DukeEmployees.com - Duke Energy Employee Advocate
News - April 2001
Duke Energy Employee Advocate - April 29, 2001
An independent study, commissioned by the University of Washington, has named Congressman Sanders’ website the Best in the entire Congress.
We have another award for Mr. Sanders. Read on.
Duke Energy Employee Advocate - April 29, 2001
Whereas, Congressman Sanders has fought cash balance pension injustice, while many others ducked the issue or caved in to the influence of large corporations.
Whereas, Congressman Sanders has offered bill after bill that would protect the pensions of American workers.
Whereas, Congressman Sanders has given speeches and attended shareholder’s meetings to support employee’s efforts to obtain pension justice.
Whereas, Congressman Sanders has delved into the pension matter to the extent of becoming an expert and does not need to rely upon “employer shill groups” to tell him how to vote.
Be it resolved that on the twenty-ninth of April in the year two-thousand and one, the Duke Energy Employee Advocate does hereby proclaim Congressman Bernard Sanders to be the best elected official in the entire Congress.
Duke Energy Employee Advocate - April 26, 2001
Have you noticed that news coverage in America seems a little strange? We are inundated with tons of news of the most trivial nature, while many important matters go totally ignored. Have you ever read an interesting story that seemed to be the beginning of an important development, then the issue just dried up?
Sometimes to get a broader perspective of what is actually taking place in America, one has to read the foreign press. MediaChannel.org (Britain) published “SILENCE OF THE LAMBS: The Election Story Never Told,” by Greg Palast March 12, 2001. It spills a few beans.
Mr. Palast reported on the voting problems in Florida, and marveled at how little press coverage the story has received in America. After he reported the vote fraud in Britain, CBS called him for information. He gave them everything he had. CBS killed the story because Jeb Bush’s office denied it!
We recall watching a CNN report of the Florida voting scandal that evaporated during a CNN requested break. During the break, they killed the link to the story. We reported it in “Election Hearing Too Hot To Handle?,” November 12, 2000. CNN refused repeated requests for a comment as to why the story was killed.
Even the foreign press has noticed the void of news coverage concerning this episode.
The Nation did publish “How the GOP Gamed the System in Florida,” in the issue dated April 30, 2001. The news is slowly, sporadically seeping out.
Duke Energy Employee Advocate - April 25, 2001
AT&T employees did not receive a proxy statement, as other shareholders did. AT&T claims that this was to save money. That sounds a little thin to us. Could it be that the company wants to discourage employee shareholders from voting for the pension plan resolution?
Below is a statement from the ACE CORP employee’s newsletter of April 23, 2001:
“Unfortunately, the 100,000 employees holding positions in AT&T stock, were not treated the same as the other 5 million shareowners. Employees were not mailed a Proxy Statement. You should ask WHY! In her very own words, Marilyn Wasser, VP Law & Government Affairs said in her E-Mail to all employees on April 4th, 'By accessing these materials electronically, instead of paper copies, employees will help AT&T reduce the expenses associated with the printing and mailing of these materials.' Come on now Ms. Wasser. How much did AT&T really save by not mailing out those Proxy Statements?”
Duke Energy Employee Advocate - April 25, 2001
The IBM shareholder’s resolution for pension justice did not pass. This came as no surprise, even for those who submitted it.
Getting the resolution passed will take a Herculean effort. And even then, the resolution would be non-binding. The effort is accomplishing its purpose of drawing attention to the cash balance pension disgrace.
The pension resolution is for publicity; the lawsuit and EEOC age discrimination charges are where the employees will be playing for keeps.
Pensions have been looted, one way or another, for decades. These employees have mounted a fierce campaign to end the latest sorry chapter of the pension heist saga. As usual, the IBM employees are doing a masterful job.
Click the links below to see pictures taken at the IBM Meeting of Shareholders and a report from the Communications Workers of America.
Employee Advocate - DukeEmployees.com - April 23, 2001
P&I Daily reports that employees have filed a motion asking a U.S. District Court judge in Philadelphia to add amended RICO [RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT] allegations to their complaint against New York Life Insurance.
New York Times - By ANDREW C. REVKIN - April 21, 2001
In a new review of the science behind its proposal to purge fine soot from the air, the Environmental Protection Agency has concluded that there is a stronger link than ever between the tiniest soot particles and thousands of premature deaths each year.
The analysis, still being revised, considered more than 3,000 new health studies published since the agency proposed rules in 1997 intended to cut levels of soot and other smog ingredients produced mainly by power plants and vehicles. The proposed rules are still under review, and the final analysis could be a crucial factor in the Bush administration's decision about how tough the final rules should be.
From the start, businesses had strenuously fought the rules, saying the science was suspect and the costs would be enormous. But in the review of more recent research, one of the highlighted studies was in fact partly financed by industry.
Agency officials said that more changes in the report were inevitable and another draft was likely before the document was considered complete. But they said the review clearly eliminated almost any doubt that this kind of pollution posed a serious health threat.
"There is a veritable deluge of new research," said Dr. Lester D. Grant, the director of the agency's national center for environmental assessment, in Research Triangle Park, N.C., which is conducting the review.
"The bottom line is the studies very substantially confirm the original findings. That goes a long way toward laying to rest the sort of controversy that swirled around those studies."
So far, the Bush administration has not indicated whether it will change direction on the soot rule. In fact, President Bush's choice to head the environmental agency's air division, Jeffrey R. Holmstead, has not yet had his confirmation hearing.
But the administration did take a strong stand on a big source of this kind of pollution in February, when Christie Whitman, the E.P.A. administrator, strongly endorsed a rule drafted by the Clinton administration that would sharply curtail emissions of soot and other emissions from diesel engines.
The separate standard proposed for soot and air would limit concentrations of particles smaller than 2.5 microns to an average of 15 micrograms per cubic meter measured for three years in a row. Until now, the agency has only had limits on particles of 10 microns and smaller, but no specific limit on the smallest ones.
Levels of these particles have been slowly declining on average across the country for years, as stricter controls have been instituted on coal- fired power plants and as other plants have switched to cleaner- burning fuels, particularly natural gas. But many cities still see dozens of days each year when levels of the small soot particles far exceed the proposed federal standard.
For example, the study shows that in 1999, the latest year with comprehensive data, New York City, Los Angeles, Atlanta, Chicago, and several other cities had annual average levels of the 2.5-micron particles that would - if seen for three years in a row - violate the proposed rule.
