Auditor Set to Oversee Teamsters

The U.S. Justice Department, in an extraordinary move that may signal deepening concerns about wrongdoing by Teamsters leaders, named an independent financial auditor Monday to oversee the union’s spending and related dealings.

The auditor, Washington accountant Marvin M. Levy, is to be given broad authority to veto any financial transaction whenever he “reasonably believes” that such an action would break the law, violate the union’s constitution or represent an “abuse” of union funds or property. That appointment awaits what is expected to be routine court approval.

Monday’s action follows a ruling last week by a court-appointed overseer that disqualified Teamster President Ron Carey from running for reelection of the 1.4-million-member union. The overseer found that Carey, who rose to power as an anti-corruption union reformer, authorized the illicit diversion of more than $700,000 from the Teamsters treasury to his reelection campaign war chest.

The Justice Department’s move could signal government concerns about even broader wrongdoing not yet disclosed, labor experts said. The U.S. attorney’s office in New York, which reached an interim agreement with the Teamsters to appoint Levy, is leading a Justice Department investigation into Carey’s since-voided reelection last year.

Teamsters officials are now in “a virtual trusteeship,” said University of Michigan labor expert Michael Belzer. The auditor’s appointment “essentially takes away discretionary authority on the part of the Teamsters leaders to spend their funds and therefore to do the job for which they were elected. Their discretionary authority is very circumscribed at this point.”

Already, three former Carey campaign associates have pleaded guilty to participating in a conspiracy in connection with the reelection effort. Prosecutors are continuing to look into possible improper dealings between the Carey campaign and other key labor leaders with the national AFL-CIO labor federation, along with the Democratic National Committee, the Clinton-Gore campaign and allied political groups.

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Labor experts said the Levy appointment reflects the tougher approach the federal government is now taking in policing the Teamsters.

When Carey was disqualified from running for reelection last week, the court-appointed overseer also called for a close examination of the campaign finances of Carey’s rival, James P. Hoffa. As a result, the union’s rerun leadership election, originally scheduled to last from mid-February to mid-March, has been postponed.

“If there’s anybody who wants to step forward to lead this union, he better not have any skeletons in the closet,” Belzer said. “He’d better be clean.”

Although federal authorities have rarely subjected major unions to tight, daily oversight, one of the main precedents came with the Teamsters union itself. The union was supervised for more than three years by an independent arbitrator after signing a historic consent decree with the federal government in 1989 aimed at eliminating mob influence. Since then, Carey has run the union while undergoing scrutiny by election officials and the Independent Review Board, which looks into possible mob influence and other corruption.

But Teamster leaders had hoped to avoid close government supervision over the inner workings of the union. “Part of the reason they [Teamsters officials] signed the consent decree in 1989 was to avoid a situation like this,” said Arthur J. Jipson, a Teamsters expert at Miami University in Oxford, Ohio.

The new move by the federal government, Belzer said, suggests that “something significantly further is being found” by the ongoing review of the union by the IRB, which is looking into whether Carey, who continues as president of the Teamsters, should be removed even before a new election.

Richard Leebove, a spokesman for Hoffa in Detroit, hailed the appointment of Levy and called the action a “vindication” of the Hoffa camp’s contention that Carey should resign. Referring to the Teamster union’s finances, Leebove said: “We need to protect our meager treasury, because it’s been looted by Carey and his slate.” He said that the Levy appointment also reflects how existing Teamster overseers “have failed to prevent the embezzlement of Teamster funds.”

Nancy Coleman, a spokeswoman for the Teamsters brought in by the Carey administration, downplayed Monday’s news. She said the U.S. attorney’s office in New York “spoke to us and requested an additional level of oversight. We agreed it would be a good thing. It raises the comfort level of the U.S. attorney, and it assures our members that everything is as it should be.”

Coleman said she hopes that operations of the Teamsters, the nation’s biggest private-sector union, would not be hindered. “Obviously, it adds a step in the approval process for expenditures,” she said, before adding: “It should have no effect on our ability to deliver services to the members.”

Coleman also said she is “not aware” of any new developments in the investigations of the Teamsters, other than last week’s disqualification of Carey, that would have prompted the Levy appointment.

Levy, who declined to comment late Monday, is a managing director of the KPMG Peat Marwick accounting firm, specializing in its litigation and forensic services practice. He previously headed his own CPA firm. Before that, he held several government posts, including work as a senior management analyst for the FBI, a special agent of the U.S. General Services Administration and as a staff investigator for the U.S. House of Representatives Committee on Standards of Official Conduct.

Under the interim agreement between the Teamsters and the U.S. attorney’s office providing for the Levy appointment, the union agreed not to spend any money or transfer any property without the approval of the auditor. An exception, however, was made for “regularly recurring” expenses.

Levy, on the other hand, will not have the authority to review collective bargaining agreements with employers.

A more elaborate “final agreement” regarding Levy’s appointment is being worked out between the government and the union.

Arthur A. Sloane, a professor of industrial relations at the University of Delaware who long has followed the Teamsters, saw some irony in the government’s latest actions. He said the union is far cleaner today than it was before Carey was first elected in 1991.

“It sounds as though the government is going to continue to remind people that the Teamsters aren’t saintly, but it’s a very different union today, in terms of being far more honestly run and much more democratic. The wholesale pilferage of the health and welfare fund . . . , the huge Mafia inroads into the Teamsters--all of that is just about gone.”

Although Carey has said he plans to appeal his disqualification as a candidate for reelection, many of his backers already have begun to search for a replacement candidate who would make a similar push to rid the union of mob influence.