I very much appreciate your invitation to be here today and discuss with you some of the problems we have uncovered so far in our investigation, as well as some of the areas in which legislation is being considered.

The committee…has heard over 250 different witnesses in some 130 sessions. We have received over sixty-five thousand letters of complaints of improper practices in labor-management relations. We feel the committee is supported by labor throughout the country, not only because…the AFL-CIO Ethical Practices Committee [adopted a code of ethics], but because over 80 percent of these letters are from union members.

An analysis of these complaints and of the hearings that we have held so far, as well as the events that have transpired within organized labor itself, indicate many problem areas that demand solutions. Today, I will talk of only a few.

The Jimmy Jameses of a year ago, the Dave Becks of yesterday, the Jimmy Hoffas of today, will be forgotten. However the defects in the law that permitted their operations will return to plague us with new Becks and Hoffas unless we find the basic solutions. The success or failure of this committee lies not in Dave Beck being denied the position of president emeritus of the Teamsters, or of Jimmy Hoffa under some half dozen federal indictments being elected president. It lies, rather, in our ability to arrive at solutions for problems that obviously exist, to develop the facts so that Congress will act…

There are at least seven areas, admittedly controversial, where there is considerable agitation by part of the public and certain members of Congress for some federal action. They are:

• Misuse of pension and welfare funds.

• Misuse of union funds.

• Trusteeship.

• Democratic processes/secret ballot.

• Terrorism/violence.

• Organization picketing.

• Use of union money for political purposes.

There is relatively little controversy surrounding the proposition that the federal government should exercise stricter control over pension and welfare funds…

It was developed that Jimmy James, an official of the Laundry Workers International Union, and several of his colleagues had taken over $900,000 of the pension and welfare funds of that union. Such misappropriation is not a federal crime and the federal government has been powerless to take any action. Because of the jurisdictional problems, local governments have so far found it impossible to move. The unhappy result has been that these people are still free and have been suspended from their jobs only recently.

In the second category, the field of union funds, apart from welfare and pension plans, there are a number of obvious deficiencies in the law. During our committee hearings into the activities of Dave Beck, the president of the International Brotherhood of Teamsters, it was established by fourteen different methods of proof that Mr. Beck took, not borrowed, some $370,000 from the funds of the Western Conference of Teamsters.

Unfortunately, here also, as the law is not written, it is not a federal crime to misappropriate funds from a labor union.

We have found certain union officials who regard their unions as their own personal possession. Union funds exist, according to their theory, for the purpose of helping them and their friends. James Hoffa, for example, continued the salary of Pontiac, Michigan Teamster officials who were friends of his after they were convicted of extortion and sent to the penitentiary. He used over $55,000 of union members’ dues money to defend several union officials who were friends of his, and who were charged and later convicted of dynamiting and extorting money from employers…

Mr. Hoffa transferred $500,000 of Teamsters Union funds to a Florida Bank to induce them to loan money on a land scheme in which Mr. Hoffa had a financial interest. Meanwhile, the promoter of the land scheme was on the payroll of the Teamsters and was receiving some $60,000 in salary and expenses.

Mr. Hoffa also loaned $50,000 to a racetrack where his partner had a string of horses; over $150,000 to a friend who then turned around and loaned him $25,000; $400,000 to an individual who was unable to get a loan from a bank because he had been arrested twenty-two times. Several thousands of dollars of Teamster funds were used to hide his brother from the police when he was wanted for armed robbery; at another time, more than $5,000 was used to find his brother’s runaway wife; $200,000 of union funds were loaned to a department store which was operated by a friend but which was in financial difficulties and, at the time, on strike by a fellow AFL union—and on an on, to well over a million dollars of union funds for Mr. Hoffa and his associates.

Not only is there no law covering the misappropriation and misuse of union funds, there is also an apparent deficiency in the law in connection with the financial reports filed by unions desiring access to the services of the National Labor Relations Board…We learned that under present interpretation of the law, these reports do not even have to be true or accurate. As the matter now stands, therefore, some thirty-nine thousand of these reports are filed every year, and their sole value is to take up space in the government buildings.

When these New York union officials appeared before the committee, they refused to answer questions on the grounds that their answers might tend to incriminate them. Since our hearings, a number of them have been indicted for larceny and forgery.

Certainly the law should be reexamined to determine whether it is worthwhile to have these financial statements filed and, if so, whether it should not also be required that they be accurate.

In the same connection, the relationship between labor unions and the Treasury Department is being reexamined. As you know, labor unions are tax exempt. This is a privilege, not a right.

There are those who question whether the tax-exempt status of a labor organization should continue if access to its books and records is denied to the Treasury Department, as has happened in the past, or if, most important, the tax-exempt organization is being used merely as a source of illegal income for a few individuals…

So, within the field of union funds alone, there are many areas that need attention…

In the 1956 Teamster Joint Council election in New York City, when Mr. Hoffa was attempting to gain control of the 140,000 Teamsters in that area, votes were cast in the names of people who were listed as delegates and officers of new Teamster unions established by Hoffa and Johnny Dio who did not even know they were members of a labor organization. As one example, we had a witness appear before the committee who said that somebody came into Joe Saud’s bar in lower New York, where he was having a drink, and said, “Let’s all go down to the amphitheater and vote.” We showed him that he was an officer in the Teamsters Union at the time and had voted. He testified he never knew he was in the Teamsters Union, let alone an officer, and, unfortunately, he did not remember if he went to the amphitheater to vote as he was too drunk that day…

Many of the other problems which our committee has uncovered may be traced directly to lack of democratic processes with a union. Autocratic control is an invitation to corruption, a fact too well established to be ignored…

A fifth area which has given concern, and on which we have held hearings and which we expect to further develop, is the use of force and violence, terrorism and bombings, in labor-management affairs. From over a dozen sections of the country the committee has received information concerning major terroristic acts in the field of labor-management relations. The state and city officials in many cases seem unable to cope with the situation…

Another very controversial area of complaint arises from the use of union members’ dues for political purposes. Why, some argue, should a union composed of 70 percent one party and 30 percent another contribute union members’ dues to the one party’s candidate without the consent of the membership? On the other hand, union officials maintain they must take steps to protect the interests of the union and the members, and this political action is necessary for survival.

I am sure you will agree that all of the problems which I have cited today have been worthy of discussion and consideration by our committee. However, the role of management as well as labor also deserves close scrutiny and study. The committee is aware that there is often a very narrow line between what is extortion and what is a bribe. Undoubtedly, certain employers, because of selfish financial interests, would prefer to make sweetheart contracts with union officials to avoid paying better wages to their employees…

A more thorough airing of this area will come when we begin the hearings…We expect to develop a pattern of the improper and often illegal efforts on the part of management, including some of the largest and most respected in the country, either to avoid unionization or to bring dishonest union officials to sign a sweetheart contract…

We need your help and support but also your ideas on what remedial action is necessary. If the press will share the committee’s responsibility in this regard, we may later be able to consider the investigation a real step forward for American society—to make this country stronger, and, for ourselves and our children, even a better place in which to live.