Labor in Vain

Was a union probe bungled?

It was "a textbook illustration of how not to conduct an investigation," said an angry Sam Nunn of Georgia, ranking Democrat on the Senate Permanent Subcommittee on Investigations. It "wasted a historic opportunity" to root out corruption and mismanagement, said the subcommittee's 190-page report, released last week. The object of those disparaging words is a fiveyear, $5 million investigation by the Labor Department of an enormous pension fund controlled by officials of the International Brotherhood of Teamsters--a union whose ties to organized crime have inspired a number of federal probes over the years and whose power, and powerful friends, have usually helped protect it.

This time the Government seemed to have a strong case. The union's $2 billion Central States pension fund, which contains retirement funds for 450,000 Teamsters, followed a plainly unorthodox investment strategy. Nearly three-quarters of its assets were socked into real estate, especially Las Vegas hotels and casinos.

(In one instance gambling chips were put up as collateral for a large loan.) The fund also made curious multimillion-dollar loans to developers with close ties to mobsters and to Central States' own trustees.

A Labor Department task force was assembled in 1975 to look into such dubious practices, and it disbanded a year ago. The Senate subcommittee, dissatisfied with the results, undertook its own review of the investigation. The new report charges that Labor's Special Investigations Staff hired only 28 of its authorized complement of 45 investigators, was deprived of subpoena power as a matter of department policy and was prevented by "bureaucratic infighting and naivete" from working with the Justice Department to build criminal cases. Most incredibly, the task force was ordered by Labor higher-ups not to conduct "third party" inquiries--that is, to disregard officially the unsavory recipients of Teamster loans.

The Labor Department did, however, pressure the pension fund's 16 trustees to resign and place the assets under independent management. But the trustees were allowed to pick their successors, and other attempts at reform were thwarted.

Early in 1978 Labor filed a civil suit against the former trustees for the recovery of fund losses, but last week's study charges that the unresolved brief was needlessly timid. The subcommittee concluded that Labor seemed institutionally "incapable of investigating major labor racketeering cases."

University of Texas Economist Ray Marshall, who was Secretary of Labor under President Carter, last week defended his department's conduct: "Nobody else ever put the fund in safe hands as we did."

Ken Paff, a leading Teamster dissident, is not impressed. Said he: "The Labor Department has consistently bungled. We're worried it's going to be even worse under [Secretary Raymond] Donovan."

This file is automatically generated by a robot program, so viewer discretion is required.