For Immediate Release
Monday, February 08, 1999
AFSCME Judicial Panel Upholds Administratorship of DC 37
NEW YORK —The Judicial Panel of the American Federation of State, County and Municipal Employees (AFSCME), which investigates allegations of wrongdoing within the union, today upheld the decision by International President Gerald W. McEntee to place District Council 37 under administratorship. McEntee placed the council under emergency administratorship last November and named Lee Saunders as administrator of DC 37 after allegations and admissions of financial and other wrongdoing in the Council and its locals.
“We knew we had to clean house,” McEntee said, “and to accomplish that we had to take decisive action. Today, the union’s Judicial Panel confirmed that our decision to place the Council under administratorship was a sound decision. Make no mistake about it: this union will continue doing whatever it takes to rectify the problems facing DC 37 and will do what is right for the 125,000 members we serve in New York City.”
The ruling by the Judicial Panel was based on a number of key findings, including:
- The Council did not have the kinds of financial policies, practices and controls that are needed to ensure that the funds of the union are spent for the benefit of the members;
- The leaders of the Council had intentionally misrepresented the Council’s financial condition in preparing its 1998 budget;
- The principal officers and certain top staff of the Council were provided with Council-paid American Express cards, but were not required to account for their charges on the account;
- The Council made certain payments on behalf of some of its affiliated local unions and deducted the amount of those payments from the dues rebates payable to the locals -- a policy that in the case of one local, Local 372, allowed the officers of the Local to hide certain expenditures from members;
- The Council’s financial condition deteriorated over recent years;
- There was extensive fraud in the ratification vote conducted on the Council’s 1995 city-wide economic agreement with the City of New York.
Since the Council was placed under administratorship, a number of steps have been taken to rectify the problems facing the Council and protect the interests of its 125,000 members. To date, AFSCME has:
- Launched two full-scale investigations to determine the depth of problems within DC 37 -- one conducted by KPMG Peat Marwick to audit all of the financial records of the Council and its locals, and the other by Kroll Associates to investigate the vote tampering. The union will provide full disclosure of its findings to the members and leaders of the Council, the public, and the Manhattan District Attorney, which is also investigating allegations of wrongdoing in a number of locals within DC 37;
- Placed one of the Council’s locals, Local 376, under administratorship in response to allegations and admissions of financial improprieties and vote tampering;
- Launched a full-scale review of the unions’ relationships with vendors and contractors -- in one instance deemed improper, the union discontinued a $450,000 retainer paid to an attorney working with one of the local unions within DC 37;
- Established new policies whereby all contract ratification votes within DC 37 will be conducted in a uniform manner, and will be overseen by an independent body such as the American Arbitration Association.
