Hillary vs. Labor, Round II

Hillary Clinton's chief strategist, Mark Penn, is becoming a liability for her campaign. Following the publication of The Nation's article, Hillary Inc., the heads of two large unions wrote a letter to Clinton, first noted in the New York Times this week, expressing their displeasure that Penn's PR firm, Burson-Marsteller, was helping corporations block union organizing drives, including one their unions were involved in at Cintas, a highly profitable uniform and laundry supply company.

After the Times story, the two most important labor leaders in America--the AFL-CIO's John Sweeney and SEIU's Andy Stern--also contacted the Clinton campaign. According to AFL-CIO spokesman Steve Smith, "Sweeney had a conversation with the campaign and registered his concern about Mark Penn."

As a result, two days before Hillary is to speak before an AFL-CIO forum in Detroit, Penn is trying to draw separation from his company's anti-labor work, telling The Atlantic's Marc Ambinder that "he will cede all oversight responsibilities for his company's labor relations clients to other managers."

A few weeks back Penn told The Nation that he had "never personally participated in any antiunion activity." He said today, via email, that he is "sending a clear message that I have no role in this and as a matter of conscience will not."

Penn's statements raise the question: how does one recuse themselves from work they claim not to be doing?

"The logic of the question has considerable merit," says Harold Ickes, a longtime Clinton advisor and ambassador to organized labor. "Mark has told us that he is taking extra steps to assure people on the outside that he does not engage with clients that may be involved in controversial issues. The phrase 'Chinese wall' has been used."

Ickes predicts rival campaigns will use the anti-labor connection against Clinton. "You don't want to have attention deflected from the candidate," he says.

The Clinton camp believes it has put the matter to rest. "Mark is a extremely valued and vital member of our team and Hillary is pleased that he has not done this work in the past and will be recusing himself from any possible involvement in the future," says Clinton spokesman Howard Wolfson.

Yet some labor officials hoped Penn would go much further, taking steps toward terminating B-M's "labor relations" division or at least ending the contract with Cintas. Neither will occur, nor is Penn taking a formal leave of absence from the company. He's also not distancing himself from the money the "labor relations" wing brings in and the other controversial clients B-M represents in the defense, pharmaceutical and energy industries and the Republican lobbyists he oversees.

Penn's "recusal" must thus be seen as a classic case of PR spin; a phony gesture that fails to address the underlying problems or the reasons prominent labor leaders are upset with Clinton's campaign.

Comments (6)

1. "The Clinton camp believes it has put the matter to rest."

   Well....haven't they?

   Or are the labor boys going to "go after" Hillary? Big-time, in the Media. Say they may not support Obama or Edwards, but that "they WILL NOT support Hillary for the Democratic nomination"?

   In other words...do ...anything towards Her Nibs? Punishment-wise (yeah, I hate that "-wise" stuff, but it's fun)?

   Or has it been "put to rest"?

   Posted by Mask at 06/07/2007 @ 4:54pm

2. Penn, and anyone else with a proven track-record at helping Democrats win, is OK with me!

   Posted by JoeCHI at 06/07/2007 @ 6:24pm

3. Lets not forget that the Clintons are "good friends" of labor when they see a clear advantage for themselves to be so.

   "Billionaire Clinton Friend, Union Accused of Racketeering

   Ron Burkle is a very wealthy man, with a net worth listed last year in Forbes magazine at $2.5 billion. He's also a close friend of former President Bill Clinton. That relationship is now coming under greater scrutiny given the backdrop of Burkle's now-successful attempt to buy out a major long-distance car-hauling company, with an able assist from the International Brotherhood of Teamsters. On April 23, investors of Hawk Opportunity Fund sued Burkle's private-equity company, Yucaipa Companies, in Atlanta federal court, charging Yucaipa and IBT leaders with racketeering in Yucaipa's takeover of Allied Holdings, Inc., North America's largest hauler. The plaintiff is demanding $200 million in damages, a figure that could triple under RICO statutes. Yucaipa thinks the case is groundless. "We think that this suit is totally without merit," said company lawyer Robert Klyman. A Teamsters spokesperson likewise dismissed the suit as having no basis. But the surrounding facts notwithstanding provide a window to the ways in which Hillary Clinton will fund her bid to become the next U.S. President.