Since the early 1980's, scientists' concerns about soot have focused increasingly on the smallest particles, which penetrate farthest into the lungs.
In 1987, regulations took effect that limited the concentration in air of particles less than 10 microns in diameter (a human hair is about 100 microns across). But the rule proposed in 1997 would sharply reduce allowable levels for particles less than 2.5 microns across.
These microscopic motes - composed of metals, carbon and other ingredients - are able to infiltrate the tiniest compartments in the lungs and pass readily into the bloodstream and have been most strongly tied to illness and early death, particularly in people who are already susceptible to respiratory problems.
One critical new research effort cited in the E.P.A. review was an analysis by an industry-financed research center, the Health Effects Institute, that supported the conclusions of two keystone studies from the early 1990's that drove the agency to write the new rule.
Those studies, by the Harvard School of Public Health and the American Cancer Society, found strong links between high levels of small particles and a rise in death rates. They were attacked by industry groups and some members of Congress as biased.
The Health Effects Institute, based in Boston, is financed by industry and the E.P.A. and was established in 1980 to serve as a referee on air pollution research. Its study, published last year, largely approved of the methods and data in the original studies and concurred that there was a link between soot and illness.
Many other new studies, Dr. Grant said, corroborate the link between the smallest particles, those under 2.5 microns, and the most serious health effects. Other studies cited in the new analysis strengthen the relationship between sooty conditions and a rise in hospital admissions of children with asthma attacks.
The 632-page research review, which was posted on the agency's Web site (www.epa.gov/ncea/) this month, has already been through one round of public comments and a critique by an agency panel that includes officials from industries that generate some of the pollution.
A second round of public comment will end in July, followed by another critique by the panel, the agency's Clean Air Science Advisory Committee. The agency is also beginning to draft a paper recommending how to translate the findings into the final language of a rule to cut fine soot.
Eventually, Mrs. Whitman, assessing the science and her staff's recommendations, would propose either to accept the Clinton administration standard or to modify it. Some supporters of strict controls decried the pace of the rule making, which has been delayed by court challenges, including one from the American Trucking Association and other industry groups that was rejected by the Supreme Court in February.
"We're already having another scientific review completed before step one has actually been taken to cut the pollution," said David G. Hawkins, a lawyer for the Natural Resources Defense Council, a private group. "In the meantime, there are about a quarter million Americans who have died prematurely as result of fine particle exposure."
Studies, including some cited in the new review and one by the natural resources group, have estimated that more than 50,000 people die prematurely each year from illnesses caused by exposure to fine soot.
The Washington Post - By Kathleen Day - April 18, 2001
IBM's annual shareholders meeting next week will be the next battlefield for workers who are trying to put the brakes on corporate America's efforts to shift more of the risk for retirement benefits to employees.
Although about 300 companies have converted their pension plans and hundreds of others are considering revising their retirement benefits, employees at International Business Machines Corp. have been some of the most vocal opponents of this shift, which they say leaves older workers facing sharp pension cuts.
That has made next Tuesday's showdown in Savannah, Ga., a focus of attention for many executives, workers and government officials.
Employees don't expect to win a shareholder vote to undo the pension changes IBM made two years ago. But they do hope to shame concessions out of IBM's management, especially chief executive Louis V. Gerstner Jr., who received a $73.6 million compensation package last year even as employees struggled with the benefits changes. Yesterday, employees released a letter to Gerstner signed by more than 1,000 IBM workers, criticizing him for taking a bigger paycheck at a time when IBM cut pension benefits and medical coverage for many workers. "Lou Gerstner slashed retirement pay for employees to make profits look higher because part of his salary depends on earnings going up," said Jimmy Leas, a patent lawyer and engineer at IBM for 20 years. "Lou Gerstner put his interests ahead of company interests."
Under a traditional pension plan, the company funds and manages the benefit, which increases rapidly as an employee nears retirement age. Employees could not take these pensions with them if they left the company. For these reasons, such plans favor older workers and those who remain at a company for many years.
Many employers have shifted to cash-balance plans, which the company funds steadily over the worker's tenure. These plans often are less costly for employers. They are also often preferred by younger workers, because employees can take with them whatever money is in their account if they leave the company. Opponents charge that the plans discriminate against older workers and are a dodge to conceal benefit cutbacks.
Few cash-balance plans are implemented from scratch; instead they are installed as conversions of traditional plans. The conversion process is complex, and employees often cannot figure out what the impact will be until later. In a number of cases, including IBM's, workers have been enraged to find that their benefits will be reduced.
IBM's pension changes, adopted in 1999, protected its oldest workers. But thousands of middle-aged employees faced sharp pension cuts.
Because of complaints by IBM workers, members of Congress, including Rep. Bernard Sanders (I-Vt.), have introduced legislation to restrict pension conversions.
At next week's annual meeting, shareholders will vote on a proposal to give all IBM workers a choice between a cash-balance pension plan and a conventional plan. The proposal -- which IBM management opposes -- lost last year but received more than 28 percent of the vote, the highest percentage of any shareholder proposal.
Workers disgruntled by the pension changes point out that Gerstner's compensation package last year included a $3.59 million reward for the company's profit increase over three years. They say that profit gain was due in part to an estimated $10 billion surplus in IBM's pension plan, some of it resulting from the conversion.
"IBM has found an ingenious way to use the pension trust fund, not to help IBM, or even to help the stockholders, but exclusively to enrich IBM executives," the letter from employees says.
Employee Advocate - DukeEmployees.com - April 17, 2001
Many companies will go to any lengths to divert the employee’s pension dollars to the executives.
Kroger tried to get out of making pension contributions by calling some employees “casual.” It was a nice try, but they were not able to pull it off. The U. S. Supreme Court let a federal appeal court decision stand that the pension contributions must be made.
The case is Kroger Co. v. Central States Southeast and Southwest Areas Pension Fund.
New York Times - By BOB HERBERT - April 16, 2001
If not for the efforts of a high-powered corporate lawyer, a specialist in mergers and acquisitions who was able to draw on the vast resources of his firm in New York City, Don Paradis would be dead.
Mr. Paradis, now 52, was wrongly convicted of murder and sentenced to death by hanging in Idaho in 1981. (The method of execution in Idaho has since evolved from hanging to firing squad to lethal injection.)
