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Y 4.ED 8/1: 105-86

FINANCIAL AFFAIRS OF INTERNATIONAL

BROTHERHOOD OF TEAMSTERS

HEARING

BEFORE THE

SUBCOMMITTEE ON
OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON EDUCATION AND

THE WORKFORCE
HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS

SECOND SESSION

HEARING HELD IN WASHINGTON, DC, MARCH 26, 1998

Serial No. 105-86

Printed for the use of the Committee on Education and the Workforce

DEPOSITORY,

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 1999

55_063

APR 0 8 1999

SCT niversity
For sale by the U.S. Government Printing Office ansson Library
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-058230-X

COMMITTEE ON EDUCATION AND THE WORKFORCE

WILLIAM F. GOODLING, Pennsylvania, Chairman

THOMAS E. PETRI, Wisconsin
MARGE ROUKEMA, New Jersey
HARRIS W. FAWELL, Illinois
CASS BALLENGER, North Carolina
BILL E. BARRETT, Nebraska
PETER HOEKSTRA, Michigan
HOWARD P. “BUCK" McKEON, California
MICHAEL N. CASTLE, Delaware
SAM JOHNSON, Texas
JAMES M. TALENT, Missouri
JAMES C. GREENWOOD, Pennsylvania
JOSEPH K. KNOLLENBERG, Michigan
FRANK D. RIGGS, California
LINDSEY O. GRAHAM, South Carolina
MARK E. SOUDER, Indiana
DAVID M. MCINTOSH, Indiana
CHARLIE W. NORWOOD, JR., Georgia
RON PAUL, Texas
BOB SCHAFFER, Colorado
JOHN E. PETERSON, Pennsylvania
FRED UPTON, Michigan
NATHAN DEAL, Georgia
VAN HILLEARY, Tennessee
JOE SCARBOROUGH, Florida

WILLIAM (BILL) CLAY, Missouri
GEORGE MILLER, California
DALE E. KILDEE, Michigan
MATTHEW G. MARTINEZ, California
MAJOR R. OWENS, New York
DONALD M. PAYNE, New Jersey
PATSY MINK, Hawaii
ROBERT E. ANDREWS, New Jersey
TIM ROEMER, Indiana
ROBERT C. “BOBBY" SCOTT, Virginia
LYNN C. WOOLSEY, California
CARLOS A. ROMERO-BARCELO, Puerto Rico
CHAKA FATTAH, Pennsylvania
RUBEN HINOJOSA, Texas
CAROLYN MCCARTHY, New York
JOHN F. TIERNEY, Massachusetts
RON KIND, Wisconsin
LORETTA SANCHEZ, California
HAROLD E. FORD, JR., Tennessee
DENNIS KUCINICH, Ohio

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The subcommittee met, pursuant to notice, at 10:03 a.m., in Room 2175, Rayburn House Office Building, Hon. Pete Hoekstra (chairman of the subcommittee) presiding.

Present: Representatives Hoekstra, Norwood, Ballenger, Hilleary, Schaffer, Mink, Scott, and Kind.

Also present: Representatives Clay, and Owens.

Staff present: Robert Borden, Professional Staff Member; Jay Diskey, Communications Director; Patrick Lyden, Staff Assistant; Bill McCarthy, Press Secretary; Mark Rodgers, Workforce Policy Coordinator; Kevin Talley, Staff Director; Cindy Von Gogh, Calendar Clerk/Advance; August Stofferahn; Mike Reynard; Mike Quickel; Joe di Genova; Victoria Toensing; John Loesch; Brian Connelly; Philip Smith; Fred Smolen; Lisa Rich; Bill Outhier; Gail Weiss, Staff Director; Mark Zuckerman, Deputy Counsel/Press; Brian Compagnone, Staff Assistant; Jim Jordan, Special Counsel; Cassandra Lentchner, Special Counsel; Michael Berlin, Counsel; John W. Lee, Senior Investigator; and Lisa Lotkin, Executive Assistant.

Chairman Hoekstra. (presiding] The subcommittee will come to order. The subject of today's hearing is the financial affairs of the International Brotherhood of Teamsters.

STATEMENT OF THE HON. PETE HOEKSTRA, CONGRESSMAN FROM THE STATE OF MICHIGAN

Part of this unfortunate story we already know. Through this subcommittee's hearings last October, through articles in the press, and through findings of the election officers and the proceedings of the court in the Southern District of New York, we know that despite seven years of Federal supervision and $20 million of taxpayer's money, the IBT election of 1996 was fatally flawed. It failed and must be redone sometime this year.

We now know, in at least some detail, that President Ron Carey's effort to reelection was marred by illegal financial dealings and that the IBT's own funds secretly funneled into the Carey campaign through various laundering schemes. And we know that Carey's campaign consultant wrote a memo to Mr. Carey, naming dozens of people at the IBT headquarters who worked full time on getting Carey reelected while they were on the International's payroll. That too was illegal.

The 1996 election, however, is not the focus of this subcommittee's investigation. Our focus is larger in scope, as we have made clear to those we have been force to subpoena for documents. This is a permanent standing subcommittee of the House with broad oversights powers and responsibilities. Over the next months we will be looking at three money trails: the finances of the IBT, which is our focus today; the $20 million spent by the Federal Government to finance the cost of the 1996 election; and the illegal swap schemes used to finance the Carey campaign for reelection.

We start this morning by looking at the finances of the Teamsters. The fail election of the Teamsters was not an isolated event. Rather, it was the culmination of at least four years of Ron Carey's arrogance and abuse of power, his total disregard for the rank and file members, and his lack of respect for legal safeguards intended to reform the

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