Local 14 mob investigation ends in deal with Feds

4 August 2008

The New York City local branch of the International Union of Operating Engineers, a 1,500-member union which includes crane drivers in the city, has agreed to Federal oversight. The deal comes after the US Eastern District of New York court made a civil suit against the organisation in late July on charges of links with racketeering and corruption.

"For some time, the construction industry in New York City has been infiltrated, controlled, influenced and corrupted by La Cosa Nostra families," the deal agreement says. US prosecutors allege that since at least 1981 the Columbo and Genovese organised crime families have exercised 'corrupt influence' in Local 14 by accepting labour bribes from construction contractors and securing no-show jobs for organized crime associates. A total of 26 officers, representatives and members of the union have been convicted of labour racketeering in two lawsuits in 2003 and 2004.

A picture is emerging of a city that is rife with this kind of corruption. Earlier in the year, the New York City District Attorney's office charged acting crane and derricks chief inspector James Delayo with receiving bribes and tampering with public records. The complaint alleges that he met with the owner of a Long Island-based crane rental company and accepted bribes for passing unqualified individuals.

Another investigation this year by New York State's Inspector general found that New York State crane operator examining board examiner Frank Fazzio, who was connected with the IUOE, issued more than 200 improper certificates.

Although the IUOE Local 14 has changed its procedures since those trials by, among other actions, testing some members' qualifications and limiting the work of those who failed the test, and also systematically recording job referrals, it admitted in the deal document that more needed to be done.

The deal, agreed on July 25, requires Local 14 to cooperate with (and pay for) an ethical practices attorney whose job is to root out corruption in the union. Evidence gathered by the ethical practices attorney would be presented to a hearing officer, who would judge whether to act on that advice. Both officials have an initial five-year term that may be extended by the court.

The ethical practices attorney's job includes overseeing elections and appointments, monitoring expenditure and recovering assets, reviewing job referral rules, collective bargaining agreements, and, in general, to investigate corruption concerning Local 14 with and without probable cause. The attorney can require members to be tested on equipment they are certified to use, and check that Local 14 members are actually working on job sites.

The attorney can conduct background investigations on candidates for elections, and conduct an educational programme for the members on the responsibilities of union officers. The Local has agreed to prohibit elections until the ethical practices attorney determines that they can be fair and untainted.

The deal document lays out a formal process for dealing with the ethical practices attorney's evidence, which includes hearsay. It is the hearing officer's responsibility to affirm the ethical attorney's recommendation of action, if the hearing officer believes there is enough evidence. The hearing officer may set up a hearing, which would be run along labour arbitration guidelines. Members of the IUOE Local 14, and the IUOE as a whole, who do not cooperate with the process to protect themselves from self-incrimination may still be punished for that reason alone, the deal document states. Decisions of the hearing officer can be appealed in the courts.

The Local 14 has also agreed to implement an ethical practices code in its bylaws. The new rules specifically prohibit making deals- contracts for purchase, or job referrals- that personally benefit individuals in the union. It prohibits the union loaning money to individuals for private business. It prohibits any individual receiving fees or salaries from a union pension fund. It prohibits union officials who administer pension funds to have a connection with insurance carriers, brokers or consultants who might cause a conflict of interest. It prohibits union people from receiving payments, valuable gifts, lavish entertainment or other compensation from employers that the union collectively bargains with.

Although on face value adding this code to its bylaws might seem like corrections to past behaviour, part of the deal is that the Local does not need to admit to anything. "This consent decree is entered into for purposes of settlement only, and nothing in this document shall be deemed an admission by Local 14 of the truth of the allegations set forth in the complaint."

A spokesman at IUOE Local 14 could not be reached for comment.

The US attorney for the Eastern District of New York said that the union's cooperation was a positive sign.

Daniel Petrole, Deputy Inspector General for the United States Department of Labour, said: “Today’s announcement of a consent decree exemplifies the long-standing commitment from our office to fully investigate labor racketeering and eradicate the influence of organized crime within labor unions. It establishes a new direction for Local 14 of the International Union of Operating Engineers. We will continue to work with our law enforcement partners and the U.S. Attorney’s Office toward that end.”