In the early 1980's, Edwin Matthews Jr., a partner at Coudert Brothers, specialists in international corporate and commercial law, became concerned about the poor quality of legal representation available to defendants facing the death penalty, which he opposed.
The Paradis case was brought to his attention, and he agreed to handle the appeals pro bono. It took the better part of two decades to get the job done, and Mr. Paradis came frighteningly close to being executed on several occasions. "I needed help on this case," Mr. Matthews said in an interview. "I wasn't a criminal defense lawyer. And I wasn't a death penalty lawyer."
He joined forces with William L. Mauk, an attorney from Boise, Idaho, who'd had some experience with homicide cases. Mr. Mauk was less than anxious to get on board.
"I wasn't opposed to the death penalty," he said. "And I told Ed I had no interest in taking on a case and dealing with the lingering 11th- hour appeals of a man about to be executed. I just didn't want that agony in my life."
Mr. Mauk said he would take on the case only if he felt that Mr. Paradis had been denied justice.
In fact, Mr. Paradis was innocent, and there were eyewitnesses and forensic evidence to prove it. Mr. Mauk joined the case.
But having the evidence is one thing. Getting a fair hearing on it is quite another, even when a man's life is at stake. Backed by staff, funding and other resources from Coudert Brothers, Mr. Matthews and Mr. Mauk struggled to get the truth about their client heard above the noise of a complicated appeals process that is routinely, if not inherently, hostile to exculpatory information.
One year went by, then two. One carefully crafted motion was denied, and then another. One critical appeal after another was lost.
"We found five eyewitnesses who contradicted the state and exonerated our client," said Mr. Matthews. It didn't matter.
The lawyers became so frustrated with the criminal justice system that they launched a separate political and publicity campaign aimed at securing clemency for Mr. Paradis so that even if they couldn't get him freed, at least he wouldn't be executed.
That worked. In 1996, a Republican governor, Phil Batt — a man, as one observer noted, "not known for his mercy" — commuted Mr. Paradis's sentence to life without parole.
The effort to get the conviction overturned continued. And that bore fruit last year when a federal judge, confronted with irrefutable evidence that the prosecution had concealed exculpatory evidence, threw out the conviction. The state appealed that ruling, but lost. And last week, for the first time in 21 years, Don Paradis was released from custody.
What if he hadn't had the services of two dedicated lawyers and the virtually limitless resources of Coudert Brothers?
When you tally the many thousands of hours of legal work that went into the case and the expenditures made on Mr. Paradis's behalf, the cost of securing justice for him ran to well over $5 million.
Now consider that 97 percent of the defendants on death row are indigent.
Both lawyers were chastened by their experience. "I know that we can't trust human beings with this penalty unless we're prepared to kill innocent people," said Mr. Matthews.
Mr. Mauk has re-thought his approach to capital punishment. "I was stunned by the insurmountable difficulties of overcoming the conviction, even though there was evidence of innocence," he said. "Without Ed Matthews and his firm, Don Paradis would have been killed a long time ago."
He added: "If the system is inevitably of that character, then I'm opposed to the death penalty simply because the system does not afford an opportunity for relief that's reasonable and affordable to people.
"Am I opposed to it because I don't think people should be killed for heinous crimes in our society? I can't go that far."
New York Times - Jeffrey L. Seglin - April 15, 2001
I'm not particularly good at firing anyone. I know few people who are. On the few occasions when I was part of a group of managers considering layoffs, the process was agonizing. I found it excruciating to sit down with a list of people with whom I worked every day and assess who might be expendable.
For me, at least, the underlying question was always whether what we were about to do was fair to the company, the employees and those of us who would stay. Deciding the right thing to do was never easy.
Now, as the economy has cooled and downsizing has heated up, the ethics of layoffs have once again come into sharp focus, not only for the managers making the cuts, but also for the remaining employees. The number of people laid off in the first three months of this year - 406,806 - was nearly triple the total for the same period of 2000, according to Challenger, Gray & Christmas, the outplacement firm in Chicago.
And the numbers show no sign of subsiding.
The payroll is often the first place companies look when trying to save a bundle. But growing evidence suggests that such a response can be myopic. A survey by Mercer Management Consulting of businesses that used cost-cutting as their primary strategy in the first half of the 1990s - a period that included a recession - showed that 71 percent failed to achieve profitable growth in the strong second half of the decade.
When employees recognize that layoffs may be more of a knee-jerk reaction than a smart business solution, "there's a cost to that," said Bob Atkins, a vice president at Mercer Management.
"You're breaking trust with your people," he said.
Consider, too, that the highest number of layoffs during the last decade came in 1998, amid the economic boom, according to Challenger, Gray. It is no wonder that employees question how much they owe to their companies. "If the 1990s have taught employees anything, it's that no matter how much they give to these corporations, they will give them nothing back in return," said Jill Andresky Fraser, author of "White-Collar Sweatshop" (W.W. Norton). "Companies relied on aggressive cutbacks throughout the prosperous 1990s to give one more short-term boost to the bottom line. They looked at their employees as yet another disposable commodity that could be squeezed dry and then thrown out the door."
Whatever the reasons for layoffs, what ethical responsibility do employers and employees have to each other? If a layoff is imminent, do those employees who know that they are safe owe any loyalty to the company? And do employers owe loyalty to employees who have hunkered down in tough times and helped the business survive?
"The notion of loyalty has been so battered that it is naive - indeed, even somewhat disingenuous - to expect that employees will be loyal," said Daryl Koehn, a professor of business ethics at the University of St. Thomas in Houston.
Even when they do stay, employees may feel betrayed by a company that demands more work of them and gives back little in return. "When people don't feel a level of acknowledgment, that's when they really constrict and, in the most serious cases, very significant sabotage against the company begins to occur," said Michelle Reina, a management consultant and co-author of "Trust and Betrayal in the Workplace" (Berrett-Koehler, 1999)...
Public Citizen - Press Release - April 12, 2001
The pharmaceutical industry's status as the most profitable industry in 2000 makes its opposition to Medicare prescription drug coverage unconscionable, Public Citizen said today.
The drug industry this week was named "more profitable than any other" by Fortune in its new Fortune 500 analysis of America's most successful companies and industries in 2000. The industry was also rated the most profitable industry last year and has been consistently ranked number one or two by Fortune over the past few decades.
