• authored by news
  • published Mon, Apr 8, 2002

ULLICO-Global Crossing Scandal

Biz-Unionists raked it in while pension fund took a hit
Senior biz-union officials who were members of the Board of Directors of ULLICO, a union-sponsored life insurance company, profited from investments in a now defunct communications business called Global Crossing. Why is this cause for concern? This article tells the story.

Thanks to a union-owned insurer's early stake in the former highflier, more than a dozen labor leaders profited handsomely.

The unfolding scandal involving Global Crossing may be about to engulf an unlikely group: the U.S. labor movement. The labor connection involves a union-owned life insurance company that was one of the original investors in the fiber optic outfit, providing some initial seed money to Global founder Gary Winnick. It was a savvy deal for the unions that own the insurer, ULLICO Inc., earning the company a $500 million profit on a $7.6 million investment.

At the same time, however, ULLICO CEO Robert A. Georgine, a long-time AFL-CIO official, used the Global investment as a profit-making opportunity for himself and other ULLICO board members, most of whom are current or former union presidents.

He did so in two ways. First, he extended to his directors an offer from Winnick to get in on Global Crossing on the ground floor, say several directors, letting them buy shares at the IPO price. That's no different from the way many investors made windfall profits during the IPO boom -- benefitting from their close ties to newly formed companies. Labor officials say some directors made millions off their sales, although no director contacted by BusinessWeek would disclose his or her gains.

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  • posted by <Joe Blow>
  • Tue, Apr 9, 2002 9:45am

UA General Pres. Marty Madaloni was also in on this deal. He actually made the front page of the Wall street Journal on April 2.
Mr Madaloni (I sure won't call him Brother) has his hands full nowdays. His election is being protested by the Labour Board. The use of funds from the US UA Rank and file members Pension for the building of the Diplomat Hotel is in question and the Labour Board has told the Trustees to resign or face a litigation. He lost his bid to have the litigation to remove sec 199 of the UA Constitution tossed out and as a result has to remove it and also inform union members of their rights under the LMRDA. Now there is the the deal of him making close to $200.000.00 in the Global Crossings fiasco.
Talk about greed (and that's what it is all about pure and simple) I guess the big salary and expense account isn't enough to keep him in the manner to which he has become accustomed.
Who says member complaints don't work. Most of Madaloni's problems have evolved because a lot of members are fed up to here and won't take it anymore. It's too bad that we don't have an easier route to take in this country to file our complaints, the Labour Board here does zip zero zilch.

  • posted by licatsplit
  • Tue, Apr 9, 2002 11:56am

Joe Blow, I wish we had access to the number of UA Members who actually have monies tied up in this insurance. I can remember receiving an application in the mail, with an official union letterhead, asking me to invest in a life insurance policy. My gut instinct at that time told me this was not right and I tossed it in the trash. I wonder how many members actually replied to these mailings and invested some of their hard earned money. It's an atrocity we cannot trust our elected officials. The phrase "House of Labor" comes to mind. What happens in the "House of Labor, Stays in the House of Labor". Well, I suppose someone has opened the door on our house and the whole world is looking in. Hiding behind closed doors will not work anymore. There are too many members, who are concerned enough for our future, who want to clean and polish our "House of Labor". Labor must set an example for all to see. Through our basic rights and fundamental principles, we can make Labor a respected word among society in general. We should be fighting for everyone's rights, whether they are union members or the general public. An injury to one is an injury to all!

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