U.S. Orders Teamsters to Hold New Election

By Frank Swoboda
Washington Post Staff Writer
Saturday, August 23, 1997;
Page A01

The federal government yesterday threw out last year's reelection of Teamsters President Ron Carey and ordered a rerun of the vote, after finding that a "complex network of schemes" was used to illegally finance his campaign.

The decision is a major blow to both the federal government, which has been trying to clean up the union for more than 40 years, and the labor movement, which just days ago was basking in the success of the Teamsters strike against United Parcel Service of America Inc.

The new election will once again pit Carey, the onetime reform candidate, against James P. Hoffa, son of the late Teamsters president Jimmy Hoffa, in a contest for control of the 1.3 million-member union. Carey narrowly defeated Hoffa last November in a secret-ballot mail election.

Barbara Zack Quindel, the federal official who oversaw the election, said her investigation found no evidence of any misconduct by Carey or other candidates on his slate. So, she said, she rejected the Hoffa camp's request that she disqualify them from running again.

But Quindel left the door open to disqualifying them if more evidence emerges. In her ruling, she said her investigation "suggests that there may be additional improper schemes, additional instances of improper uses of IBT [Teamsters] assets and additional participants in improper activities."

Quindel's ruling is subject to approval by a U.S. District Court in New York City, which has been overseeing the union for nearly a decade. Election officials expect court approval by mid-September. The balloting by mail would be completed within four months after that.

The new election will involve all but six of the union's 27 international officers. Quindel said she will allow to remain in office five candidates from Hoffa's slate who won vice presidential positions from the union's Central States region, and a Canadian official elected without opposition. All the remaining Carey candidates on the member board will have stand for reelection.

The election results require federal certification under the terms of a 1989 consent decree the Teamsters signed with the Justice Department to settle a civil racketeering suit in which the government accused the union of being a wholly owned subsidiary of organized crime.

The Teamsters issued a statement pledging full cooperation with the government's decision, saying it will review Quindel's findings and take any appropriate actions.

The message from Carey's campaign committee was much more combative. "The decision to rerun last year's election is welcomed by the Carey campaign. We are rolling up our sleeves and today we stand ready to turn back the old guard for the third time in six years. With the greater unity in the Teamsters union since last year's election, Ron Carey should win the new one by an even greater margin. A new election will be healthy for the union and should remove any cloud of doubt over last year's campaign," the committee said in a statement personally approved by Carey.

Hoffa spokesman Richard Leebove said he was disappointed in Quindel's decision, arguing that Carey and the members of his slate should be removed from office immediately. "He gets to sit in the Marble Palace [Teamsters headquarters] while all this is going on. He gets to control the treasury," Leebove told Bloomberg News.

Carey first won his office in a 1991 federally supervised election in which he ran as a reform candidate against the union's old-guard leadership. He had since won praise from both the government and others outside the union for helping clean up the Teamsters. Three of six Teamsters presidents who served before Carey were jailed for corruption, and a fourth died under indictment.

Just four days ago, Carey was being hailed by organized labor for his handling of the Teamsters' successful 15-day strike against UPS, a strike labor had held up as a national symbol of the resurgence of the labor movement.

The AFL-CIO yesterday issued a brief statement. "It is our hope that the court will handle the rerun election fairly and we hope the outcome will be in the interests of the members of the Teamsters union," the federation said.

Leebove, Hoffa's campaign spokesman, accused Quindel of trying to help Carey by waiting until the UPS strike had been won before announcing her decision.

Quindel, in a interview yesterday, acknowledged that she waited to issue the ruling. "I wasn't ready to issue my decision until the strike had already begun. I didn't want it to be a factor in the dispute," she said.

The election officer said she took the action against the Carey campaign because "there has to be an accountability. If you break the rules there are serious consequences."

A federal grand jury in New York also is investigating the financing of Carey's campaign as well as the union's financial ties to the Democratic National Committee in both the Carey and congressional elections last year.

Mary Jo White, U.S. attorney for the Southern District of New York, who is directing the grand jury investigation, would not comment on the Teamsters case other than to congratulate the "thoroughness" of Quindel's investigation.

The investigation into Carey's campaign has resulted in criminal charges against two Teamsters consultants, one of whom has pleaded guilty to conspiracy and is cooperating with the inquiry. Sources close to the probe expect the grand jury to hand up indictments against several officials from the Teamsters staff and Carey's campaign. Quindel's report, filed with the court, outlined a series of alleged money-laundering schemes involving money from both the union's general treasury and money from its political action fund.

The alleged schemes were said to be an attempt to get around the rigid rules under federal labor law that prohibit a union candidate from receiving money from any employer, whether or not that individual is a Teamsters employer. A doctor with a receptionist and a bookkeeper, for example, is considered an employer for purposes of the law.

As a result of this prohibition, Quindel said in the court filing, the Carey campaign devised ways to get contributions from individual employers by promising to pay them back, either through kickbacks from business contracts with the union or by promising to have the union contribute to their political causes.

An example cited by Quindel involved a group of wealthy benefactors in California known as the Social Venture Network. SVN was described in the court paper as "a loosely connected group of about 300 wealthy individuals, many of whom have inherited money, who gather together with representatives of various organizations to exchange ideas about social projects to which SVN members could contribute."

According to the government, one of those social projects was the Carey campaign. Quindel said Teamsters agents would solicit money for the Carey campaign in exchange for a promise the union would contribute "multiples" of that amount for get-out-the-vote efforts on behalf of their favorite causes.

As a result, Carey's campaign gained money at the expense of the union's political fund, according to Quindel.

One unanswered question yesterday was just who would pay for the new elections. The federal government has paid for the last two -- Carey's original victory in 1991 and last year's contest -- to the tune of nearly $50 million as part of the consent decree with the Justice Department. Quindel said the cost of supervising last year's election so far was $17.5 million and climbing. The government budgeted $21.2 million for the election.

Quindel said the cost of the rerun would have to be worked out between the government and the camps of the two candidates. She would not speculate on the government's continued willingness to pay for the elections.

Rep. Peter Hoekstra (R-Mich.), chairman of the House subcommittee with oversight on labor matters, issued a statement yesterday questioning the government's willingness to pay any more money and suggested waiting to rerun the election until Congress had a chance to take a look at the situation. "It is clear that even with $20 million the government can't ensure a fair election," he said.