Union paid firms with family ties
The Service Employees International Union’s headquarters has paid millions of dollars to consulting firms, political nonprofits and individuals with family ties and other personal connections to some of the labor organization’s top officers, records show.
One company partly owned by a union director also received more than $1 million in SEIU consulting fees.
The nation’s fastest-growing union, the SEIU bills itself a standard-setter in the drive to reform and modernize the labor movement. It has adopted a code of ethics that bars officers from directing business to their relatives, although a spokeswoman said no competitive bidding process is required when such contracts are awarded.
Labor Department records from 2003 through last year show that:
The SEIU and its political affiliate contributed $3 million to America Votes, an advocacy organization that was headed by Cecile Richards, wife of an aide to SEIU President Andy Stern, at the time the payments were made.
Melissa Mullinax was an SEIU political director when the political consulting firm she held a 20%-to-25% stake in, The Edison Group, was paid more than $1 million, including expenses. In addition, the SEIU has spent about $41,000 on a graphic design company owned by Mullinax’s husband, Jason Abbott.
The union paid about $520,000 to a consulting firm co-founded by Democratic Party and labor strategist Steve Rosenthal, the husband of another SEIU director, Eileen Kirlin. Rosenthal, a longtime friend of Stern, also headed America Coming Together, a get-out-the-vote nonprofit that received $23 million from the union.
Pamela Kieffer, wife of a third union director, David Kieffer, has received about $70,000 in consulting fees and in separate payments from a firm that provided recruitment services to SEIU.
In addition, the SEIU and an associated nonprofit paid roughly $210,000 in consulting fees over four years to Don Stillman, husband of the union’s outside legal counsel, Judith Scott. Stillman helped edit a 2006 book written by Stern, a publication that has generated controversy because of how the union president profited from it.
Although she is not an SEIU staffer, Scott disclosed her husband’s relationship with the union on U.S. Labor Department disclosure forms filed by officers.
SEIU spokeswoman Michelle Ringuette said there was nothing improper about any of the payments, which also were reported in the union’s annual financial filings with the Labor Department.
She said the expenditures comply with rules against nepotism and self-dealing that the union adopted in 2005. The officers had no input in the hiring of spouses or in their compensation, she said.
“They did not work for, nor were they retained by, their spouses, and they did a good job,” Ringuette said.
The SEIU represents about 2 million healthcare workers, government employees, janitors and others in the private and public sectors. Ringuette said the union received excellent services from Rosenthal’s organizations, America Votes, the consulting firms and the individuals, Mullinax among them.
“She is a respected political consultant,” Ringuette said.
She said the money paid to America Coming Together was particularly well spent, considering the group’s widely applauded efforts to turn out Democratic voters in the 2004 presidential election. Ringuette added that Rosenthal more than earned the $520,000 that his consulting firm received for political work.
Rosenthal said any criticism of his relationship with the union would be “almost stunning.” “I hold the work I do up to anybody’s,” he said.
And Richards, now president of Planned Parenthood, said in a statement that America Votes is a coalition of more than 40 groups, and that its financial records are “transparent.”
Richards is the wife of former Stern chief of staff Kirk Adams, now a union director.
Attempts to reach other officers and their spouses were unsuccessful.
The SEIU’s policies also require transparency in decisions to give union business to relatives. But the number and size of the SEIU payments were unusual, said a leader of a labor reform group.
“This is very uncommon in unions,” said Ken Paff, national organizer of Teamsters for a Democratic Union. “We’ve had a lot of that in the Teamsters. . . . It’s a bad indicator about a union when you have a pattern of husband and wife in that kind of role.”
The SEIU has come under scrutiny recently by federal criminal authorities, following Times reports last month that its largest California local and a related charity paid hundreds of thousands of dollars to firms owned by the wife and mother-in-law of the local’s president, Tyrone Freeman.
The local spent similar sums on a golfing resort, expensive restaurants and a Beverly Hills cigar lounge. According to the union, Freeman also spent union money on his Hawaiian wedding.
Fallout from The Times’ reports spread to other SEIU chapters, prompting Stern to call on all locals to impose a code of ethics similar to the national office’s.
The SEIU has brought internal charges against Freeman, who was initially appointed by Stern. The union alleges that the payments could not be justified for the services received, and instead were part of a broad corruption scheme. Freeman, who has been removed from the union payroll pending a hearing, has denied any wrongdoing.
Unlike the national officers, Freeman did not file disclosure forms until after The Times inquired about the expenditures, which are required for union payments to spouses, Labor Department officials say.
Two other SEIU local presidents have gone on paid leave, including Annelle Grajeda, an executive vice president of the national organization.
Grajeda, a Stern appointee who heads the SEIU’s California council, stepped aside because of allegations that her former boyfriend received improper payments from the union. She has said she did nothing wrong.
Nelson Lichtenstein, director of UC Santa Barbara’s Center for the Study of Work, Labor and Democracy, said the SEIU headquarters’ payments to officers’ relatives could set a bad example for locals, even if the business relationships are out in the open and ultimately beneficial to union members.
“Clearly, there’s a kind of double standard at work,” he said.
Stern’s harshest critic within the SEIU, Sal Rosselli, the president of a Bay Area local, says the 2006 book deal amounted to self-dealing. Stern received a six-figure advance for “A Country That Works,” which the union helped fact-check and promote, and which union locals bought in bulk.
“The money should have gone to the union workers,” Rosselli said.
In denying any impropriety, Stern has said that the SEIU’s board voted independently to promote the book and urge locals to buy it, and that he received no royalties from sales to the union.
The SEIU has accused Rosselli and his board of financial malpractice for using members’ dues to set up a nonprofit and legal defense fund to wage an internecine battle with Stern.
Rosselli labels the charges retaliation. They are the subject of an internal hearing that begins today and could end in the SEIU’s placing the local into trusteeship.