President’s Report

Full Disclosure

Volume CVI, No. 3March, 2006

David Lennon

On Jan. 20, 2006, concerns regarding the personal use of the union’s credit card were brought to the attention of the Local 802 Executive Board. The board immediately addressed the issue and, after consulting with 802 Controller Matt Milne and 802 Counsel Harvey Mars, the board unanimously voted to engage outside, independent counsel Larry Cary of Cary Kane LLP, “for his review and analysis and that he be authorized to report to the board as soon as possible as to his evaluation and recommended action.”

Mr. Cary’s report and recommendations were completed and submitted to the board on Feb. 28. The board unanimously adopted those recommendations the same day.

While it is difficult and painful for me to report to you on this matter, I believe it is my obligation to the membership to fully disclose the findings and recommendations of the independent counsel’s report. I therefore have sought and received permission from the board to reprint Mr. Cary’s report unedited and in its entirety in this issue of Allegro (see .pdf version here, please allow a few minutes to download).

In this column, I take this opportunity to share with you my thoughts with respect to Larry Cary’s report on credit card use and expense policy at Local 802. I note at the outset that this report, and the inquiry that preceded it, were prompted by my use of the card for personal expenses in recent years. And although there was no rule against personal use of the card, the extent of my use and the amount and duration of my balance in 2004 and 2005 were significant enough to raise serious questions for me and this union.

Those questions have now been substantially answered by what I perceive to have been a thorough and fair study of the overall situation by Mr. Cary. His findings show that I never sought to mislead anyone about my use of the credit card; that I never failed to repay personal expenses; that I never submitted a false or misleading receipt or expense report; that I did not violate any established policies regarding credit card use. It is part of the record of this inquiry that I was in the position of using the union credit card due to a personal credit problem from my student days which, while embarrassing, is all too common. I assure you all that had my situation been different, I would never have relied on the union credit card to the extent I did.

Mr. Cary’s findings regarding union policy and procedures on personal use of the credit card and expense reporting have provided us with a much needed roadmap for overhauling those practices. His recommendations for such an overhaul, as well as his recommendations regarding me personally, are sensible and proportionate. I express here and now my sincerest regrets for continuing use of the credit card and I accept and concur with the imposition of a fine for my conduct. I assure you that I will commit myself to working with you all, and with my fellow officers, to ensure timely and accurate review of our past financial records, timely and accurate filing of any necessary amendments to the LM-2’s and our financial statements, the development of training programs for officers, and implementation of the recommended policies and procedures.

It is my belief, and I am advised by my personal counsel, that I did not breach my fiduciary obligations to the union, either in light of 802’s constitution and bylaws, or under federal law. Both sources, whether 802’s constitution (article 1, section 4-B) or the Labor-Management Reporting and Disclosure Act (sections 501 and 503), contemplate “payments” or “loans” made by the union and received by the individual, or union “assets” appropriated by the individual. I concur and accept Mr. Cary’s characterization of the balance resulting from my personal card use as a “shortage” not just because it protects the union and me from harsher implications but because there is sound legal and factual basis for such characterization. This does not diminish the seriousness of my conduct or my acceptance of responsibility; but I would never intentionally misappropriate funds or assets of the union I hold so dear.

While taking limited issue with some of Mr. Cary’s characterizations of facts and circumstances, I wish to stress that his findings were incisive and largely accurate. His fairness and his insightful appraisal of the situation throughout this report is apparent, and nowhere more so than in the last paragraph of his factual recitation:

“Lennon states that he used the union’s American Express card for personal reasons because he had no personal credit card of his own, owing to a bad credit rating and because there was no rule at Local 802 against it. He says he always repaid the union on a timely basis. He states that because of the sudden and dramatic increase in his responsibilities when he became president of the local in the beginning of 2004, he was somewhat overwhelmed and this led to him to not timely prepare his monthly expense reports. He states that this led, in turn, to not focusing on how much he owed the union and the growth of the obligation. He states it was never his intention to not repay the union, that he never hid the issue of his personal use from anyone else. He is regretful and states he is willing to do whatever it takes to make it right.”

The beginning of the “Discussion” section of the report likewise fairly stresses the lack of false reporting on my part, the absence of a written policy or law prohibiting use of the credit card for personal expenses, and my full repayment of those expenses, while equally stressing the “inappropriateness” of my integrating the card into my personal life.

I wish to state here that my brother officers were completely correct and respectful of their fiduciary duties on the occasions that they expressed some concern over my continued use of the card and in seeking an impartial outside inquiry into these matters. I do note, however, for the sake of accuracy, that my repayment was voluntary and no one had to “call” me to “account” or seek to “recover” funds or “institute” the payroll deduction, as the report states in footnote 10. Pursuant to Cary recommendation #10, the accountant’s final review showed some additional expenses, which were immediately repaid by me. To the extent that the inquiry that stemmed from my fellow officers’ expressions of concern has caused me to reexamine my past practices, discontinue them, and work towards internal reforms, it has been a necessary and useful turn of events. 

In closing, I accept full responsibility for my actions and I apologize for the problems that my conduct presented for my union. I fully embrace and accept the findings and recommendations of the Cary report. I look forward to working in unison with my fellow board members and officers to institute a new era of accountability at Local 802 and wish to be in the vanguard of that reform. Most importantly, however, I wish to reassure the union that I never did and never would intentionally do anything to breach the trust that has been reposed in me by my brothers and sisters.