United Auto Workers
For Release: Thursday, January 30, 2003
UAW sues ULLICO to force release of Thompson report
The UAW will file a lawsuit today in U.S. District Court in Detroit against ULLICO (Union Labor Life Insurance Company), seeking the release of the report by former Illinois Governor James R. Thompson regarding allegations of improper stock trading by certain members of ULLICO's Board of Directors.
"We need to know the facts," said UAW President Ron Gettelfinger. "If we've learned anything from Enron and other corporate scandals that have unfolded during the past year, it's that shareholders must be vigilant in demanding transparency, openness and accountability from corporate officers and directors."
"ULLICO, which is owned by America's labor unions, must be held to the very highest ethical standards. The UAW strongly believes that ULLICO should release the Thompson report to all ULLICO directors and shareholders," said Gettelfinger.
The lawsuit was filed on behalf of the pension plans for employees of the International Union, UAW; the pension plans collectively own more than 150,000 shares of ULLICO stock.
In December 2002, UAW President Ron Gettelfinger and Secretary-Treasurer Elizabeth Bunn sent ULLICO a written request for a copy of the Thompson report.
"ULLICO management did not even respond to our request," said Bunn. "Our union routinely requests and receives financial disclosure from companies across the bargaining table. We will demand no less from ULLICO."
ULLICO is presently under investigation by a federal grand jury and state insurance regulators in Maryland, where the company is based.
ULLICO made a major investment in Global Crossing, a telecommunications company which experienced a sharp rise in its stock price in the late 1990s, and an equally sharp fall in its stock price in 2000.
According to press reports, when ULLICO stock was rising as a result of its investment in Global Crossing, company directors were allowed to purchase company stock at an artificially low price. When Global Crossing's stock began to fall -- and ULLICO's along with it -- the same directors were offered the opportunity to resell their stock to ULLICO at an artificially high price. Not all directors took advantage of these opportunities.
These special deals were offered only to ULLICO directors but not to any other shareholders, according to press reports.
At ULLICO's May 2002 annual meeting, management assured shareholders that an independent investigation of these stock transactions would be conducted by James R. Thompson. Currently the managing partner of Winston & Strawn, a Chicago-based law firm, Thompson served as U.S. Attorney for Northeastern Illinois prior to his election as Governor of Illinois in 1976.
Thompson completed his report later in the year, but reportedly only ULLICO directors who signed a confidentiality agreement were allowed to see the report.
"We were promised a full investigation, and we intend to see that ULLICO management keeps its promise," said Gettelfinger. "ULLICO shareholders -- including UAW employees whose pension funds are invested in that company -- deserve no less than full disclosure of the Thompson report."
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