Cash for Concessions: Exposed!
Earlier this month, we brought you disturbing news about a payment of $1.5 million that UFCW Canada - the UFCW's Canadian national office - apparently accepted from Loblaw Companies during the course of secret negotiations for the RCSS deal. That deal provided Loblaws with Wal-martized wages and benefits at its Real Canadian Superstores. The $1.5 million - to be paid over a three year period - was in addition to $1.35 million in payments that the three UFCW Locals involved in the negotiations accepted from the hugely profitable Canadian grocery retailer.
We invited UFCW officials to comment on the payment and to respond to the following questions:
- Did Loblaw Companies offer and did the UFCW National Office accept a payment of $1.5 million during the RCSS negotiations?
- Did that offer play a role in bringing those negotiations to a successful conclusion?
- If yes, how do you justify your behaviour? How is this not a payoff?
So far, UFCW officials have not responded. That's too bad.
In our view, UFCW members, particularly those who are affected by the RCSS deal, have a right to know what their representatives did at the bargaining table. They weren't able to vote on the deal because their union - at Loblaw's insistence - didn't let them. They weren't able to ask questions about the substantial payments their union accepted from their employer just before the deal came together because their union didn't tell them about those. Now they know.
If their union accepted money from their employer in the course of those negotiations, members have a right to know that and are entitled to a full and frank explanation of why the money was accepted, how it's being used and whether or not the exchange of cash played a part in the conclusion of the negotiations. In the absence of such fullness and frankness, how can members ever be sure that their employer didn't simply buy their union's acquiescence? Whether the offer of money influenced the outcome of those negotiations is a legitimate question that deserves an answer. That's especially so given what the UFCW agreed to in the end: A package of concessions that undercuts Wal-Mart's wages and acquiescence to the company's demand that there be no ratification vote. It's even more so when we consider that members are being asked to give their union officials the green light to enter into yet another round of mid-contract negotiations with Loblaw Companies.
In the interests of further informing the thousands of working people affected by this deal, we've decided to post the documents upon which our initial report about the $1.5 mil was based. As stated in our earlier story, we will not disclose the source(s) of these documents but have good reason to believe that the source(s) are credible and that these documents are authentic. We believe that the four documents you are about to see demonstrate that an offer of money was made by Loblaw Companies late in the negotiations. The offer was sweetened up considerably as the negotiations headed towards an impasse over the issue of ratification. The offer was accepted by the UFCW. The impasse was resolved. There was no ratification. Check it out and decide for yourself.
We have posted each of the four documents as a separate pdf file with a brief explanation of what the document contains and why it's relevant.
File No. 1: The Conliffe Proposal
This is a fax dated May 14, 2003 from Roy Conliffe, Senior Vice President of Labour Relations, Loblaw Companies, to Michael Fraser, Director of UFCW Canada
The cover page has Roy Conliffe's name as well as his office address and fax number on it. The fax header indicates that the document was sent from Conliffe's office in the National Grocers building to Mike Fraser on May 14, 2003.
Attached to the fax cover page is a one page document that sets out a number of proposals related to the RCSS deal. Included at the bottom of the list of proposals is "a training and ed fund payment of $500,000 for the next 3 years".
At the bottom of the fax cover page are the first names and fax numbers of the three UFCW Local Presidents who were involved in the RCSS negotiations. These were written on the fax by another person (the handwriting is different from that at the top of the fax. When we examine the content of Doc. #2, it is apparent that this proposal was circulated among the Local Presidents not long after it was received at Fraser's office.
File No. 2: The Corporon Memo
This is a memo dated May 20, 2003 from Kevin Corporon, President of UFCW Local 1000a to Mike Fraser, UFCW Canada Director.
In this memo, Corporon comments on each of the proposals that Conliffe sent to Fraser on May 14, 2003. (Conliffe's proposals are in plain type, Corporon's are in italics.)
In his comments Corporon asks for clarification about the $500,000 training and education fund payment that the company proposed: "if this lump sum is provided to each local in addition to current Education Fund contributions i.e., 175, 1977 currently receive cents per hour" and proposes that his local should get a piece of the action "1000A - new - 5 cents per hour in addition to current Lump sums".
