Living the High Life on the Autoworkers' Dime

Living the High Life on the Autoworkers' DimeOn a single day in December 2015, Gary Jones, who resigned last month as president of the United Auto Workers, spent more than $ 13,000 of the union's money at a cigar store in Arizona. His purchases included a dozen $ 268 boxes of Ashton Double Magnums and a dozen boxes of Ashton Monarchs at $ 274.50 each. "Hi Gary, Thank you & Happy New Year," read a handwritten note from the store.The purchases, documented by a federal complaint filed against a union leader in September, were part of more than $ 60,000 in cigars and cigar paraphernalia that Jones and other UAW officials expensed to the union between 2014 and 2018. And the cigar purchases were in turn just a small portion of the roughly $ 1 million in union money that court filings say UAW officials spent on golf outings, four-figure dinners and monthslong villa rentals during regular retreats in Palm Springs, California, and elsewhere.The scandal comes on top of an investigation into company and union officials' improper use of millions of dollars from a joint Fiat Chrysler-UAW training center. Jones' predecessor as president, Dennis Williams, is accused of encouraging the use of Fiat Chrysler funds meant for worker education as a way to pay for the extravagant spending in Palm Springs and other places.In direct financial terms, the scandals don't approach the scale of the corruption that plagued organized labor in the 1960s and '70s.But the stakes are nonetheless enormous, given the UAW's outsize influence over auto manufacturing, a pillar of the U.S. economy that generates hundreds of billions of dollars in annual revenue and employs hundreds of thousands of workers. The union's 40-day strike against General Motors this year cost the automaker an estimated $ 3 billion in profit. Last month, GM contended in a lawsuit that Fiat Chrysler had bribed the UAW to help it undermine GM by manipulating labor costs.And no one in the union had more influence over the industry than its two flawed former presidents.Williams, 66, who was president from 2014 to 2018, is a former welder and by most accounts a committed progressive but also a man susceptible to the perquisites of power. According to court documents, Williams and his team celebrated a Fiat Chrysler labor agreement they negotiated in 2015 with a $ 7,000 dinner paid for by the company. The agreement was so disliked by rank-and-file members that they soon took the highly unusual step of rejecting it.Jones, 62, a union accountant known both for asking colleagues to pray and for lashing them with profanity, is said to have used the illicit Palm Springs spending to win over union power brokers and help him secure the top job in 2018. As president, Jones led the UAW into its recent GM strike just weeks after federal agents raided his house and hauled away more than $ 30,000 in cash.Of the more than 15 current or former UAW officials interviewed for this article, most declined to comment on the record, citing an ethos of silence at the union or a fear of retribution. But together with government documents, the picture they paint of Jones and Williams suggests a leadership that has at times aspired more to the role of fat cat than defender of workers. The consequences for the rank and file may take decades to tally fully."There was a culture of corrupt activities spanning years. That's what we're trying to turn around," said Matthew Schneider, the U.S. attorney in Detroit, who is leading the investigation into the UAW. "The purpose of the union is not to serve the leadership. It is to serve the members."Jones and Williams have not been charged and appear in court filings only as "Official A" and "Official B," pseudonyms that two union officials told The Times refer to them, a fact that other news organizations have also confirmed. In an email, Bruce Maffeo, a lawyer representing Jones, dismissed the accusations as stemming "from public documents in which Gary was not charged."A person close to Williams rejected the accusation, first reported in The Detroit News, that he urged the diversion and misuse of training center funds.The 'Master Account'At the heart of the UAW embezzlement scandal, which dates back at least to 2013, was an elaborate hospitality tab known as the "master account." Union officials opened such accounts at hotels like the Renaissance Palm Springs, the site of an annual series of conferences. According to the federal complaint, union officials billed to this account not just rooms and food that they bought at the hotel but also a variety of other expenses weeks before and after the conferences.Union officials did conduct work at the meetings, including discussing contract enforcement and upcoming negotiations. But the gatherings also appeared to be a pretext for power brokers to enjoy a comfortable winter getaway.Among the expenses charged to the master account were the villas, which were tucked away in a gated community and cost about $ 5,000 a month, and dinners that ran into thousands of dollars. The bill for one meal at LG's Prime Steakhouse topped $ 6,500 and featured a $ 1,760 charge for four bottles of Louis Roederer Cristal Champagne.Union officials also spent more than $ 80,000 at the Indian Canyons Golf Resort in Palm Springs for green fees, shoes, golf bags, sunglasses, shirts and "fashion shorts," according to the complaint. They shipped many of these items home to Michigan on a semitruck.Williams, who was the UAW president for much of this period, was often the gravitational center of the Palm Springs sabbaticals. According to the federal complaint, the union paid for a monthlong stay for Williams at a villa in the winter of 2013-14. Two years later, the union paid for more than three months.In interviews, union officials said Williams would spend his days in Palm Springs conferring with aides and colleagues on the phone and in person, sometimes while playing golf. Nights were frequently given to socializing.Two former UAW officials recalled a night in which a few dozen people, including the wives of male officials, gathered at Williams' villa for pizza. The men gathered around a fire on the back patio where they smoked cigars, drank whiskey and discussed car restoration projects.The federal complaint said that friends of Williams who had "no legitimate reason to attend" union events joined him in Palm Springs on the UAW's dime.The arrangement helped create an in crowd and an out crowd at the union. Officials who were uneasy with the cigar-and-whiskey atmosphere in Palm Springs were left out and had more limited interactions with Williams. Three former officials said in interviews that they rarely saw him in Detroit during the winter.Other UAW officials, including those tasked with negotiating the union's contract with Fiat Chrysler, spent far more time in Palm Springs over the winter. These officials charged more than $ 25,000 in Palm Springs