UAW bolsters financial controls after embezzlement scandal

Posted at 2:16 PM, Dec 02, 2019

DETROIT (AP) — The United Auto Workers union has replaced its auditing firm, added four internal auditors and has hired a big accounting firm to study its financial controls in an effort to prevent embezzlement and bribery discovered in a federal probe of the union.

The moves announced Monday by Secretary-Treasurer Ray Curry come after last month’s resignation of President Gary Jones, who has been implicated in the scandal. Several other union officials have been charged or implicated in the probe, which embarrassed the union leadership and angered many of its 400,000 members when it became public starting in 2017.

Curry says the reforms will put checks and balances in place to prevent financial misconduct.

“This top-to-bottom assessment of our financial and accounting procedures and policies will result in a stronger and more stringent financial oversight of all expenditures,” Curry said in a statement Monday.

The new auditing firm, Calibre CPA Group of Bethesda, Maryland, which specializes in labor union accounting, will check all of the UAW’s finances for the past year. In addition, the Deloitte accounting firm will look into the union’s accounting and financial processes.

The scandal exposed weak financial controls at the union, which allowed a bribery scandal involving Fiat Chrysler’s joint training center with the union. Also exposed were embezzlement of hundreds of thousands of dollars in the purchase of 58,000 watches for union members by the UAW-General Motors training center, and an embezzlement scheme at a regional office in St. Louis involving the purchase of thousands of dollars of expensive cigars and booze, golf greens fees and rental of swanky villas for union leaders. Funds allegedly were falsely represented as regional conference expenses.

The federal probe brought an unprecedented federal lawsuit from General Motors last month against Fiat Chrysler, alleging the company bribed union officials to get lower labor costs than GM.

Under the reforms announced Monday, the union hired four additional internal auditors, and it’s reviewing financial training for all UAW employees responsible for financial and accounting duties. They’ll be trained on new procedures, labor laws and updated policies, the union said in a statement.

The reforms come in addition to changes announced last month by Acting President Rory Gamble. Last month he banned contributions from employers and vendors to charities run by union officers and hired an ethics officer to handle misconduct complaints.

They come a day after Matthew Schneider, the U.S. Attorney in Detroit who is heading the UAW investigation, said in a newspaper interview that a federal takeover of the union is still possible due to corruption. Schneider told The Detroit News that he was unhappy with the UAW’s lack of cooperation, and he raised the possibility of federal oversight.

UAW spokesman Brian Rothenberg said that Gamble has put reforms in place after just three weeks as acting president. “The UAW continues to cooperate in turning over any and all records requested by the federal government,” he said.

Jones, who stepped down as president last month, was the regional director in St. Louis before taking the union’s top spot. He has not been charged, but his home was raided by federal investigators in August.

His attorney, J. Bruce Maffeo, said that all expenses for regional conferences were reported in detail and never questioned by the UAW accounting department or executive board.