Posted on 06/18/2003 3:22:44 PM PDT by webber
By David Keene
The scandals at Enron and Global Crossing shook Washington as well as the markets and the investor community because, in each instance, corporate executives and their cohorts in the reporting and accounting world figured out how to either avoid reporting what they were up to or to hoodwink everybody by filing incomplete or misleading reports with regulators and those who follow their activities.
The result was a demand for increased corporate transparency and, eventually, the passage of legislation requiring thorough and understandable disclosure. That meant that those most likely to be hurt by such shenanigans would in the future be able to figure out just what's going on in corporate America.
Congress responded with the Sarbanes-Oxley bill that imposes new and more detailed reporting and auditing requirements on corporations seeking investment capital. Transparency, it was argued, would restore corporate credibility and prevent future abuse.
Leaders of organized labor and their friends in Congress led the demand for greater transparency. The AFL-CIO's John Sweeney argued, for example, that "transparency, accountability and full and accurate disclosure should be central goals of financial regulation." He want on to demand that such disclosure should be made available via the Internet and that existing laws be changed so that "employees can make truly informed decisions about their investments."
Now, however, Sweeney and his colleagues are arguing the opposite, not realizing that what was sauce for the goose may also be sauce for the gander.
They favor transparency for corporate America, but are dead set against anything approaching understandable reporting requirements when it comes to their use (or misuse) of the money that they collect from those very same employees as union dues.
Since the passage of the 1959 Landrum-Griffin Act, unions have been required to file annual disclosure forms known as LM-2s with the Department of Labor that supposedly provide some transparency to those interested in just how they spend their member's money. But these disclosure requirements are vague and don't provide anything even approaching the transparency we demand of corporate America. Indeed, to say that many unions scoff at real disclosure and treat the filing of the LM-2s as something of a joke is to understate the situation.
How's this for full and complete reporting. In 2001, the National Education Association, one of this country's most politically active unions, reported on its LM-2 that it didn't spend anything on politics, but did disburse nearly $69 million in the form of "contributions, gifts and grants," to its affiliates. Hmm.
Or, how about this tidbit from the New York local of the Service Employees International Union, which reported with a straight face that it, spent $3,927,968.00 on "sundry expenses."
When Landrum-Griffin worked its way through the House, the committee report accompanying the bill said the reason for requiring the reporting was that "with such disclosure, and by relying on voluntary action by members of labor organizations, it is hoped that a deterrent to abuses will be established." But that hope has been proved hollow as thousands of union officials have been indicted and convicted in the years since for activities that would make Enron's Ken Lay blush.
When Elaine Chao became labor secretary, she decided that the LM-2s should be updated to provide greater transparency and meaningful information to union members in a timely manner by posting the information on the Internet. Labor went berserk, arguing that such burdensome reporting requirements and simply reflected the "anti-labor" mentality of the Bush administration.
Chaos persisted. She proposed exempting nearly 80 percent of unions, imposing the more detailed reporting requirements only on the largest ones and estimating that the burden of filing would only require about 50 hours of additional time per union - hardly a killer when the reporting could let members know just where their money was going.
When Democrats controlled the Senate, labor leaders got their friends in that body to try to prevent any money from being spent to implement the reforms. But since the last election they have had to go back to the drawing board, as even the most hypocritical of their friends have proven reluctant to defend such self-serving stonewalling.
One compromise: Exempt those unions who can show that they have had their own finances audited by a firm like Arthur Andersen. Which just goes to show that at least John Sweeney learned something from the boys and girls at Enron.
You have been here since 98 and you just started noticing ?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.