EXCLUSIVE: Union head returns some of $1.2M pay

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EXCLUSIVE:

The president of a maritime workers union - a labor organization dogged for years by declining membership and a federal racketeering lawsuit - reported receiving $1.2 million in compensation last year but abruptly gave back much of the money in April after his big payout was disclosed to the government, according to federal documents and interviews.

Even after giving back more than half his compensation, Richard J. Hughes Jr. of the International Longshoreman’s Association still earned $494,635 in salary and expenses in 2008, putting him among the top two dozen highest-salaried labor executives outside of professional sports, according to public records.

The longshoreman’s union filed a report with the government in March showing that Mr. Hughes was paid $739,729 in 2008 from the union’s “retirement equalization” plan, on top of his nearly half-million dollars in salary and expenses, according to interviews and records. But on tax day, April 15, Mr. Hughes returned the money to the union, officials said.

The union also filed an amended report with the Labor Department last week to show the return of the money within hours of being questioned by The Washington Times about Mr. Hughes’ $1.2 million compensation.

“When he saw the payment and matched it against the finances of the union, he turned it back in,” union spokesman Jim McNamara said of Mr. Hughes’ decision. “He was entitled to it, but he made a decision to turn it back in.”

Several labor analysts expressed concern about the union’s pay practices and the changes it made in its financial reports.

“I’d be concerned if I were a member, because the president is making a straight salary of almost a half-million dollars,” said Gary N. Chaison, professor of industrial relations at Clark University in Massachusetts. “That compensation seems very high.

“It always raises a red flag when someone returns part of their compensation.”

The union said that nothing improper occurred, but that Mr. Hughes had second thoughts about his seven-figure compensation package after reviewing a union financial report.

“It wasn’t really a mistake, because he was entitled to it, but he made a decision to turn it back in,” Mr. McNamara said. “If there was a mistake, the accounting figures were not clarified.”

Once Mr. Hughes returned the money, the union said, accountants filed amended payroll tax returns to recover the $330,071 in payroll taxes paid in connection with the equalization plan payout.

“It sounds awfully convoluted, to say the least,” said Marick Masters, a labor scholar at Wayne State University in Detroit. He said he did not understand why the $1.2 million figure was reported in the first place, since both Mr. Hughes and the union’s treasurer signed the federal disclosure document.

“Certainly that kind of salary should have raised many eyebrows before the report was filed,” Mr. Masters said. “You’d think you would pay attention to something as glaring as that.”

Still, University of Illinois labor analyst Robert Bruno said that, in general, the filing of an amended financial report by unions isn’t always cause for concern.

“What the Department of Labor has found is that there sometimes are mistakes or inaccuracies, but they’re mistakes, nothing criminal,” he said, adding that across the industry, “even the most generous” union compensation packages are dwarfed by the corporate salaries of the employers where many union members work.

Labor consultant Neil Bernstein, law professor emeritus at Washington University in St. Louis, said retirement plans typically are paid out once employees leave an organization.

“Normally that’s money they can’t get their hands on until they retire,” he said.

The union said the equalization retirement plan was started more than a decade ago. In a statement, the union described the plan as a way to “compensate employees for any reduction in retirement benefits” under the union’s pension plan, “which resulted from the application of the limitations imposed” by Internal Revenue Service rules. Although Mr. Hughes still has two years left in his presidency, the union spokesman said he became eligible for the equalization payout because of his age.

Mr. Hughes was elected union president in July 2007. The labor group represents maritime workers along the Atlantic and Gulf coasts, along major U.S. rivers and in eastern Canada and Puerto Rico.

In November 2007, just a few months into Mr. Hughes’ tenure, the union won a substantial legal victory when a federal judge dismissed a civil lawsuit brought by the Justice Department two years earlier accusing the union of racketeering activities involving businesses along the New Jersey and New York waterfront.

The lawsuit, which sought to wrest control of union finances, called Mr. Hughes a “nominal defendant,” who was named only because of his official capacity as union president. But government attorneys said other union officials were associates of the Genovese crime family.

The union sharply disputed the charges and hailed the decision of U.S. District Judge I. Leo Glasser to dismiss the case. In a statement, the union said, “This case was based on outdated stereotypes of the ILA [and] was an insult to ILA members and never should have been brought.”

The U.S. attorney’s office in New York refiled the lawsuit months later. A spokesman for the prosecutor’s office declined to comment but confirmed that the case is pending.

Mr. Hughes made $430,781 in salary and expenses in 2007, when he spent half the year as ILA president and half as its executive vice president. Two other ILA officers earned $400,000 or more in total compensation last year, according to union filings. The union’s president emeritus, John Bowers Jr., made $262,080.

According to a Washington Times analysis of the disclosure reports, the union officers’ compensation rivals the pay of executives at some of the nation’s largest labor unions. The longshoreman’s union has 43,500 members.

James P. Hoffa, president of the Teamsters with 1.4 million members, made $383,132 in salary and expenses, according to the union’s 2008 financial report. Gerald McEntee, president of the nearly 1.5-million-member American Federation of State, County and Municipal Employees, made $538,661 last year.

However, several other comparably sized unions - such as the United Service Workers Union, the Aircraft Mechanics Association, the Boilermakers AFL-CIO headquarters, and the United Service Workers Union - paid one or more of their executives $400,000 in salary and expenses, according to a review of Labor Department filings.

The highest-paid union executives in the nation represented professional athletes. Billy Hunter, executive director of the union for National Basketball Association players, was paid $2.4 million from July 2007 through June 2008. Gene Upshaw, who ran the National Football League players union, received more than $4 million from March 2007 to March 2008, and Donald Fehr, executive director of the Major League Baseball players union, was paid more than $1 million last year.

Like many other unions, the ILA has seen its membership rolls decline in recent years. According to Labor Department figures, the ILA had 59,000 members in 2004, 52,000 the next year and 43,500 for each year since then. The shipping industry in recent years has been hit hard by declining trade volumes.

A recent report by the Maritime Executive, a trade publication, said cargo volume at the nation’s largest retail container ports dropped by 7.9 percent in 2008.

Mr. Hughes nonetheless remains a prominent figure in the labor industry. Among her first public appearances after being confirmed as Labor Secretary, Hilda L. Solis visited the Miami local chapter of the ILA, where she was greeted warmly by Mr. Hughes.

A Baltimore native, Mr. Hughes told Mrs. Solis that his union was proud to have helped elect Barack Obama as president, and he recounted a recent visit to the White House with other labor leaders.

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