   Car haulers are those behemoth trucks rolling down our highways ferrying automobiles to local dealerships around the country. Running a full-scale fleet of such vehicles can be expensive, especially in a time of high debt, rising fuel prices, high labor costs, and a soft domestic-car market. That combination was enough to put the Decatur, Ga.-based Allied Holdings, Inc. in the red, and eventually in federal bankruptcy court in July 2005. Ron Burkle, who'd made his original fortune in the supermarket business, recently had gained control of another bankrupt car hauler, Performance Transportation Services, Inc. By acquiring Allied, Burkle would have control over at least half of the entire industry. Last year he made his move. Two Yucaipa funds bought a combined $100 million in Allied debt, making Burkle the firm's largest unsecured creditor. In return, he wanted to restructure the company, subject to approval by U.S. Bankruptcy Court in Atlanta. On Monday, May 14, the court, after a challenge from several parties, granted approval. Burkle's plan to lift Allied out of Chapter 11 and restructure the company's management and operations is set to go into effect by June 1, provided all closing conditions have been met.

   To bring the deal off, Burkle needed help from two key sources. One was the Teamsters, which represents about 3,300 of Allied's 5,500 workers. This past February, Teamster local leaders representing car haulers approved the plan, which would protect existing member benefits. The other source was former President Bill Clinton. Since 2002, Clinton has served as a senior adviser to Yucaipa for three of its funds. His function, in the firm's words, is to "provide counsel" and "participate in events related to the funds and provide advice in the development of potential investments." Clinton was attracted to Yucaipa because of its reputation for bringing jobs and investment into economically depressed regions of the U.S. More importantly, Burkle long has been a generous donor to the Democratic Party – and one of its most effective fundraisers. Recently, he raised about $2.5 million at his Beverly Hills mansion for the presidential campaign of Bill Clinton's wife, Sen. Hillary Clinton, D-N.Y.

   What kind of compensation has Bill Clinton been getting for all this? Mrs. Clinton's Senate financial-disclosure form, which includes spousal income, reveals her husband in 2005 received "guaranteed" partnership payments from Yucaipa Global Opportunities Fund I LLC of "over $1,000." That statistic doesn't reveal a whole lot. But a spokesman for the ex-president indicated that Mr. Clinton owns one-third of fund assets. The two other funds – the Yucaipa American Fund and the Yucaipa Corporate Initiative Fund – aren't listed on Mrs. Clinton's disclosure form because Mr. Clinton hasn't received actual monies from them. Observers say he could make millions from his Yucaipa connection, and thus provide key financing for Hillary.

   The Allied deal required special intervention by the former president. Mr. Clinton reportedly brought Burkle and Hoffa together to remove labor-related obstacles. Clinton convinced Hoffa to work with Yucaipa as a union-friendly employer – something Burkle says he could not have pulled off on his own. Clinton, said his spokesman, believes in doing business "in a labor-friendly way." Burkle took things over from there. Originally, negotiations involved the car-hauler as well as Yucaipa and the Teamsters. But somewhere along the line, Allied fell by the wayside. After Yucaipa bought $100 million of the troubled car hauler's debt, Allied allowed Yucaipa to stay on in contract concessions with the Teamsters. Talks went on for months, but without progress. "We were getting conflicting proposals from Yucaipa and the company," says Fred Zuckerman, director of the union's car-hauling division. "We didn't know who we were negotiating with."

