Labor chief rails at 'corporate pirates'
NEW YORK — AFL-CIO labor federation President John Sweeney denounced "corporate pirates" during a rally across from the New York Stock Exchange and called for more stringent government standards for publicly traded companies.
Sweeney, who represents 13 million U.S. workers and more than $5 trillion in pension funds, said the federation would push for increased accountability.
Among the AFL-CIO's recommendations to government officials and business executives are creating new corporate governance standards, enacting pension reforms and putting workers at the "front of the line" in bankruptcy proceedings.
Sweeney endorsed a proposal being debated to force publicly traded companies to expense the stock options they give CEOs. Companies have no such obligation and have lavished millions of shares on top managers, diluting the value of existing shares.
Sweeney also said CEOs should be prohibited from selling their company shares while they're in office, removing incentives to pump up the stock in the near term regardless of future consequences.
Sweeney harshly criticized the former leaders of Enron, Global Crossing and WorldCom, who sold millions of dollars worth of shares just before their companies spiraled from billion-dollar businesses into bankruptcy protection amid disclosures of questionable accounting.
"Now we're faced with 20th-century corporate pirates who took advantage of our nation's transition from an industrial to an information economy," Sweeney said. "The sad truth is that American consumers can shop with more assurance of quality and safety at their corner grocery store than American investors can shop for equities in our stock market."
The federation will take legal action to recover severance pay for workers fired from WorldCom, Sweeney said.
Chief executives of companies involved in corporate scandals and bankruptcy "aren't businessmen," Sweeney said. "They aren't even capitalists. They're thieves."
The rally came after President Bush signed into law legislation granting the government new powers to police the accounting profession and increasing prison terms for executives who defraud investors.
Hundreds of New York-area labor leaders and union members joined the rally.
Among the unions represented were the United Federation of Teachers, the Service Employees International Union and the Union of Needletrades, Industrial and Textile Employees.
"We want to make corporations and people at the top of these corporations more aware of their responsibilities to the general public," said Marty Eisenberg, 56, a United Federation of Teachers member and Brooklyn teacher.
The AFL-CIO helped negotiate severance payments of as much as $13,500 for more than 4,200 fired Enron workers. Sweeney said the federation plans to file a similar lawsuit on behalf of 17,000 fired WorldCom workers.
The AFL-CIO is made up of 66 unions. Its union pension funds are "our country's single largest source of investment dollars," Sweeney said.
Former employees of Enron, WorldCom and Arthur Andersen spoke at the rally. The three companies fired thousands of employees amid investigations of accounting irregularities.
"The bottom line is executives stole our money," said Deborah Johnson, who worked for Enron for seven years. "They should pay for what they've done."
Coretta Robinson, a senior executive assistant at Arthur Andersen for nine years, said she was "penalized for the wrongdoing of others." She lost her job five months from being vested in the company's pension program.
Johnson and Robinson were not union members.
"I'm worried about my pension," said Anthony Williamson, 39, a member of Local 79 of the Laborers International Union of North America who attended the rally. "They're investing our money and it's being squandered into the big CEO's pocket and it's not fair."
Labor unions will increase their push for accountability by meeting with executives, leading shareholder fights, holding demonstrations, lobbying and starting electronic mail campaigns, Sweeney said.
The AFL-CIO has long used its financial clout to further its agenda. Union investments represent more than $400 billion in the capital markets.
AFL-CIO pension funds lost $3.3 billion in the bankruptcies of Enron and WorldCom.
Some observers say organized labor is trying to harness outrage over the accounting scandals to push its agenda on such issues as subsidized health care and opposition to privatizing Social Security.
"They'd be fools if they didn't seize this chance, and they're not fools," said Jarol Manheim, a professor of media and public affairs at George Washington University.
Critics say unions' motives for better regulation of corporate-accounting practices aren't altruistic — they're just trying to organize workers at nonunion companies.
AFL-CIO General Counsel Damon Silvers said increasing membership is only part of the federation's agenda.
Such high-profile corporate implosions simply drive home the labor movement's message, he said. "At the very heart of their message to their employees was, 'Trust us,' " Silvers said. "Look where it got them."
Sweeney also is to meet with New York Stock Exchange President Richard Grasso and Henry Paulson, chief executive of Goldman Sachs.
"The New York Stock Exchange has taken positive steps already, but we have to insist on more," Sweeney said.
On Monday, Sweeney joined a rally at the Stanley Works in New Britain, Conn., to protest its plan to reincorporate in Bermuda. Today, Sweeney is to lead a demonstration at the Boston headquarters of Fidelity Investments, the largest mutual-fund company, to protest its policy of not disclosing votes in shareholder fights.
Material from The Associated Press was used in this report.