Labor: Back On The Ropes

The Carey scandal could stop the union comeback in its tracks

John J. Sweeney must feel a bit like a character in a Greek tragedy. In August, his protege, Teamsters President Ron Carey, led his union to labor's biggest bargaining victory in years against United Parcel Service Inc.--proof that the labor movement was indeed staging the comeback that the AFL-CIO president had so carefully plotted. Sweeney's joy was short-lived: Days later, a court-appointed overseer threw out Carey's 1996 election because of illegal fund-raising.

That was only the opening act. On Nov. 10, after a two-year push to restore labor's political clout, Sweeney succeeded in getting enough pro-union votes in Congress to stop President Clinton's bid for so-called fast-track trade authority, which labor had argued would cost American jobs. With that victory in hand, Sweeney and other union leaders were prepared to push a broad labor agenda in Congress next year.

But within a week, Sweeney's hopes for a full-fledged union revival were dealt a stunning blow. On Nov. 17, Kenneth Conboy, a former federal judge who helps oversee the Teamsters under a 1989 consent decree with the Justice Dept., banned Carey from participating in the new Teamsters election and issued a 72-page report saying Carey had known of a plot by his lieutenants to illegally funnel nearly $1 million in union funds to the Carey campaign in 1996.

These developments mar the clean image of labor that Sweeney has worked to create and could undermine his campaign to rebuild labor's role in the U.S. economy. "Anytime you have negative publicity like that, it hurts the entire labor movement," says Douglas Fraser, retired president of the United Auto Workers. "It makes you sad because things are going so well."

Sweeney could have a hard time containing the damage from the spreading scandal. In addition to his findings about Carey, Conboy also says a core of other key Sweeney supporters made questionable Teamsters contributions, including AFL-CIO Secretary-Treasurer Richard L. Trumka, Service Employees President Andrew L. Stern, and Gerald W. McEntee, head of the American Federation of State, County, & Municipal Employees (AFSCME).

Labor's problems could even reach to the White House. Prosecutors are investigating the role of Terence A. McAuliffe, finance chairman of the Clinton-Gore campaign, in trying to find campaign donors for Carey in exchange for Teamsters contributions to Democrats.

Even if no one goes to jail, the debacle could give Republicans a field day. Instead of building on its fast-track triumph next year, labor will now be playing defense. The day after the Carey decision, Representative Peter Hoekstra (R-Mich.), who has attacked unions as corrupt, announced hearings on the new charges. Come January, other GOP legislators can be counted on to push antilabor measures, including legislation to limit the ability of unions to use dues money for political contributions.

PILING ON. Labor may even have trouble holding on to its allies. "This is a black eye that makes it more difficult for Democrats to rally around labor," says Nelson Lichtenstein, a University of Virginia history professor. Sweeney says the scandal "certainly distracts from the momentum we got from the fast-track victory. We don't want this prolonged any longer than it has to be."

The black eye could hurt in bargaining and recruiting, too. Bob C. Kutchko, a Federal Express Corp. courier who has been trying to get co-workers to join the Teamsters, met with other Chicago-area organizers on Nov. 16 to brainstorm about how to counter management's literature on "the Carey situation," he says. The Teamsters morass "will take some of the wind out of labor's sails," says Dan Danner, head of government relations at the National Federation of Independent Business.

Business groups, too, will pile on. The Business Roundtable, whose members include top CEOs, recently tripled its budget for 1998, to $30 million, partly to counter labor's new political clout. Labor also faces a business-backed ballot initiative in California that would require unions to seek written permission annually from members to use their dues in political elections. The proposal is a stealth move by House Speaker Newt Gingrich (R-Ga.), who couldn't push a similar bill through Congress and is looking to states to take up the cause.

Sweeney insists that labor's political clout has not suffered yet. But the way he won the fast-track battle--by mobilizing thousands of rank-and-file members to lobby Congress--won't work if labor continues its public-relations slide. The critical challenge for Sweeney is to convince millions of workers that the Teamsters trouble is only a sideshow and they should keep working with the AFL-CIO on issues such as health care and pensions. "We can keep the enthusiasm going," he says.

Perhaps. As former UAW chief Fraser points out, Carey's problems are not on a par with the rampant corruption that once made the Teamsters notorious. "It's a different kind of behavior than shaking down employers or selling out workers," he says. "But [Carey] is wrong, and as far as I'm concerned, he's got to pay the penalty."

That distinction could also be lost on the public as other labor leaders are dragged into the Teamsters case. McEntee, president of the public employees union and a big Sweeney supporter, is cooperating with prosecutors. His indictment would be a big setback for Sweeney. Worse yet would be an indictment of Trumka, Sweeney's No.2. Conboy said Trumka may have helped Carey by authorizing a $150,000 contribution to a liberal group. The Teamsters then donated that amount to the AFL-CIO, and Carey's campaign received some money back from the group. Trumka's lawyer denies he did anything wrong. But for weeks, AFL-CIO officials have quietly debated whether to pressure him to resign if he's indicted.

VACUUM? Union leaders also fear that Sweeney could be sucked in. Most think that Trumka couldn't have authorized the payment alone. "Stern, McEntee, Trumka, these are all Sweeney's people, so it's hard to see how he can stay out of this," says a union official. An AFL-CIO official says Sweeney doesn't sign off on all spending and didn't know of the $150,000 donation.

For the moment, the real crisis is confined to the Teamsters--who are in disarray just as critical contract talks with trucking companies begin. After UPS, they had been confident of scoring gains on part-timers and other issues. Now, "our bargainers may not be taken seriously until this is over," says one union official.

The Teamsters could face an outright leadership vacuum. Although Carey talks about an appeal of Conboy's decision, insiders believe he may resign shortly. Carey also may be indicted by federal prosecutors in New York, say sources involved in the case. At the same time, his would-be rival, James P. Hoffa, could be sidelined. On Nov. 18, the Teamsters election monitor asked to delay the new vote so she could look into possible campaign violations by Hoffa's team in 1996.

All in all, the stuff of Greek tragedy--in which the higher a protagonist rises, the steeper the risk of an eventual fall.