   In early January of this year, Allied requested that Yucaipa management leave the negotiations. In February, Allied asked the federal bankruptcy court to void its Teamsters' contract, which would have paved the way for deep wage cuts and a possible strike. That's when Burkle, waiting in the wings, began negotiating with the Teamsters on his own. This time there was a breakthrough. The resulting reorganization plan contains several key features. First, Allied's debt, including the portion held by Yucaipa, will be converted into common stock, with shares of the old stock to be cancelled. Current shareholders will not receive any distributions, but will have the option to buy, at a discount, up to 4 percent of the reorganized company's stock. Second, several key Allied executives, including CEO Hugh Sawyer, will be dismissed. Third, Yucaipa wants to put its own people on the board of directors. In addition to a new CEO, there will be three other replacements, plus a fifth appointed by Allied's creditor committee. The Teamsters, having observer status, will send a representative to board meetings. Finally, though the union may have grimaced while accepting, the deal calls for an across-the-board 15 percent wage cut in each over the next three years in an amount not to exceed $35 million a year.

   Financial observers projected Burkle's takeover will generate $20.3 million in profits this year, a figure that will rise to $42.2 million in 2008. Allied plans to pay back unsecured creditors, owed $196.9 million, with its new stock. But not everyone was happy with the proposed regime. Among them were two investor groups, Virtus Capital and the aforementioned Hawk Opportunity Fund, who held a combined 8.3 percent of Allied stock. Additionally opposed were three of Allied's 10 board members, members of the company's founding Rutland family (which owns about 30 percent of Allied stock), and several dissenting Teamsters. They filed a motion with the bankruptcy court to block the takeover-restructuring deal, a suit that became moot when the court approved the proposal. But the RICO suit, which is entirely separate, remains intact. Hawk Opportunity Fund is accusing Yucaipa of manipulating the deal. The fund says that Yucaipa extended the negotiation period until after Teamster President Hoffa's re-election victory last November against perennial challenger Tom Leedham, misrepresented Allied's position as insolvent as a pretext for excluding the company from negotiations, and had a conflict of interest, given that it now was owner of a major competitor in Performance Transportation Services.

   Yucaipa believes none of these charges will stand up. The company said that it acted properly to break an "impasse" that could have led to the shutdown of Allied's operations. Union leadership likewise defends the plan, despite the wage concessions. "The Yucaipa plan is not perfect, but it is the best way to make sure that our members' futures remain secure," said the Teamsters' Zuckerman. The 15 percent wage reduction actually is somewhat smaller than the cut Allied management earlier had proposed. The RICO plaintiff, Hawk, might well accept cash and/or equity from Yucaipa in return for dropping its suit. But one way or another, it's clear Teamster leaders were party to an unusual business deal. Being a "friend of Bill" has its rewards. (Financial Week, 3/19/07; Los Angeles Times, 4/28/07; Wall Street Journal 5/2/07; Associated Press, 5/14/07; other sources)."

   National Legal and Policy Center -- Organized Labor Accountability Project UNION CORRUPTION UPDATE May 21, 2007 -- Vol. 10, Issue 11

   Posted by OneVote at 06/07/2007 @ 7:03pm

4. Posted by JOECHI 06/07/2007 @ 6:24pm

   And the union boys can't afford to miss an opportunity for a Dem Prez and Dem Congress (first time in 14 years).

   She's won this round.

   Posted by Mask at 06/07/2007 @ 8:20pm

5. The psedo-progressives won't hit Bushies, Cheneyistas anymore. They now attack Hillaery Clinton. Fat, stupid idiot and liyng liar Moore makes me sick to stomach. Read this.

   June 07, 2007 Michael Moore hits Clinton in 'Sicko'

   One of the differences between Michael Moore's forthcoming "SiCKO" and his previous films, he writes in the publicity materials, is that "there's not one character or company to hate in SiCKO," which I caught at a screening yesterday. And indeed, most of the politicians appear as anonymous figures in suits, with price tags indicating their contributions from the drug industry. Billy Tauzin, predictably, takes a bit of a beating. And so, less predictably, does Hillary Clinton.

   Posted by Helen DAO at 06/07/2007 @ 11:27pm

6. Posted by HELEN DAO 06/07/2007 @ 11:27pm

   FRANKGRITS is going to be in a quandry over that!

   Loves both Mike AND Her Nibs!

   Posted by Mask at 06/08/2007 @ 07:09am