The Fortune report shows that the 11 drug companies in the Fortune 500 enjoyed rates of profitability (measured in return on revenue) that were three to four times greater than the median for all industries in the Fortune 500. Pfizer, the second-largest drug company, has seen the value of its stock increase a stunning 1,454 percent over the last decade.
Public Citizen conducted additional analysis of the 11 drug companies' annual financial reports. The analysis (available at www.citizen.org/congress/drugs/factshts/mostprofitable.htm) shows that profits - not research and development of new medicines - were the top priority for drug companies. Public Citizen found that Fortune 500 drug companies plowed 30 percent of their revenues into marketing and administration, while committing just 12 percent of revenues to research and development. Seventeen percent of the revenues represented profit.
"Given the druggernaut's extraordinary profits, it's laughable that the industry - and the congressional leadership in Washington, D.C. - have fiercely opposed prescription drug coverage under the Medicare program for fear it would lead to price discounts," said Frank Clemente, director of Public Citizen's Congress Watch.
The drug industry has spent tens of millions of dollars in recent years to lobby against a Medicare prescription drug benefit because it might lead to price discounts as the federal government becomes a bulk buyer for millions of American seniors.
"The drug industry's insistence on price-gouging appears all the more greedy when you consider that the industry's profitability is largely based on federal government assistance in the form of monopoly patents, taxpayer-funded research and huge tax breaks," Clemente said.
Public Citizen's analysis also found that:
§ The largest American drug company, Merck, had profits of $6.8 billion in 2000, which was more than the profits of all the Fortune 500 companies in the airline, entertainment, food production, metals and hotel/casino/resorts industries combined.
§ Fortune 500 drug companies saw the value of their stock increase by 38 percent last year, as investors turned to these steady profit-generators during the stock market turbulence in 2000. Drug stocks have tended to be impervious to market gyrations and perform well during economic downturns.
§ The drug industry's success in Fortune 500 profitability rankings has become a rite of spring. In the 1970s and 1980s, Fortune 500 drug companies enjoyed rates of return on revenue that were two times greater than the median for all industries in the Fortune 500. In the 1990s, the drug industry's rates of return on revenue were almost four times greater than the median for all industries in the Fortune 500.
Public Citizen is a nonprofit consumer advocacy organization based in Washington, D.C. For more information, please visit www.citizen.org.
The Charlotte Observer - By STAN CHOE - April 10, 2001
A fight is brewing over who will lead Pillowtex Corp., the struggling textile giant that owns Fieldcrest Cannon, including several factories in Kannapolis.
The Dallas-based company is close to hiring a headhunter to find a CEO after leaving the position vacant for six months. But the company and its union are far apart on whom that leader should be.
One candidate is Tony Williams, the company's president and chief operating officer, said Pillowtex Chairman Ralph LaRovere. Williams joined the company last year as chief financial officer, quickly took on the roles of president and chief operating officer, then recently shed the CFO title. He has been the most visible leader in crafting a plan to pull the debt-ridden company out of Chapter 11 bankruptcy protection.
But the Union of Needletrades, Industrial and Textile Employees rejects Williams as a candidate. Instead, union leaders want a CEO experienced in textiles, one who will clean out much of the company's top management, including Williams, whose previous job was with a British automaker.
The union is angry that Williams has not ruled out eliminating some manufacturing jobs as part of the company's restructuring.
It also says Williams' inexperience in textiles - allegedly demonstrated by the company's recent hiring of consultants and advisers - is wasting money.
Pillowtex is the largest private employer in Cabarrus County, where it has about 5,000 workers.
Last month, Pillowtex hired a strategic consultant, a business consultant and a corporate communications consultant to advise the company, according to filings in the U.S. Bankruptcy Court in Delaware.
"The current management doesn't know what they're doing," said Mark Pitt, the southern regional director for UNITE. "We believe the best thing is for them to go."
The union is not without clout. It holds a seat on the unsecured creditors committee, which has a voice in the company's bankruptcy proceedings. But to have any effect, it must rally support from other creditors.
Some members on the committee declined to comment Tuesday. Others could not be reached.
Reuters - By Peter Szekely - April 9, 2001
The Bush administration plans to freeze spending on labor law enforcement and cut many employment training programs that did not previously spend their full entitlements, the Labor Department said on Monday.
The administration is not seeking an increase in the department's budget for enforcing laws that assure safety in mines and the workplace, govern pensions, require the payment of the minimum wage and overtime and regulate child labor.
The department said spending on enforcing worker protection laws grew by 36 percent since 1996, far more than the 10 percent rise in inflation during the same period.
The budget also would cut department staffing by 1 percent to 17,483, mostly in enforcement, training and management areas. Chao said the cuts would be made through attrition.
AFL-CIO President John Sweeney criticized much of the administration's proposed budget, saying it made too many sacrifices for President Bush's proposed tax cut that critics said would go disproportionately to the rich.
``The president's proposed trade-off -- budget cuts in programs working families need and depend on in exchange for millionaire cuts - is a bad idea and a bad deal for American workers and their families,'' Sweeney said in a statement.
Separately, the budget of the independent National Labor Relations Board would rise by a modest $5 million to $221 million. The NLRB conducts union representation elections and referees some of the disputes between employers and unions.
Association of Former Pan Am Employees - Press Release - April 9, 2001
Richard A. Brooks, the President of the Association of Former Pan Am Employees (AFPAE INC.) announced today that the number of employees covered under the Class Action Suit brought against the Pension Benefit Guaranty Corporation (PBGC) on November 24,1997, has almost doubled. With the advent of adding almost 40,000 former National Airline employees to the existing suit of 45,000 former Pan Am employees, brings the total group to approximately 85,000.
AFPAE's President Richard A. Brooks stated, that ``it was outrageous for both PBGC headquarters and two of their Field Benefit Administrators to misinform former NAL employees who had called them, with questions about their pension benefits.'' That the former National Airline employees desperate experiences with the PBGC, a government agency set up to help and protect the retirees' pensions and their interest, came as no surprise to AFPAE, stated Mr. Brooks.`` We are used to being misinformed, lied to, and denied the rights that any other retiree is granted under ERISA law. We knew instinctively that the hundreds of former NAL employees who did not work for Pan Am, who contacted us for help, were being deceived by the PBGC. Till recently, we just could not get the agency to admit that they in fact were administering former National pension plans. Very few, if any, of these former NAL employees who did not also work for PAA, have yet received their Initial Determination Letters (IDL's). Thus, a decade or so later, IDL's setting forth the final determination of benefits they were to receive, have not been issued by this US government agency.
