Too Many Loopholes in New Union Reporting Rules

Posted on October 13, 2008

-By Warner Todd Huston

On October 10 we reported that the OLMS had instituted some new reporting rules for union finances. The National Right to Work Legal Defense Foundation, however, is still unhappy with the new rules saying that there are too many loopholes and that the Dept. of Labor admits as much.

At issue is a loophole that permits unions to hide funds and expenditures under an exclusion called the “sensitive information” exception.

This “sensitive information” exception to full disclosure is simply a loophole allowing union and trust fund officials to unilaterally determine what disclosure must be made public, and then hide a vast array of questionable expenditures. Financial reports of trust fund operations and expenditures can never be considered “confidential” information, because this money is owned by the employees, not the union or trust fund officials. Fiduciary agents have no right to maintain secret records or engage in secret transactions that are purposefully hidden from principals – the employees who are the actual owners of the funds.

So, the new reporting procedures won’t be useful for catching the very fraud and waste that the procedures were meant to catch in the first place.

But instead of closing the loophole, DOL merely pays lip service to these serious concerns. The fact is — as long as this loophole exists, corrupt union bosses will be able to withhold disclosure of any expenditures they wish, claiming an exemption. DOL officials “reiterate” or “emphasize” that their sensitive information loophole should be used “sparingly.” They say abuse of the loophole will be investigated. But why even have it? There is no justifiable reason, as Foundation attorneys had explained.

The NRWLDF is saying that the loopholes are so egregious that the new reporting procedures are a sham in the final analysis.

Don’t expect this glaring error to be corrected under an Obama administration.

Share on Facebook

Tweet This Post