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“Sunlight,” as Justice Louis Brandeis said, is “the best of disinfectants.” The U.S. Department of Labor is charged with shining the light on the inner workings of unions for the benefit of some 15 million unionized workers. But now Congress is poised to cut the budget of the very office that helps protect union integrity. The department’s Office of Labor-Management Standards enforces the Labor-Management Reporting and Disclosure Act of 1959, which, among other things, requires transparency in unions’ financial information. This office accounts for just one-tenth of 1 percent of the Labor Department’s budget, yet this year Congress has singled out the office for a cut while slating increases for every other departmental enforcement agency. Our nation has a long tradition of using transparency to prevent and reveal corruption and abuse of power. To protect the integrity of our political process, federal law requires the disclosure of campaign contributions to the Federal Election Commission. To protect investors, federal law requires publicly traded companies to disclose internal financial information to the Securities and Exchange Commission. Through the Freedom of Information Act, citizens themselves can request access to many government documents. This kind of openness helps ensure that officials act in the best interests of the people. But if the Labor Department budget that has already passed the House goes into effect, rank-and-file members will end up with significantly less “sunlight” on their unions’ finances and operations. �THE REAL OWNERS’ During the 1950s, Congress compiled more than 17,000 pages of testimony on labor racketeering, corruption, and abuse of trust. This prompted the introduction of the Labor-Management Reporting and Disclosure Act, also known as the Landrum-Griffin Act, in 1959. Lawmakers were very clear that the purpose of the bill was to protect union members’ rights. The legislation required democratic internal union procedures and public disclosure of financial transactions. As Sen. Frank Moss (D-Utah) put it during debate, disclosure would drive “union members and public opinion [to] compel the elimination of improper and unethical practices” and, by “expos[ing] abuses to the light of day,” permit those abuses to be “effectively dealt with by the members.” Sen. John McClellan (D-Ark.), who had chaired the committee that compiled the testimony on abuses of the rank and file’s rights, pointed out that the power of collective bargaining is essentially meaningless “when the tyranny of the all-powerful corporate employer is replaced by the tyranny of the all-powerful labor boss.” Ultimate power must rest in the hands of the members “so that they may be ruled by their free consent [and] bring about a regeneration of union leadership.” The Senate report on the bill, which Sen. John F. Kennedy (D-Mass.) helped write, stated that the union members “who are the real owners of the money and property of the organization are entitled to a full accounting of all the transactions involving their property.” Sen. Jennings Randolph (D-W.Va.) repeated the words of George Meany, president of the AFL-CIO, who said that the legislation would “aid the American trade union movement to maintain free, democratic and responsible trade unions, cleansed of the crooks and racketeers who have preyed upon some unions and upon segments of some of the unions.” The bill was generally supported by large majorities of the public and by the national media, including The New York Times and the Los Angeles Times. Ultimately, it was passed by overwhelming bipartisan margins, and President Dwight D. Eisenhower signed it into law. As with most other laws, the Labor-Management Reporting and Disclosure Act required the executive branch to fill in the details through rules and to update those rules as circumstances change. In 1961, Rep. Robert Griffin (R-Mich.), who had been one of the principal authors of the act, noted that the secretary of labor “bears a great responsibility for its enforcement.” Similarly, AFL-CIO President Meany told Congress that “the reporting requirements will make a major contribution towards the elimination of corruption and questionable practices” if the act is “vigorously and properly used.” Unfortunately, for many years, a lot of annual disclosures forms were not filed at all or were filled out incompletely or in ways that obscured the true story. For example, a form might provide overly general descriptions of disbursements, with no information on the payees or the purpose. TIME TO UPDATE Recognizing the need to reform and to adapt the statute to current realities, the Office of Labor-Management Standards has recently been revising the required disclosure forms to make the information more useful to union members and has been enforcing the filing requirements that were previously ignored by some unions. In 2003, the office updated the primary union disclosure form (LM-2) and other forms for smaller unions and began posting the completed forms online, along with forms filed by employers that transact certain business with unions (LM-10), labor relations consultants (LM-20/21), and union officers and employees (LM-30). The office continues to update these forms, including issuing a revised LM-30 just last month. The primary goal of all these reforms has been to ensure that unions publicly disclose in a meaningful way how they are spending their members’ money. The rank and file and the public are then free to make their own judgments about the appropriateness of disbursements and any potential conflicts of interests. As the U.S. Court of Appeals