Additionally, due process such as their right to appeal the PBGC's decision on their pension payments has been denied. Based on the Pan Amer's experiences, many of PBGC's computations have been found to be flawed and in significant error.
Mr. Brooks stated that the 2nd US Circuit Court of Appeals is now in the process of hearing the PBGC's appeal of Judge Preskas third decision in AFPAE's favor. If the agency's appeal is denied, AFPAE's lawyers will go right to Discovery.
In other legal action, Mr. Brooks also stated today that ``AFPAE has just been informed that a Washington, DC judge has ruled against Office Specialists (PBGC's outside contractor who administered the Pan Am pension plans from 1991-1998) on their motion to ''dismiss`` in AFPAE's ''False Claims Lawsuit.``
The false claims suit is based on allegations that certain Office Specialist Officers had a cozy relationship with certain PBGC Officials awarding the contract to administer the Pan Am and other terminated pension plans, as verified by the PBGC-IG's office, and the criminal investigations division of the GAO (Mr. Robert Hast) during joint Senate Committee hearings in September of 2000.
``We will continue to press forward on all fronts with our two lawsuits and support legislation which needs to bring about profound changes in the administration of the PBGC. In the meantime, we want to hear from as many former National Airlines employees who are now part of the ''suit.`` They need to contact us to protect themselves and their families.
The Charlotte Observer - By AMES ALEXANDER - April 8, 2001
Ted Maurer trusted his insurance agent to help make financial decisions that would protect his family. So when the agent presented a supposedly guaranteed way to increase his income - by investing in a Florida-based company that built golf courses - Maurer wrote a check for $95,000.
"I lost everything," said Maurer, 64, a retiree from Hendersonville. "It just destroyed our life."
Like Maurer, thousands of retired Carolinians have poured much of their savings into what insurance agents portrayed as no-lose investments - only to lose it all. During the past two years, regulators estimate, Carolinians have lost more than $100 million to questionable investments like promissory notes and pay phones, most of which have been sold by independent insurance agents not licensed to deal in securities.
The problem has surged in the Carolinas during the past two years, and is now the single biggest source of complaints to N.C. securities regulators. Nationally, experts believe it has cost investors billions.
Regulators stress that the vast majority of insurance agents are honest. But too often, they say, the agents are duped themselves.
"It's the biggest regulatory problem I've encountered in my 20 years," said Deborah Bortner, president of the North American Securities Administrators Association.
For decades, insurance agents have been among the first people Americans turn to during times of crisis. We rely on them when cars crash, homes burn and hurricanes hit - and when we plan how to take care of our families after we die.
But many agents began selling investments in the mid-1990s, as their clients increasingly sought out high-return stocks and mutual funds.
The trend intensified two years ago, when federal legislation further eroded the walls that once kept insurance companies, securities firms and banks out of one another's business.
Some agents, such as representatives of large companies like State Farm and Allstate, can only sell company-approved investments with proven track records. Most stockbrokers also need a supervisor's OK before selling nontraditional investments.
But independent insurance agents can sell virtually anything without supervision and they have many trusting clients. Con men discovered these agents were perfect to sell questionable investments.
"When the trusted insurance agent says I can get you 13 percent in this guaranteed investment, you listen," said California securities regulator Bill McDonald.
The people behind the schemes recruit insurance agents with promises of generous commissions and guaranteed investments. They also convince agents they don't need securities licenses to sell such investments, when, in fact, they do. The insurance agents tend to be less savvy than stockbrokers about the regulation and risks of various investments.
Many agents thrive on the sales, pulling in commissions of 6 to 10 percent - far larger than those earned by most stockbrokers. In just 18 months, one N.C. agent earned more than $300,000, regulators say.
When Dave Eggert retired in 1996, after 35 years with Continental General Tire, he began looking for a safe place to put his pension money. A Tega Cay neighbor said he knew just the person to help: a financial adviser named Dan Glazier.
Glazier, a Charlotte insurance agent, urged Eggert and his relatives to put their money into a series of investments touted as both safe and profitable.
In 1996, Eggert invested $33,000 in World Vision Entertainment, a Florida television production company. In 1998, Glazier encouraged him to put his remaining savings - $211,000 - into LifeBlood Biomedical Inc., another Florida company that purportedly did medical research and promised to pay investors 12 percent, Eggert said. At first, he said, he was reluctant to invest it all, but Glazier persuaded him.
"He told me, you don't have to worry," Eggert said. "It's bonded, insured. You can't lose."
Eggert's relatives also found the pitches enticing. His wife invested $87,000 in a Kansas company called Technical Support Services. His mother-in-law invested more than $60,000 in other promissory notes. And his son invested $6,000 with Liberte Capital Group, an Ohio company that sold shares in life insurance policies of terminally ill people.
Now, each investment has turned into a financial black hole.
World Vision has filed for bankruptcy, and federal securities regulators allege it's a massive Ponzi scheme - using money from new investors to pay early ones.
LifeBlood's president, William Jeffrey Mann, is serving a two-year sentence for fraud. Other corporate officials are facing criminal charges.
Technical Support Services has defaulted on its notes and has gone out of business.
And a federal judge froze Liberte Capital Group's assets, after prosecutors alleged insurance policies had been fraudulently obtained and investors had been defrauded.
Eggert, 59, has abandoned his retirement plans. Like other investors, he expects to get back less than 10 percent of his money through bankruptcy and legal proceedings.
"We're ruined," Eggert says. "I worked all my life and scrimped and saved. It's devastating."
Thousands of other Carolinians share Eggert's distress.
At the urging of an affable insurance agent, Dot Bowen invested all her savings - more than $50,000 - in companies that have run into federal investigations and financial trouble. Now she fears she's lost it all.
"I don't think I had stars in my eyes," said Bowen, a 63-year-old hairdresser from Cleveland County. "I trusted the man."
Some investors say authorities have done little to protect them.
The Carolinas have issued more than three dozen cease and desist orders against insurance agents for selling unregistered investments. And they were among 28 states that joined a national crackdown on promissory note scams last year.
