After several years of debate, the Canadian Parliament last week passed legislation to require financial transparency from labor unions. This is a monumental achievement deserving of praise. It was not easy.
I had the privilege to be present for some of the debates on this legislation back in 2012. The unions and their allies, in typical fashion, threw every argument at the bill they could think of, from the tired and illogical that the bill is an “attack on the middle class,” to the factually incorrect claim, that it would result in fines of “$1 million a day for a union that did not comply.”
Despite the hyperbole, common sense prevailed, and the legislation will soon go into effect. The legislation is modeled after the disclosure requirements that apply to unions in the U.S. It requires unions to provide disclosure in a variety of categories, itemized at the $5,000 level, information on the financial health of the union, information on certain financial transactions the union made, and information on the compensation packages provided to union officials.
Now, workers will be in a position to know whether the union is spending their hard-earned dues money appropriately. They will be able to tell whether the union is spending money on political causes that they oppose, or whether the union’s spending is in line with their beliefs. They will be able to determine whether the union is being wasteful with members’ money, or whether the spending is legitimate.
The U.S. experience has shown that these disclosure requirements greatly benefit union members by providing them with the information needed to take effective democratic action within their unions.
The U.S. law providing for union financial transparency, the Labor-Management Reporting and Disclosure Act (LMRDA), was passed by Congress in 1959. Before passing the Act, Congress held over 270 days of hearings, calling over 1,500 witnesses to testify. In the end, the Act was passed with wide bipartisan support. The Act was designed acknowledging that “the members who are the real owners of the money and property of the organization are entitled to a full accounting of all transactions involving their property.” However, it was not until the 2000s that the regulations implementing the Act were brought in line with the Act’s intent, to provide a “full accounting.”
This “full accounting” has enabled union members and the public to find instances of corruption, such as theft of union members’ money. The U.S. disclosure regime enabled Paul Pringle, a reporter for the L.A. Times to uncover financial misconduct by a local union affiliated with the Service Employees International Union. An investigation by Mr. Pringle, using the mandated financial disclosures, led to the conviction of the union’s president, Tyrone Freeman, of several crimes related to his use of union members’ money as his own personal piggy bank. Even though Freeman was making over $200,000 a year he still ripped-off his own members, using their money for everything from $10,000 at a cigar bar to his honeymoon expenses in Hawaii. Without the mandated financial disclosures, his activities could have remained undetected for a very long period of time.
There are numerous other examples where disclosure has uncovered corruption. These disclosures also have a deterrent effect as well. As noted by a Congressional staffer who worked on the LMRDA, “the official whose fingers itch for a ‘fast buck’ but who is not a criminal will be deterred by the fear of prosecution if he files no report and by fear of reprisal from the members if he does.”
These effects, deterrent from corruption and the ability to uncover corruption when it occurs, will serve to benefit Canadian workers who are represented by unions.
Passing union financial transparency legislation is a great step forward for Canada.
Nathan Mehrens is President of Americans for Limited Government Foundation and previously served in the U.S. Department of Labor.