More Like a Bank Than a Union

Douglass McCarron: Union Boss or Ponzi Schemer?

by DAVID CORREIA

In the aftermath of the police blitzkrieg that returned Zucotti Park to the bankers and brokers it may be useful to consider the alliances forged and enemies revealed during the short occupation of Liberty Park. If Occupy Wall Street has done anything in its relentless critique of the human costs of the financialization of capital, it has been to force the mainstream left to declare which side it is on. In mid-October more than a dozen locals of various unions marched in solidarity with Occupy Wall Street protestors to condemn a financial system that has drained worker’s pensions while filling the pockets of Wall Street bankers. AFSCME, Communication Workers of American, SEIU, the United Auto Workers, United Federation of Teachers, National Nurses United, and the Professional Staff Congress of CUNY among other unions showed support and marched in solidarity with the protestors.

But one notable absence from the Occupy/organized labor alliance, the Carpenters Union, offers another reminder that some leaders in the labor movement are on the side of the bankers against working people. While many rank and file carpenters have shown support, the union, particularly Carpenter’s President Douglass McCarron has been silent.

There are a number of possible reasons for the silence. The Carpenters union under McCarron’s leadership is without question among the most conservative unions in today’s labor movement. Over the last decade McCarron has dragged the Carpenters union into an malevolent alliance with conservative Democrats and Republican politicians, demonstrated most clearly by McCarron’s sycophantic courtship of George W. Bush during both of Bush’s terms in office.

Even more, the anti-authoritarian, non-hierarchical structure of the Occupy movement contrasts starkly with the consolidated leadership structure of the Carpenters, a structure defined by McCarron’s dictatorship over every facet of union life and administration.

But perhaps more importantly, the Occupy movement’s laser-like focus on the social and economic costs of financialization on the lives of working people has revealed McCarron for what he is: a fugitive Wall Street ponzi schemer disguised as a labor leader.  McCarron, it turns out, has more in common with Bernie Maddoff than he does with the rank and file members in his union.

The history is clear. For the past five years, members of New York Local 370 have sustained a relentless campaign to oust its corrupt regional union leadership. McCarron has long ignored their demands.  It got worse in recent years when it was revealed in January of 2009, that three northern New York trade unions were among the legion of investors that lost money in Bernard Maddoff’s massive $50 billion fraud by Bernard Maddoff. McCarron, however, did nothing, despite the fact that locals of the United Union of Roofers Waterproofers & Allied Workers, Plumbers & Steamfitters, and the Empire State Carpenters Fringe Benefit Funds lost money in the hundreds of millions of dollars. 

By March of 2010, however, McCarron could no longer ignore the fallout from the Maddoff scandal. He placed the District Council in trusteeship and acknowledged union leadership cost rank and file members an estimated $160,000,000, a blow that has meant diminished pension, annuity and health funds for unionized workers.

Far from resolving the leadership problems in New York, the consolidation merely robbed local unions of meager resources. One carpenter noted that McCarron’s restructuring “took $850,000 of our local’s assets, they returned $50,000 of it, but all we could use it for was a clambake,” he said. “In other words, they were going to control everything.”

While various media outlets have covered McCarron’s decision to declare trusteeship, none have asked why it took so long . An answer to this question may explain why McCarron has kept the union at arm’s length from the Occupy Movement.

Under McCarron, the carpenters have been transformed into an institution that operates more like a bank than a union. After his election as UBCJ President, Douglass McCarron became an influential member of the Union Labor Life Insurance Company (Ullico). Beginning in the late 90s, McCarron helped develop an investment strategy for Ullico designed to enrich board members and Wall Street insiders at the expense of its union subscribers.In one scheme, Ullico officers and directors purchased 33 million preferentially priced shares in Global Crossing, a telecommunications company. The purchase, based on insider information offered by Global Crossing’s CEO, turned the board members into millionaires (the 1%). When Global Crossing went public and the stock soared to more than $60 a share in 1999, board members enjoyed a $1 billion windfall.

The scheme was merely a means to drive up the value of Global Crossing. In an exit scheme of Ullico CEO Robert Georgine’s design, board members dumped Global Crossing before the price tanked and shifted money into Ullico in an even more ridiculously advantageous purchase plan. Less than a year later, Ullico’s board established a new price for Ullico stock nearly $100/share higher than the price they paid in the exclusive purchase plan, making the board members even more money, $13 million according to one report. When the board later dropped the price, the company started posting astounding losses: more than $20 million in 2001 and nearly $75 million in 2002. The unions and their members paid the price of the collapse in Ullico.

McCarron jumped ship in March of 2003 and avoided the backlash that hit many of Ullico’s board members. His presence on the board, however, proved to be pivotal. The corporate-connected and Republican-friendly McCarron had become an important political ally of the “bankocracy.” Despite pressure from rank and file union members to fully investigate Ullico and the scandal, The GOP-controlled Congress refused. As Roll Call reported “party leaders didn’t want to embarrass Bush or United Brotherhood of Carpenters and Joiners President Douglas McCarron, one of Bush’s best friends in organized labor.”

And so as Occupy Wall Street marched with union allies through October condemning the disaster of finance capital, McCarron kept his mouth shut and his union out of the streets. His interests are with the bankers and he no doubt smiles at the thought of a possible end to Occupy Wall Street lest its focus turns to frauds like McCarron and other enemies of working people.

David Correia is an Assistant Professor of American Studies at the University of New Mexico. He can be reached at dcorreia(at)unm.edu