Rank and file Boilermakers deplore their bosses’ corruption, and the Labor Department’s protracted investigations. Documents obtained by The Star implicate union bosses in pension fund losses by every sort of method possible: nepotism, preference given to family members, excessive monetary gifts to union employees, conflicts of interest, cronyism, outrageous gratuities and perks.
Letters between US Department of Labor officials and union big wigs reveal a multitude of highly suspect actions by those who manage the unions finances and pension funds.
Judy L. Thomas tells the story in the Kansas City Star.
Rank-and-file union members, who in the past decade have watched their pension fund go from a classification of “healthy” to “endangered,” want to know why federal officials have taken so little action.
In January 2006, the Labor Department said in a letter that it also was conducting a civil investigation of the Boilermakers National Funds (BNF), which includes the union’s three pension and benefit funds. The $9 billion funds are administered by trustees, some appointed by the Boilermakers and some by employers who do business with the union.
One area under investigation was the selection of investment managers.
In the second case, the investment committee of the Boilermaker-Blacksmith National Pension Trust, another of the funds, evaluated six prospective money managers in 2004. One of the firms was HGK Asset Management.
The Labor Department questioned the hirings in its letter, saying the BNF paid significant fees to Callan Associates to identify qualified money managers.]
The letter said hiring money managers that employed the children of trustees Murphy and Rogers “poses objectivity concerns for the Department even though these men did not participate in the vote to hire these money managers.”
The letter also raised concerns about a law firm.
The Labor Department also alleged that trustees received a variety of gratuities from money managers, letters said.
“Such gratuities include massages, scenic tours, college and professional football tickets, major league baseball tickets, hotel accommodations, rounds of golf at premier courses, golf apparel, golf equipment, a wedding gift for the daughter of a trustee and theme parties/dinners,” one letter said.
In a follow-up letter, an official with the Department of Labor’s Employee Benefits Security Administration detailed the acceptance of gifts by three BNF trustees — Murphy, Larry McManamon and Frederick “Lucky” Hayes — when they served from Jan. 1, 1999, through March 2003.
McManamon had received rounds of golf at Augusta National and other premier courses, golf apparel, golf equipment, a wedding gift for his daughter, hotel accommodations, professional football tickets, major league baseball tickets and massages, according to the letter.
Murphy had accepted rounds of golf at premier courses, golf apparel and equipment, college and professional football tickets, major league baseball tickets and cigars, the letter said. Hayes had received golf, football and baseball tickets and hotel accommodations.
Federal officials also questioned spending by employees of a Boilermakers affiliate called the Mobilization, Optimization, Stabilization and Training trust, or MOST. Its purpose is to help maintain a highly skilled work force and teach safe work habits.
During the same time frame, investigators also were focusing on former BNF executive administrator Vernon Keith Reed.
The nine-count indictment alleged that Reed and Taylor conspired to embezzle from the pension and benefit funds through the construction work that took place from 1999 through 2001.
A May story in The Star reported that a legal motion dated March 27, 2012, asked a judge to enforce grand jury subpoenas issued in the case. The motion noted that the Employee Benefits Security Administration had launched the investigation of the union’s employee benefit plans after receiving several anonymous complaints alleging “waste and mismanagement” of the funds by trustees.
Boilermaker members want to know what’s taking so long.
Ed Lacey, former president of Boilermakers Local 83, said he met with a Labor Department investigator in May to discuss his concerns about the pension fund and other issues.
“She said they’ve been looking into this for several years,” he said. “I don’t know what the government’s been doing — just playing tiddlywinks, I guess.”