But in recent years, the regulators who police the sale of securities in North Carolina haven't fined or criminally charged insurance agents for selling fraudulent investments. South Carolina has fined several agents for securities violations, and it is criminally investigating others. But the S.C. Law Enforcement Division has yet to win criminal convictions against insurance agents for selling bad investments.
The state of Florida, by contrast, has convicted more than 45 insurance agents for securities violations.
N.C. regulators say staffing cutbacks have made it hard to police the industry. In 1996, five investigators handled about 1,000 complaints a year. Now the staff has just three investigators, but they're handling more than 1,700 complaints yearly. John Curry, chief investigator for the N.C. securities division, says his staff has done an "outstanding job with the resources we have." But he says he doesn't have enough investigators to root out every scam or handle every complaint.
"I can say 100 percent we have not taken action against every insurance agent who has sold these products," Curry says. "We just don't know about them all."
Roland Corning, deputy securities commissioner for South Carolina, says most complaints don't come to his office until long after investors have lost their money. And by that time, he says, it's often too late because the schemes have collapsed.
State laws don't allow securities regulators in the Carolinas to seek restitution for victims. That's up to the courts. And while securities regulators can revoke a stock broker's license, they can't yank insurance licenses.
State insurance departments can do that. But in the Carolinas, insurance regulators haven't taken disciplinary action against agents for selling unregistered securities. The S.C. insurance department says it hasn't gotten referrals from law enforcement agencies.
Charlotte retiree John Langford questions why regulators don't do more to protect investors like him.
Three years ago, he responded to a newspaper ad promising 10 to 15 percent returns on an "insured and bonded" investment. He wound up putting $25,000 into LifeBlood, the research company that's now in bankruptcy. He later learned Alan Elam, the insurance agent who headed the sales firm, wasn't licensed to sell securities in North Carolina.
Langford, now 78, said he has sent numerous letters to authorities, telling his story and sharing the names of other North Carolinians who've been swindled.
North Carolina issued a cease and desist order against LifeBlood, while South Carolina ordered Elam and his company to stop selling the investments. But the salesmen were never fined or criminally charged, and Langford doesn't expect to recover more than a fraction of his money.
"They don't do a thing but make records and talk about it," Langford said. "An individual retiree has almost no recourse at all."
Regulators say it's often hard to make a criminal case against agents because many were misled by dishonest promoters.
Some agents say they themselves lost money. Glazier, the agent who sold to Eggert, says he was so confident the promissory notes were safe, he put in $170,000 of his own money - and also persuaded his father-in-law to invest. He says he worked diligently to check out the investments, and heard from lawyers and accountants who assured him the deals weren't risky. He also got a Dun and Bradstreet financial report on the Belgium-based insurance company supposedly backing some of the notes. He said he has tried to recover money for investors, filing complaints with U.S. senators and the U.S. Embassy in Belgium, among others.
Last year, S.C. regulators cited Glazier for selling securities without a license and told him to stop. But Glazier said he had quit marketing the investments long before, as soon as he saw they weren't paying the promised returns. "There's a lot of honest people in our business," Glazier said. "And I'm one of them. I'm really sick of being blamed for what others did."
Elam, the agent whose company sold to Langford, said the firm began selling promissory notes after he responded to a newspaper advertisement. He attended a sales presentation, where he and other agents were told the notes were backed by reputable insurance companies - and they didn't need securities licenses to sell them.
"From what was presented to me and some of the homework people did, it looked safe," Elam said. "I didn't have the acumen to determine otherwise."
Elam wishes the state did more to educate agents like him. He has recommended the insurance department warn agents about questionable deals in continuing education classes.
"I'd like to think there are a lot of good-intentioned insurance guys out there," Elam said. "We're naïve enough to think that if it looks legitimate, it is legitimate."
But in their quest for big commissions, some agents neglect to check whether the investments are as safe as promoters claim, regulators contend. A quick call to the state insurance department would alert many agents that the insurance companies supposedly backing such investments aren't registered to do business in the Carolinas, they say.
"They should have checked this out," said securities investigator Curry. "They didn't. I can't buy that they're completely blameless in all of this."
Maurer can't buy it either.
For several years, he relied on insurance agent Todd Metcalfe to advise him on investments and health coverage. When Metcalfe presented material on Legend Sports Inc., Maurer said he repeatedly asked whether the investment was safe.
"He said you can't lose," Maurer said. "It's bonded and insured I trusted him implicitly."
Authorities in Florida contend the company ran a Ponzi scheme that scammed hundreds of investors. They've sent some of the company officials and top sellers to prison. Metcalfe wasn't licensed to sell securities, and N.C. officials have ordered him to stop.
Metcalfe said he thought Legend Sports would be a safe way to help Maurer out of a financial bind. He and other insurance agents were given assurances by lawyers, accountants and others that the investments were solid, he said. He also reviewed a financial report for a bonding company that was supposed to pay investors if Legend Sports couldn't, he said.
"I think it was a well-orchestrated ruse," said Metcalfe, who has since filed for bankruptcy protection. " This is any businessman's nightmare to be involved in something like this. The agents basically were defrauded along with everyone else."
Now Maurer's finances are a shambles. He has qualified for food stamps and mortgaged his house to pay creditors. He says he can't even afford to get four rotten teeth pulled.
"I lost everything I worked for all my life," says Maurer, who is retired from the McDonnell Douglas aircraft company. "We're struggling here."
Associated Press - By LEIGH STROPE - April 7, 2001
President Bush on Friday amended on order that blocked union contracts on government projects, allowing pre-existing agreements to go forward with organized labor on the job.
Bush's action is one of several back-steps in recent days by his administration to undo previous decisions, including one that stopped testing for salmonella in school lunch meat.
The change of heart on union projects came after 2,500 union construction workers descended on Capitol Hill this week to lobby lawmakers and protest the original decision. Bush's Feb. 17 executive order barred ``project labor agreements'' on all federally funded construction projects.
But in a move not favored by unions, the Bush administration has rescinded $4.8 million in grants to 19 nonprofit groups and unions for workers' health and safety programs in order to help pay for next year's budget cuts at the Labor Department.
The agency, under the Clinton administration, announced Jan. 8 it was awarding the money to the groups to develop worker safety and health training programs over three to five years as part of the Susan Harwood Training Grant Program.
