The United Auto Workers’ court-appointed watchdog determined “significant dysfunction” with the processes governing the union’s Strike Trust investments but found allegations from President Shawn Fain’s office against the union’s secretary-treasurer were false and retaliatory.
Monitor Neil Barofsky, a lawyer at Chicago-based law firm Jenner & Block LLP, this week filed his 14th report in the U.S. Eastern District Court of Michigan to U.S. District Judge David Lawson, who gained broad control of a deal to oversee the UAW in 2020 following a years-long corruption scandal that sent numerous labor leaders and auto executives to federal prison. He recommended the union take steps to clarify and safeguard investment management.
“Although the specific allegations of affirmative misconduct against Secretary-Treasurer (Margaret) Mock were unfounded,” the monitor wrote, “the investigation nonetheless uncovered significant dysfunction, supervisory shortcomings, communication failures, and governance weaknesses that contributed to the Union’s investments being out of alignment.”
This included activity in Mock’s office, Barofsky said.
Leaked union documents and sources last year alleged that there was $80 million in unrealized stock gains after investment funds liquidated in 2023 to finance the UAW’s strike against the Detroit Three automakers weren’t reinvested in accordance with the union’s investment policy for 18 months after the six-week walkout.
“The Union strongly disagrees with aspects of the Monitor’s report, but we agree on these key facts: The Union internally identified the compliance concern, notified the Monitor, remediated the issue, and came back into compliance with its investment policy almost a year ago,” the UAW said in a statement. “The Union remains in compliance today. The Union will implement the Monitor’s recommendations to enhance its governance and investment-management processes.”
Mock’s attorney and Fain did not immediately respond Friday to requests for comment.
The monitor found a lack of clarity around the roles over union investments, whether decision-makers like the investments director and Investment Advisory Committee members had necessary qualifications, and poor communication lines in and outside the secretary-treasurer’s office concerning investment decisions and recommendations.
As a result, the monitor recommended the creation of a new investment charter to clarify investment responsibilities, establish qualifications for investment directors and outside consultants, mandate regulatory requirements to the Investment Advisory Committee and IEB, and conduct annual financial management training for the committee members and the IEB.
The monitor also noted that although he didn’t calculate potentially lost investment gains, he determined the calculation for the $80 million unrealized funds was “based on deeply flawed and inaccurate assumptions that significantly exaggerated any loss amount.”
For example, the UAW policy allows equity investments to make up 22% to 38% of its portfolio, according to the report, and the union report used 30%.
Allegations of mismanagement against Mock came amid a public dispute between the highest-ranking officials in the union. The International Executive Board had removed Mock in February 2024 from 11 department leadership and two outside board positions following a compliance report that the monitor in December determined contained “deliberately” false accusations. The IEB since has restored her roles.
The monitor determined that the IEB unanimously voted to suspend the union’s investment policy in August 2023 and that it wasn’t a unilateral decision by Mock.
He concluded Mock was unaware of the incompliance with the investment policy and didn’t take unilateral action to maintain the status quote, while there was inaction by multiple UAW personnel with respect to reinvesting the liquidated funds. Additionally, Chris Brooks, Fain’s resigned chief of staff, and Jonah Furman, a top administrative assistant who since has been demoted, were aware of the incompliance, but didn’t notify Mock and waited about two months to raise the matter with the union’s legal and compliance departments.
Brooks and Furman did not immediately respond to requests for comment.
He also included there was no evidence that Mock withheld information on the value of the union’s investments. These were unfounded accusations of misconduct made for retaliatory purposes, according to Barofsky, who wrote that president’s office staff as well as Fain himself “directly and indirectly interfered and/or obstructed the Monitor’s work.”
bnoble@detroitnews.com
@BreanaCNoble
This article originally appeared on The Detroit News: UAW monitor recommends changes to address investment ‘dysfunction’
Reporting by Breana Noble, The Detroit News / The Detroit News
USA TODAY Network via Reuters Connect
