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, was 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.

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.

The Teamsters 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 may be the first time any major national union has submitted its internal operations to tight, daily oversight by federal authorities. They said it also reflected a 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, Belzer noted.

“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.”

Under a historic consent decree reached between the Teamsters and the Justice Department in 1989, the union already has been under the scrutiny of election officials and the Independent Review Board, which looks into possible mob influence and other corruption.

But the appointment of Levy takes that scrutiny an important step further into the inner workings of the union, said Arthur J. Jipson, a Teamsters expert at Miami University in Oxford, Ohio. “Part of the reason they [Teamsters officials] signed the consent decree in 1989 was to avoid a situation like this,” Jipson said.

One of the few possible precedents for the Levy appointment also involved the Teamsters, a union that for decades has been gripped by mob influence. Back in the 1950s, the union was supervised by a three-member board of monitors but, labor historians said, the panel was largely ineffective.

“I suspect,” Belzer said, “that something significantly further is being found” by the ongoing review of the union by the Independent Review Board. The IRB is looking into whether Carey, who continues as president of the Teamsters, should be removed even before a new election.

Richard Leebove, a Hoffa spokesman in Detroit, hailed the appointment of Levy and called the action a “vindication” of his camp’s contention that Carey should resign. Referring to the union’s finances, Leebove said: “We need to protect our meager treasury, because it’s been looted by Carey and his slate.” He said 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 could not be reached for comment, 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.