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WTU Administratorship InvestigationOn January 8, 2003, AFT President Sandra Feldman commenced the procedures set forth in the AFT Constitution to consider whether an administratorship for the Washington Teachers Union, AFT Local 6 ("WTU") was necessary. By fax ballot dated January 10, 2003, the AFT Executive Council gave the President the authority to appoint a committee of the Council to investigate and conduct a hearing on the necessity for the administratorship. AFT Vice Presidents Sandra C. Irons and Walter E. Dunn were appointed by President Feldman to serve on the investigation committee.The Committee sent a notice to both the Executive Board and Interim President of the WTU, Esther Hankerson, informing them that a hearing would occur on January 16, 2003 at the AFT offices in Washington, DC. The notice set forth the applicable criteria in the AFT Constitution for consideration of an administratorship. These criteria are enumerated in Article VI, Section 15(a). The notice further outlined the facts that had been uncovered which supported the need for an administratorship. Those facts included an affidavit submitted by the FBI showing alleged substantial misappropriation of union funds by the former WTU President, Barbara Bullock, Treasurer, James Baxter, as well as by the Assistant to the President, Gwen Hemphill. HearingInterim President Hankerson and ten (10) members of the WTU Executive Board attended the hearing. The hearing commenced with the introduction of a forensic audit of the WTU finances that was completed by an outside independent auditing firm at the request of the AFT. A copy of the audit is attached to this report. The audit provides as complete a picture as is possible at this time of the improper expenditures of union funds by Bullock, Baxter, and Hemphill for the 1996-2002 time period. The audit explains the circumstances that led to this misappropriation of union funds in the following way: "due in large part to the deliberate override of the system of internal controls at the WTU, Bullock, Hemphill and Baxter appear to have systematically diverted millions of dollars in WTU funds to themselves, family members and others for personal benefit." The audit further states that, "if our findings are proved in a court of law, approximately $5 million was misappropriated during the time period from 1996 through 2002." Set forth below is an excerpt from the audit that categorizes how the WTU's funds were misappropriated:
The Director of the AFT Financial Services Department, John Feldman, testified at the hearing and introduced a document representing the outstanding financial commitments faced by the WTU at this time. A copy of that document is attached to this report. At present, WTU has outstanding obligations of $1,735,440. It has an additional contingent liability of $809,000. The total liabilities of the WTU at this time are $2,544,880. The WTU Executive Board posed a number of questions during the hearing regarding the powers of an Administrator as described in the AFT Constitution. Several of those questions concerned the status of the WTU Executive Board and the Interim President in the event an administratorship is authorized by the AFT Executive Council. Esther I-Iankerson spoke for those in attendance from the Board on the underlying issue of the administratorship and stated: "An AFT administratorship will provide the resources, strength and guidance needed to begin to repair the damage and set us right." DiscussionThis is the first instance in which the AFT has been formally presented with the issue of whether it is appropriate to exercise the administratorship authority set forth in Article VI, Section 15 of the AFT Constitution. The AFT is a union that has a proud history of local autonomy in which our affiliates have full authority to bargain and sign their own contracts, handle their own grievances and litigation, employ their own staff and engage in their own local political action. As a result of this history, we do not invoke the power to appoint an administrator lightly. However, the independence of our locals is not unqualified, particularly when the rights of the members are in jeopardy. In such crisis situations, the AFT Constitution has given the national organization the authority to intervene. There is no doubt after review of the forensic audit and the statement of WTU liabilities that an AFT administratorship is necessary both to restore the financial stability of the WTU and to ensure that the local's field operations serve the members effectively and efficiently. Under the circumstances, it is difficult to foresee how any AFT local could remediate such a situation on its own. The specific threshold set forth for an administratorship under the AFT Constitution is whether there are "exceptional and unusual circumstances where an AFT . . . local affiliate is incapable of taking adequate remedial measures on its own initiative . . . to [correct] financial malpractice or misappropriation or loss of funds." The facts in this case, set forth in both the audit and statement of outstanding liabilities, concerning the extent of union funds lost by the WTU speak for themselves. To the person, every individual who attended the hearing agreed that an AFT administratorship was needed to address the enormous financial strain facing the WTU as a result of the alleged actions of Bullock, Baxter, Hemphill and others. In addition, this financial strain on the WTU has been compounded by the distraction of significant media attention and the collateral damage to the institution's standing. Properly implemented, a WTU administratorship would engage the existing WTU leadership and Executive Board in an advisory capacity and as liaisons to the membership. The specifics of that relationship cannot be defined in this report as first it will require an assessment by the administrator to ascertain how those roles should be implemented. In addition, since this is a new process for the AFT, there are systemic questions regarding the exercise of AFT decision-making in an administratorship that go beyond the issues raised by the specific facts presented here. Nonetheless, the common objective of vigorously protecting the interests of the WTU membership throughout this difficult period will be pursued by the administrator and all parties. Here, this decision on intervention is simplified due to the support of the Interim President and WTU Executive Board for an administratorship. The presence of an administrator will provide the WTU the stability and support to put its house in order. In this connection, we understand that among the priorities will be to pursue all means reasonably available to seek restitution for the WTU membership for the alleged financial losses created by Bullock, Baxter and Hemphill. Throughout, the paramount objective will be to preserve, protect and advance the interests of the WTU membership. That objective will only succeed by maintaining regular contact with and input from the WTU membership. We note in closing that while the grounds for an administratorship are clear, the time period necessary for the administrator to conclude his work is at this point uncertain due to the extent of the task facing him. For that reason, we will request regular reports from the AFT officers on the progress of the administratorship. Order
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