for the 7th Circuit noted in Kinslow v. American Postal Workers Union (2000), the members “are often in the best position to discover union corruption and have a vested interest in honest leaders.” Individual members and local union officers use the Office of Labor-Management Standards as a vital resource in protecting their rights. The office provides significant support and assistance to unions in complying with the disclosure requirements, including answers to frequently asked questions on its Web site and compliance assistance seminars within driving distance of every private-sector union local in the country. These outreach efforts have paid dividends as individual union members report improper activity to the office. Indeed, a significant portion of the office’s caseload is based on referrals from union members. All together, the disclosure reforms, compliance assistance, and stepped-up enforcement by the Office of Labor-Management Standards have led to impressive results. When the office learns of possible fraud or other violations, it investigates and refers cases to the U.S. attorneys. In the past six years, those referrals have produced 810 indictments, 781 convictions, and $101 million in court-ordered restitution for the benefit of the rank and file. Although still almost 20 percent below 1990 staffing levels, the office has managed to leverage its limited resources so that since 2001 investigations have increased by 20 percent and convictions by 26 percent. The government’s disclosure efforts have also led unions to initiate their own investigations and/or to tighten financial controls. For example, on July 12, a Teamsters Union reform group announced that, based on information in an LM-30 form, the Teamsters Union was investigating an international vice president’s receipt of tens of thousands of dollars from a health maintenance organization that does business with the union. Also just a few weeks ago, a former executive assistant at the AFL-CIO pleaded guilty to causing the union to pay thousands of dollars in improper meal expenses for the official’s spouse and was required to make restitution, which prompted the AFL-CIO to clarify its expense policies to its staff. Congress frequently rewards this sort of agency success with budget increases, but for some reason, the Office of Labor-Management Standards is instead being punished with budget cuts. BLOCK AND TACKLE Despite the benefits to the rank and file, some unions and their allies have tried to block a number of these reforms. Before the new LM-2 form went into effect, a number of union leaders warned that the annual reporting costs for organized labor would total $1 billion. The AFL-CIO complained that its reporting costs alone would be $1 million and opposed the rule in court. But the AFL-CIO’s eventual LM-2 filing reflected only $54,150 in compliance costs — which, based on a reported membership of almost 10 million, means the required disclosures cost about half a penny per member. The AFL-CIO also recently commissioned a study allegedly showing that the vast majority of unions are well run and administered for the benefit of their members. While many unions are undoubtedly well run, political economist John Stuart Mill put it best when he wrote, “Laws and institutions require to be adapted, not to good men, but to bad.” Certainly, almost 800 convictions and more than $100 million in restitution since 2001 suggest disclosure and enforcement are both necessary and useful. Moreover, the purpose of the Labor-Management Reporting and Disclosure Act is not just to stop embezzlement and fraud; as stated by the 3rd Circuit in United States v. Budzanoski (1972), it is also “to provide information for the members so that they can control their leaders.” A number of other reforms have been proposed to improve the overall ability of the rank-and-file members (and the public) to learn how the money is spent. For example, many unions oversee trusts that receive funds from employers and members, yet are exempt from disclosures. The Office of Labor-Management Standards covered these trusts under reforms proposed in 2003, but that standard was challenged by the AFL-CIO. When the office last year published a separate rule for the trusts, the AFL-CIO sued to vacate this T-1 rule based on incomplete notice and comment under the Administrative Procedure Act. Several lawsuits challenge other disclosure requirements, including two regarding the disclosures required of employers who engage in financial transactions with a union, union officer, or union employee. The plaintiffs in those cases certainly have legitimate interests in ensuring that disclosure requirements are fair and effective. The Office of the Solicitor of Labor has helped defend all these reforms because we believe that the disclosures are fair and effective, and that the interest of rank-and-file members in having access to this information is vitally important. Unfortunately, the successful enforcement initiatives and important efforts to ensure union integrity may be stopped in their tracks if the current leadership in Congress persists in significantly cutting the Office of Labor-Management Standards’ budget. While the House of Representatives has already made its decision, the Senate will likely vote on this matter in September. I am hopeful that the Senate will again take the lead in protecting working Americans, as it did in 1959 when a large bipartisan majority insisted on financial transparency to safeguard the democratic rights of rank-and-file union members.
Jonathan L. Snare is the acting solicitor for the U.S. Department of Labor.

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