Bureau of National Affairs
Volume 02 Number 87
By Brian Lockett
Monday, May 6, 2002
Former Illinois governor James R. Thompson Jr. has been named by the board of directors of union-owned ULLICO Inc. to lead an internal investigation of the company's investment in Global Crossing Ltd. and alleged insider trading by board members, according to board sources.
The decision came during an April 29 meeting of ULLICO's board in Washington, D.C., according to these sources. A company spokesman refused to comment on the matter.
Thompson is expected to start his investigation as soon as possible, sources said, but no deadline has been set for submitting his findings and recommendations to the board. Thompson will conduct his probe without restrictions, one source said, adding. "He will set his own parameters."
ULLICO, formerly known as Union Labor Life Insurance Company, is a union-owned insurance company, founded in 1925 to provide affordable life insurance for workers, that also invests and manages approximately $6 billion of largely building trade union pension fund assets. The company also is under investigation by the Labor Department regarding its management of those funds.
Allegations that some members of the board--which includes a number of prominent union officials--personally profited from the sale of ULLICO stock as a result of insider trading surfaced last month during a federal grand jury investigation of Jake West, former president of the Bridge, Structural and Ornamental Iron Workers.
West, who was elected to ULLICO's board in 1990, was indicted last year for allegedly embezzling union funds and filing false reports with the Labor Department.
At the same time, the value of ULLICO's investment of union pension funds, which were heavily invested in Global Crossing, dropped when the price for Global Crossing plummeted.
John J. Sweeney, president of the AFL-CIO and a member of ULLICO's board, sent a letter March 20 to Robert A. Georgine, chairman of the company, urging a prompt review of the matter and proposed criteria for members of the review panel.
Georgine acknowledged Sweeney's letter but said he would be taking a "somewhat different" approach. Georgine also said he expected ULLICO's board to be vindicated in the investigation.
While not commenting on the propriety of alleged insider trading, one board member said board members at the April 29 meeting doubted that they had done anything improper or illegal. "We don't think we violated laws but some people think we did," the source said. It will be up to Thompson to make that determination, he added.
More than one board member took exception to claims that Sweeney was bringing pressure on ULLICO to conduct the investigation. "This has nothing to do with demands from the federation," one source said. Instead, he said the board wants an independent evaluation of what if anything it may have done wrong and how the matter should be remedied.
Thompson is a partner in the Chicago law firm of Winston & Strawn. A partner in the firm represented John Serpico, a former vice president of the Laborers' International Union, who was convicted by a federal jury on mail fraud charges and was a target of the Justice Department's 1995 effort to rid the union of corrupt influences.
ULLICO's annual meeting is scheduled for May 7 in Washington, D.C., a company official said.
Copyright © 2002 by The Bureau of National Affairs, Inc., Washington D.C.