But those groups were notified last week that ``because of budgetary circumstances and an evaluation of financial projections for this program, the long-term grants for which they had applied cannot be funded.''
Organized labor said Bush's actions are part of a continuing assault to punish unions over last year's election. Unions overwhelmingly favored Bush's Democratic rival, Al Gore, in the election.
Bush's budget calls for a 5 percent cut of $600 million to the Labor Department's budget in 2002. The $4.8 million grants already were budgeted in the current fiscal year and were to start in April, but now will help fund those cuts.
The Occupational Health and Safety program was fully funded at $11 million in the current budget. The Bush administration wants to cut it to last year's level of about $8 million.
The agency also wants to scale back the program to one-year grants and invited the groups to reapply.
On the project labor agreements, among the contracts affected by Bush's original decision was the $2.2 billion Woodrow Wilson Bridge on heavily traveled Interstate 95 between Virginia and Maryland. Some officials said ending the union agreement would delay the project and increase costs.
The labor agreements require union-standard work rules, even for nonunion contractors. In exchange, unions agree to provide a continuous work force and promise not to strike.
The AFL-CIO had threatened to sue to overturn Bush's order, and 32 Republicans signed a letter to Bush expressing disappointment with his original decision.
``The president listened to legitimate concerns raised by parties involved in the pre-existing projects and determined that the executive order should be amended to ensure that projects with pre-existing project labor agreements and contracts awarded under those agreements proceed on schedule and on budget,'' White House spokesman Ari Fleischer said Friday.
AFL-CIO President John Sweeney called Bush's turnaround a ``welcome down-payment - although far from adequate.''
``Even with this amendment, the executive order still undermines workers' rights and dismantles thoughtfully constructed and effective working relationships between labor and management,'' Sweeney said in a statement.
ABC News - April 6, 2001
At three o'clock on a glorious weekday afternoon in Tucson, Ariz., a group of federal judges finishes up the ninth hole on the links of one of the country's top golf courses.
In addition to golf, the judges have gathered at a resort to attend an educational program that critics call an inappropriate junket.
Golf, Sun and Seminar
Each year about one in 10 federal judges will attend similar private gatherings at some of the finest resorts in the country. The bill is picked up by a handful of groups that get their money from big corporations and pro-business organizations. Some argue the groups have a lot more on their agenda than a few rounds of golf.
"This is the way corporate America is lobbying the judiciary teaching judges to rule as if they were corporate CEOs," says Doug Kendall, director of a nonprofit environmental group called The Community Rights Counsel. Kendall's group has linked the judges' seminars with what it considers the 10 most dramatic rulings against environmental protection laws.
"We found that in all 10 of those cases the judge writing the opinion had been to at least one of these junkets," says Kendall, "In six of those 10 cases, the judge was attending a junket while the case was pending before them."
In one case involving the timber industry, a federal judge completely reversed his position after attending one of these private seminars. The judge denies the seminar affected his industry-friendly decision but Kendall is skeptical.
The seminar in Tucson is organized by the Law and Economics Center, out of George Mason University's law school, which has a reputation for a pro-business leaning. The judges' week included seven separate sessions, which the school says are unbiased and over the years have included Nobel prize-winning economists.
Corporations Paying the Tab
George Mason's dean, Mark Grady, sees nothing morally questionable about the seminars. "These are academic retreats. What could be more natural than for a law school to seek to train academic judges?" he asks.
Grady is proud the academic seminars are influencing judge's thinking. "We are, yes, we are, we are out to influence minds," he says, "If court cases are changed, then that is something that we are proud of as well."
Grady doesn't name contributors, saying that George Mason no longer discloses its sources because "the academic program stands on its own feet." But this was not always the case. The corporate sponsors were publicized until 1994, which was when the criticism of the program began.
The donor list then was a who's who of Fortune 500 companies, many of which have cases before the federal courts. The list also included a foundation run by Richard Mellon Scaife, a conservative multimillionaire best known for financing investigations of President Clinton's personal life.
By reviewing tax documents, 20/20 has learned that last year alone, through his foundation, Scaife provided $150 thousand for the judges' free trips.
Question of Credibility
While such seminars are perfectly legal, judiciary ethicist Geoffrey Hazard says judges have a responsibility to determine who's paying for their virtually free week at the golf resort to avoid possible conflicts with pending cases.
The Tucson excursion was the fifth such seminar for Judge James Jarvis of Tennessee. Since Jarvis began attending the seminars, he has presided over at least six cases involving large corporations, all of which confirmed to 20/20 that they helped pay for the George Mason seminars. Jarvis says he doesn't know who was funding the conference and points out he's paying his own greens fees.
Judge Neal Biggers of Mississippi insists his decisions won't be swayed regardless of who's paying the tab. "If I don't know who is paying for it, then I am not going to be affected either way by who it is."
But former Judge Abner Mikva thinks the judges should avoid even the appearance of unethical behavior. "I think judges should realize that, that they don't have that much credibility to spare," says Mikva.
As chief judge of the powerful D.C. Circuit Court of Appeals, he was appalled to see many upstanding judges being wined and dined by corporations in the name of judicial education. Mikva says, "The appearance of impropriety is considered as important as the impropriety itself."
Mikva worries that judges will follow the footsteps of politicians and lose the faith of the American public. "Most of the time we think about judges with more respect and more deference than we think about elected officials. I want to keep that distinction," he says.
Employee Advocate - DukeEmployees.com - April 6, 2001
A shareholder resolution has been filed by a Pratt & Whitney employee, according to socialfunds.com.
The resolution takes issue with executive compensation being tied to “employee development and satisfaction.”
The Securities and Exchange Commission (SEC) overruled Pratt & Whitney attempt to dismiss the resolution. It will be voted on at the company’s annual meeting.
BBC News - April 4, 2001
The UK's power supply industry will not have to pay back £1bn in surplus pension contributions to its retired workers following a landmark ruling in the House of Lords.
Peers reversed an earlier Court of Appeal decision won by power industry pensioners who accused "fat cat" employers of plundering their assets.
The Court of Appeal said the pensioners were entitled to claim a share of surpluses, which the companies have used since 1992 for redundancy payments and to finance the pension holidays that allow companies to suspend contributions.
By overturning that decision, campaigners fear the Lords have given companies the green light to begin 'raiding' pension funds.
