in favor of managed competition, abandoning its long-held single-payer position. AFSCME also poured money into television “issue ads” in support of the Clinton health care plan—ads that were intended to counter the highly effective “Harry and Louise” commercials paid for by the insurance companies. In addition, the Center has learned that when the president and the first lady embarked on a bus tour “to the heartland” to garner public support for the administrations ill-fated plan, McEntee’s union agreed to help pay for it.

The bottom line, however, is that during the 1993-94 struggle over health care reform, organized labor, including AFSCME, was politically ineffective and ultimately unsuccessful.

McEntee remains unbowed

McEntee remains unbowed about his inside approach, however. In the spring of 1996, he met with Clinton, urging that the White House address the public concern over managed health care, and months later the president named McEntee to a commission on health care quality.

The “reinventing government” mantra of the Clinton-Gore administration has presented McEntee with an interesting problem, as AFSCME faces initiatives nationwide to privatize many traditional state and local government functions—which, on its face, is a direct affront to the union’s membership. McEntee’s public position is to support the idea of making government more efficient and responsive by eliminating red tape and redundant management, and to decry privatization when it cheats citizens by failing to provide adequate services by trained employees. AFSCME forged an innovative privatization agreement with the Republican mayor of Indianapolis, Stephen Goldsmith, in which the local union avoided mass layoffs. McEntee has testified before Congress that AFSCME regularly wins back 80 percent of privatized contracts, by bidding successfully or working with management to redesign the system in lieu of privatization.

Back-door concessions

McEntee was not directly critical of the president when he proposed welfare reform, which union leaders have estimated could cost more than 200,000 jobs, and got it enacted. But he and other union leaders successfully lobbied the administration—over Republican opposition on Capitol Hill—to rule that people who must work for their welfare benefits are protected by federal labor law and entitled to the minimum wage.

McEntee and others were able to gain another back-door concession. In a March 28, 1997, meeting with the president, McEntee, Sweeney, and two other union presidents urged Clinton to reject a request by Texas Gov. George W. Bush, a Republican, for federal permission to allow private companies to manage several Texas welfare programs, which could have meant the loss of 5,000 public jobs. Weeks later, Clinton sided with McEntee and labor, which Bush complained would cost the state $10 million a month.

#In the interest of full disclosure, it should be noted that The Center for Public Integrity accepted contributions from labor unions including AFSCME (and corporations) from 1990 to 1995, totaling $197,500. McEntee served on the Center’s board of advisors from 1990 to 1992.

Related Report:

 

Turning to a second legal loophole after another was closed, AFSCME quietly creates a group that is televising an advertisement harshly critical of Gov. George W. Bush. (New York Times, August 11) (Free registration required)

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