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UAW says new audits will crack down on financial wrongdoing

Ian Thibodeau   | The Detroit News

Detroit — The United Auto Workers union announced Monday new audits and changes to the union's financial procedures as the federal government continues a years-long investigation that U.S. Attorney Matthew Schneider told The Detroit News could result in federal oversight of the nation's largest union.

UAW Secretary-Treasurer Ray Curry in a statement said the union would hire four additional auditors to "assist with increased auditing" processes. The union also said it retained Deloitte, which began an audit in the second quarter of 2019, to assess the accounting of Solidarity House, all UAW regional offices, all political action committees, the union's Black Lake Education Center and the UAW golf course in Cheboygan County, Michigan.

The moves were announced three days after former UAW president Gary Jones officially resigned his union membership. The News identified Jones as the unnamed UAW leader accused of helping orchestrate a conspiracy that involved embezzling more than $1 million in member dues and spending the money on personal luxuries, including private villas, golf and expensive liquor. Jones has not been charged by the government.

"The UAW is committed to putting in place checks and balances and accounting reforms that prevent financial malfeasance," said Curry in a statement. "This top-to-bottom assessment of our financial and accounting procedures and policies will result in a stronger and more stringent financial oversight of all expenditures and financial transactions. With the support of our entire International Executive Board, we will keep the membership and staff updated on our progress and changes."

In addition to the four auditors and retention of Deloitte, the UAW has also retained a new external accounting firm that would conduct financial audits of the union or 2019, and handle financial reporting moving forward. The union also plans to amplify internal training on new accounting procedures, centralize financial operations, and utilize the Bonding Certificate system to recover "100% of any misappropriated funds prior to any restitution afforded by the courts."

The federal investigation found that Jones and others allegedly used union dues to pay for golf, alcohol and other luxuries during his time as director of the UAW's Region 5. 

"Dues dollars are sacred," said acting President Rory Gamble. "Secretary-Treasurer Curry and I, along with the entire International Executive Board, are committed to establishing stringent financial controls and new procedures to address and fix any weaknesses in the system. The UAW will hand over to our membership in 2022 a financially safeguarded union."

Kristin Dziczek, vice president of industry, labor and economics at Ann Arbor's Center for Automotive Research, said Monday's moves show improvement.

"Even baby steps weren't possible a few weeks ago," she said. "You've got to give them credit for that."

The UAW's plans were announced as U.S. Attorney Matthew Schneider told The Detroit News he was unimpressed with reform efforts announced by Rory Gamble since he was appointed acting UAW president in early November.

Schneider told The News he was displeased with the UAW's lack of cooperation in the years-long federal investigation of corruption within one of the nation's largest unions. He also said federal investigators aren't ruling out the possibility of imposing federal oversight of the UAW, a move the government made when settling a racketeering lawsuit 30 years ago against the International Brotherhood of Teamsters.

Schneider said the investigation into the UAW is perhaps only halfway completed, and "we need to work through these criminal cases before we determine how we are going to go forward."

The federal government is in the middle of an investigation in the unions that so far has produced 10 convictions, 13 people charged, implicated the past two presidents in financial corruption schemes and raised the possibility that a union long considered "clean" will submit to federal monitoring.

Gamble in a mid-November made a bid to restore the UAW's credibility amid the ongoing federal corruption probe ordered the sale of a lakefront home built for a former president in addition to other reforms.

Analysts and UAW members said Gamble's list of intended moves were a step in the right direction. Gamble said then the UAW would appoint an independent ethics officer, and stiffen internal financial controls.

Those were some of Gamble's first moves as acting UAW president. He was appointed to the top seat after former president Gary Jones resigned the position. Jones resigned after The News reported federal investigators were targeting him for allegedly embezzling more than $1.5 million in union funds. The international executive board will vote on his permanent replacement Thursday.

Jones on Friday officially resigned his membership from the union, which helped him avoid a trial before UAW members.

Meantime, the UAW is expected to vote this week to appoint a president to serve the remainder of Jones' forfeited term, which ends in 2022. 

Gamble told The News last week that the UAW has been shamed by "a whole lot of bad actors," and that "I'm fighting to save my union."

There was a problem, he said, and there is a need for "great change."

Detroit News staff writers Rob Snell, Breana Noble and Daniel Howes contributed

Twitter: @Ian_Thibodeau