File No. 3: The Bargaining Notes
This handwritten one pager is contains some "bargaining notes" (a short summary of proposals received about a number of outstanding issues).
In the upper right hand corner is a handwritten notation "Received from Co. - Old Mill - May 22, 23". This indicates that this was a proposal received from the company at a negotiating meeting held at the Old Mill Inn on May 22nd and 23rd.
The proposal relates to various issues involved in the RCSS deal. At the bottom of the page is a reference to financial contributions to the three Locals - 150K per Local in 2003, 2004and to the National Office - 500K in 2003, 2004 and 2005.
Immediately below the proposed financial contributions is a proposal regarding voluntary recognition of the UFCW at the RCSS stores - "details to be worked out".
File No. 4: The Discussion Paper
This is document entitled UFCW Discussion Paper, June 8, 2003. The purpose of this briefing paper is stated as:
This document summarizes agreements to date. Outstanding items are in bold. Items in italics still need further discussion. Items in GREEN BOLD are regarding a multi-banner/Local agreement.
The discussion paper refers to issues dealt earlier in the negotiations, showing a "status of bargaining" that is now at an advanced stage.
Item #19 refers to the payments to the Locals and the National Office. Although it may not be clear in the pdf document, our copy shows clearly that this item is not in bold text or in italics which indicates that - as at June 8, 2003 - "the money" was an agreed upon item about which no further discussion was necessary.
According to this document only 4 outstanding issues were left as at of June 8th. One of these was the "method of approval by the respective local unions" - the alternative to ratification that was agreed upon between Mike Fraser and Loblaw representatives after the talks collapsed on May 23rd.
The bargaining history reflected in these documents matches up very closely with the history set out in UFCW and Loblaws submissions to the Ontario Labour Relations Board several months later. Reviewing the four files and the UFCW and Loblaw submissions, it's hard not to conclude that the offer of $2.85 million to the UFCW and its three locals came at a time when negotiations were bogging down on the issue of ratification. The impasse was broken after the monetary offer was made. The UFCW compromised on the issue, depriving thousands of members of an opportunity to ratify the concessionary deal and bringing the negotiations to conclusion.
Taken in context, these documents establish that by May 23, 2003, the RCSS negotiations were at an advanced stage. The backroom players were getting down to the short strokes. A proposal for a payment of $500,000 was tabled by the company in writing to UFCW Canada Director Michael Fraser on May 14, 2003 along with proposals about a number of other outstanding items. This proposal was canvassed with the three Local Presidents involved in the negotiations. On May 22nd or 23rd, the company upped the offer considerably to $150,000 in each of three years to each Local (for a total of $1.35 million) and $500,000 in each of three years to the National Office (a total of $1.5 million) for a grand total of $2.85 million dollars. That the UFCW agreed to accept these payments is evident by the reference in its discussion paper of June 8, 2003.
From other documents we know that shortly after the sweetened-up offer of May 22nd or 23rd was made, UFCW Locals 175 and 1977 backed off their demand that members be allowed to ratify the deal. The done deal was presented to members by the end of June 2003
In Their Own Words
Below are paragraphs excerpted from the UFCW's submissions to the Ontario Labour Relations Board a few months after the deal was done. Read them and come to your own conclusions about how the deal went down.
11. Commencing in December 2002, John Lederer, President of LCL and Roy Conliffe, Senior Vice President, Labour Relations, of LCL, and from time to time, other representatives of LCL and LCE...met with Mike Fraser, the Director of the United Food and Commercial Workers Canada, Kevin Corporon, the President of Local 1000A, Wayne Hanley, the President of Local 175 and Brian Williamson, the President of Local 1977 and, from time to time, other representatives of the United Food and Commercial Workers.
13. The Loblaw representatives advised the UFCW representatives that LCL had determined that it would meet the threat posed by Wal-mart through the opening of larger "superstores" which, in addition to food store type merchandise, would carry a greater variety and proportion of department store type merchandise. However, LCL had also determined that, apart from replacement stores on sites subject to successor rights under existing collective agreements ("successor stores"), any of the new superstores to be opened in Ontario would have to have terms and conditions of employment which, in the view of the Loblaw representatives, would permit LCL to meet the competitive challenge posed by Wal-mart.