meals to the company in January 2015 alone, according to court documents.A person close to Williams said that Williams was frequently traveling away from Palm Springs on union business during the dates in which the villas were rented on his behalf. The person also said that no one enjoyed special influence over Williams as a result of additional face time with him.An Expansive FiefAccording to documents filed by prosecutors, the orchestrator of the master account was Jones, the UAW president who resigned in November.Jones spent more than a decade as an accountant and senior aide at the union's headquarters before 2004, when he became assistant director of the union's Region 5, then one of 11 geographic units.The UAW's regions are often run like fiefs, but Region 5, which was based in Missouri but sprawled all the way to the West Coast, was more fieflike than most.According to two Region 5 officials, the region's longtime director, Jim Wells, had a knack for extracting cash from members and staff, and there were few constraints on how he spent it. They said that under Wells, staff members were expected to buy a Region 5 jacket every four years at a cost of $ 1,000, ostensibly to support Wells' campaign for reelection as director.Elizabeth Bunn, who served as the UAW's second-ranking officer from 2002 to 2010, said that under Wells, Palm Springs was known as a place where officials could enjoy themselves at union expense for well beyond the length of a conference, although the behavior may have been legal. Bunn also recalled facing internal pressure while investigating wrongdoing in the region."A lot of people saw things and did not react with the moral clarity that they exercised in every other situation," she said.Wells died in 2012. A UAW press officer declined to comment on those complaints.Jones did not appear to blanch at this culture of financial laxness. At least as early as 2010, according to court filings, Jones and a colleague began submitting receipts that had already been reimbursed, or that they had manufactured, to a fund that supports the union's political efforts. The two men would split the reimbursement. Jones personally received hundreds of thousands of dollars from this scheme from 2010 to 2017, according to prosecutors.After Jones became regional director in 2012, he took an active role in directing the Palm Springs spending, prosecutors have asserted. UAW officials who wanted to play golf or buy golf apparel were told to charge the purchase to the Gary Jones "group," and the bill would flow to the master account at the Renaissance Hotel. The hotel declined to comment.A crucial purpose of the spending by Jones was to "curry favor with UAW 'Official B,' who also enjoyed the lavish lifestyle," according to the federal complaint, referring to Williams.In interviews, three union officials said it was clear that Jones was courting Williams in order to succeed him as president. One Region 5 official noted that Jones, who was not previously a regular cigar smoker, turned himself into a cigar aficionado in the mold of Williams after becoming regional director. The official said Jones acquired a few humidors for the regional headquarters in Hazelwood, Missouri.Colleagues said that despite their expensive tastes, Jones and Williams were a study in contrasts. Williams told fellow officials in the 2000s that he was a socialist. As union president, he hired consultants to bolster the union's organizing efforts in areas like higher education and technology, including those at the electric carmaker Tesla.Jones, by contrast, appeared to be more conservative and less interested in new organizing opportunities. He blocked a promising effort to organize thousands of research assistants within the University of California system, according to two officials.The officials said Jones feared that adding members in higher education would threaten his power base among blue-collar workers. When Jones would meet with graduate students, according to two Region 5 officials, he would often joke that "my major was partying" as a way to belittle their academic experience.In the end, the power of UAW regional directors is such that Williams, normally a charismatic leader, was unable to move Jones on some of his top organizing priorities, three current and former officials said. Jones also later pushed to let most of the union's Tesla organizers go."Gary started as a factory worker for Ford and dedicated over 40 years of his life as a member and officer of the UAW to improving the lives of that union's members and their families," said his lawyer, Maffeo.But Jones' intransigence did not stop his ascent within the union.When the union's board discussed whom to back for president in fall 2017, its members were aware that Williams supported Jones, according to several people close to the situation. They said the rest of the board quickly backed Jones as well, all but ensuring that he would take over the union at its convention the following June.These people said in interviews that Jones was the only viable candidate by this point, but two also said that Williams' support had helped ensure that this was the case.'Deliver a Clean Union'Since Jones resigned as president last month, the UAW board has replaced him with Rory Gamble, who previously oversaw the union's negotiations with Ford. Gamble has put forth reforms to "deliver a clean union on solid footing" by the time he retires from the post in 2022.They include regular audits of spending by programs run jointly with automakers, a new ethics officer and an ethics hotline. Gamble also announced that Jones' former region would be split into two pieces that would each be merged into another region.And he has indicated that he intends to press for more, unspecified changes. "We have a lot more stuff we're going to be doing," Gamble said in an interview.But many current and former UAW officials say that to be truly effective, the reforms must reduce the power of the union's board members. They said that cozy relationships among union leaders may have led them to tolerate questionable behavior by one another.Bob King, who was the union's president from 2010 to 2014, confronted colleagues about improper training center spending, according to court documents. He said in an interview that he had not sufficiently scrutinized Jones' former region, partly because he was focused on preserving unity among leadership."I do feel anger and responsibility," King said. "I should have been looking at some stuff more closely. I would really encourage the current board to not make the same mistakes."King said he supported the union's current reform efforts but urged it to go further. "They have to figure out how to create a system that is more open and transparent," he said. "It's not about a few bad apples."This article originally appeared in The New York Times.(C) 2019 The New York Times Company

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