Dave Laws, one of the pensioners bringing the case, labeled Wednesday's ruling a disgrace. "There is no justice in this decision at all," he said.
"Many of our pensioners are on income support...in the poverty trap."
He said an appeal to the European Court of Human Rights was a "real possibility", based around the question of who actually owns the pension funds.
The ruling principally applies to National Power and National Grid but will affect 19 other power supply companies and employers in other sectors whose pension funds are regulated by the same rules.
"I am delighted that the case is now resolved," said Peter Giller, chief executive officer of International Power.
This judgment now enables us to develop our own pension arrangements which will continue to meet our staff's pension entitlements."
The ruling is expected to have implications for 200,000 members of the pension fund.
When the electricity supply industry was privatized in the early 1990s, responsibility for the pension scheme of former employees also passed to the new private companies.
The fund is now worth more than £20bn but the industry has been locked in a lengthy legal battle over how money from the fund was used.
Four years ago the pensions ombudsman upheld a complaint that National Grid had spent some of the surplus from its part of the Electricity Supply Pension Scheme to help pay for the costs of redundancies. The case has since been through the High Court, the Court of Appeal and now the House of Lords.
Other companies expected to benefit include Innogy, Powergen, National Grid, Manweb and Seeboard.
Bloomberg News - April 3, 2001
Black workers provided documents from Southern Co. they say support a lawsuit accusing the largest U.S. power producer of racial discrimination. In a court filing, the employees included a U.S. statistical analysis indicating blacks were paid less than white counterparts. The workers also provided company records they said show company officials were aware of nooses hung on corporate property and widespread use of racial epithets. The plaintiffs' lawyers, who asked for class-action status for the suit, obtained the company records under a pretrial order by U.S. District Judge Orinda Evans. The suit, filed in July 2000, seeks unspecified damages.
The Wall Street Journal - April 3, 2001
Virginia lawmakers consider cutting retroactively the amount the state and localities contribute to the fund for retiring public employees. If the plan is approved, the state could stop payments for part of the fiscal year ending June 30 or apply a credit from the cut to next year's payments. Neither would actually tap money already put into the fund, but "it's tantamount to taking money out of the fund," argues Bill Leighty, director of the Virginia Retirement System. "If you can retroactively go back one year, why wouldn't you go back five?" he asks.
Many public pension funds are overfunded after years of stock-market gains, but overseers note that state budget pressures are intruding just as many stocks have fallen sharply. Some worry that lower contributions could restrict future benefits. "We're very concerned," says Tom Harris, chief of staff of the State Employees Association of North Carolina, where government contributions have been withheld. Still, state officials say pension funds will remain overfunded anyway, and the money is badly needed elsewhere.
"It's inefficient to overpay into the system," says Ron Tillett, Virginia's finance secretary.
Duke Energy Employee Advocate - April 2, 2001
The International Brotherhood of Electrical Workers announced that 319 South Carolina Gas and Electric employees voted March 22, 2001 for IBEW representation. Local Union 772 Business Manager Scott Fulmer and his staff, now begin negotiations with the company to provide the newly organized employees an IBEW contract.
New York Times - By DANIEL AKST - April 1, 2001
Vincent Van Gogh made virtually nothing from his paintings. James Joyce, the author, lived in poverty. And America's school bus drivers earn, on average, just $10.76 an hour.
Despite their relative penury, these people can teach a lesson to American companies about executive compensation. After all, one of the main arguments offered in defense of sky-high pay for chief executives is that they need incentives to do a good job.
But is money such a great motivator? In some ways, yes. Systems that radically divorce productivity from reward are destined to fail, as they have in the past. Yet it should come as no surprise that, once their basic needs are met, people are motivated by a lot more than money. And the better the job, the less important money seems to be.
Consider Joe DiMaggio. He cared deeply about money and bitterly resented the feudal system that deprived him of bargaining power with the New York Yankees. Despite feeling underpaid, he still managed to be a great baseball player. Similarly, van Gogh and Joyce excelled without multimillion-dollar stock options. And school bus drivers apparently need no great financial incentive to keep our children safe.
The president of the United States, meanwhile, has an annual salary of $400,000, a pittance for a high-powered executive. (It was just $200,000 until January, when it was increased for the first time since 1969.) Yet there is never a shortage of candidates for that job. Among the 50 states, not a single governorship has gone begging for want of bonuses and stock options.
Is running a public company so much more onerous? Is that why John F. Welch Jr. of General Electric made $144.5 million last year? And did it get so much harder for the admittedly able Mr. Welch that he deserved an increase of more than 100 percent from the previous year?
None of this is to say that gigantic paydays are bad; I myself would love to enjoy a few, and Bernie Williams, DiMaggio's latest successor as the Yankees' center fielder, is entitled to whatever astronomical sum he can get, since the free agent system amounts to an open auction for his services.
The problem is that the pay of America's chief executives is not much subject to the discipline of the marketplace; the whole process is far too chummy, with many executives in effect paying themselves and claiming that they will do a good job only for a compensation package that would make Croesus blush.
Despite chief executives' insatiable needs for incentives, there is a body of evidence suggesting that pay for performance is not a very effective workplace motivator, at least when compared with others like giving employees a sense of mission, worth and proprietorship. Pay for performance probably is most effective in settings where the work isn't much fun and the output can be counted easily. Piecework pay for making widgets will generally result in more widgets per hour worked. But it begs credulity to suggest that an extra $10 million for the chief executive will finally make him put his nose to the grindstone.
The late W. Edwards Deming, a guru of quality control, was a particularly vigorous opponent of trying to pay for performance, as Andrea Gabor points out in "The Capitalist Philosophers" (Times Books). Deming believed that if you hired the right people for the right jobs and put them into the right environment, everyone would perform pretty well.
Pay for performance is particularly dubious in bad times: During a recession, Ms. Gabor writes, pay for performance becomes a zero-sum game that produces more losers than winners. A bigger slice for the chief executive can mean smaller slices for everyone else.
With the economy slowing and stocks in a slump, shareholders may finally become less tolerant of excessive executive compensation and severance packages. In effect, the chiefs will have to do more work for less money.
I predict, and you heard it here first, that there will be no wholesale resignations, despite the great hardships of running businesses on a few million dollars less. America's chief executives will just have to learn what any school bus driver can already tell you: money isn't everything.