14. LCL's preference was to open the stores under the Loblaws and Zehrs banners, because of existing customer loyalty to those banners. In such a case, LCL also insisted that any existing stores converted into or replaced by superstores would also be covered by all of the same terms and conditions of employment. Accordingly, LCL was prepared to engage in preliminary discussions with UFCW representatives to determine whether or not it would be possible to negotiate amendments to the relevant collective agreements. LCL would only be prepared to enter into actual negotiations if the UFCW representatives agreed that any agreements reached would be signed by the relevant Local without a ratification vote of the members of the relevant bargaining unit.
15. If discussions indicated that agreement could not be reached as to satisfactory terms and conditions of employment, then LCL would open the stores under a different banner, possibly a "Real Canadian Superstore" banner, which would be essentially an entirely new banner for Ontario. The opening of superstores would be accompanied by the closure of existing conventional stores with consequent job loss for UFCW members.
19. The Loblaw and UFCW representatives engaged in protracted, difficult discussions over a number of meetings in the period December 2002 to May, 2003 as to the nature of the terms and conditions of employment that LCL would require. The Loblaw representatives essentially started from the position that they would require terms and conditions of employment very similar to those set out in the existing Fortinos collective agreement, with even lower wage rates applicable to employees in the department store type merchandise departments, and further that those terms and conditions would apply to all new stores and all newly converted stores under the Loblaws and Zehrs banners. Among the provisions of the Fortinos collective agreement which the Loblaw representatives indicated they required were the exclusion of department managers from the bargaining unit.
16. Throughout the negotiations, the Union was advised that the Company would not enter into an agreement to amend the Collective Agreement, if the amendments to the Collective Agreement were conditional upon ratification by the membership. It was the Company's judgment that in the event such amendments were submitted to ratification and rejected, this would substantially prejudice its ability to pursue the other options referred to above. (From Loblaws Companies submissions.)
21. The parties also had discussions about contributions towards the education and communication funds maintained by each Local. Most unions have similar funds. These funds are used by UFCW Locals for a variety of initiatives including steward and occupational health and safety committee member training, job related skills training, literacy and general computer skill training for members and the like. Under some collective agreements, including the agreement between Local 1977 and Zehrs, the Locals are able to get employers to agree to make contributions based on a certain number of cents per hour worked by members. Under other collective agreements, the Locals are able to get employers to agree to make lump sum contributions. Application of the hourly contribution rate of $.15/hour would have resulted in an annual cost to the employer of more than $1 million. The Loblaw representatives initially resisted making any contribution to the Locals' funds, but ultimately accepted that a negotiated agreement could include lump sum payments of $150,000 per year towards each Local's Education and Communication initiatives.
22. On Friday, May 23, 2003, the discussions broke down completely. One reason for the break down was that Local 175 and Local 1977 took the position that any negotiated agreement would have to be subject to a ratification vote by their members. The Loblaw representatives repeated their position that there could be no negotiations on that basis. Local 1000A suggested that the negotiations be allowed to take place on the basis that each Local be able to obtain a mandate from an appropriate representative group of employees within each Local. In the case of Local 1000A, this representative group of employees would take the form of the Loblaws Divisional Officers... The Loblaws representatives declined this proposal, repeating their position that there could no negotiations with any Local unless there would be agreements will all Locals. The Loblaw representatives announced that they would proceed with the plan to open the new stores under a different banner. The meeting came to an end.
23. Mike Fraser had further discussions with the Loblaw representatives. On Monday, May 26, 2003, Mr. Fraser advised the Presidents of Locals 1000A, 175 and 1977 that LSL was prepared to agree to negotiate with any Local which would agree that any resulting agreement would only be subject to obtaining a mandate from an appropriate representative group of employees. LSL was prepared to abandon its condition that there could be no such negotiations with any Local unless all Locals agreed.
In our opinion it's troubling that such substantial sums of cash crossed the table in negotiations that produced these results. It's troubling that the members were not advised of the substantial payments that were made to UFCW Canada as part of the deal. It's troubling that all references to the payments made in UFCW documents cast these payments as "in lieu of" monies that would have required under the Locals' collective agreements with Loblaws - but the National Office has no collective agreements with Loblaws. It's troubling that the UFCW won't comment. We'll just have to keep giving UFCW officials more encouragement to come out of the bushes.