Monday, July 19, 2021

THE POLITICAL BANKRUPTCY OF BUSINESS UNIONISM

How a bankrupt college and questionable union spending left electrical workers in the dark

Despite warnings, IBEW built a new training centre that was never approved to teach programs


Nfld. & Labrador·CBC Investigates
Rob Antle · CBC News · Posted: Jul 07, 2021 
Members of IBEW Local 2330 protested at the Holyrood headquarters in January. The local has been under trusteeship of the international union for more than two years. (John Pike/CBC)

On a sunny August day in 2015, as fluorescent-garbed workers traversed a construction site and excavators bit into hard earth, Rick Dalton explained the vision of what they were starting to build in the eastern Newfoundland town of Holyrood.

"The demand for tradespeople is more so today than there ever has been," said Dalton, who at the time was the business manager of International Brotherhood of Electrical Workers Local 2330.

"So there's no fear on our part that there will come a day when this facility is not needed."

According to government documents, however, it was never needed in the first place.

When construction began on the multimillion-dollar, state-of-the-art college, Local 2330 trumpeted in its newsletter the school would be "the most advanced training facility for electrical workers in North America."

What wasn't mentioned: the college — which was supposed to mould the next generation of union electricians — never actually got the green light from Newfoundland and Labrador education officials to offer those programs.

That status remained the case right up until IBEW College Inc. collapsed into bankruptcy last year.

As well, internal government documents obtained by CBC News reveal that IBEW officials were advised the labour market outlook for the proposed programs was "not positive." But construction began anyway.

That was the beginning of problems. But it was far from the end.

IBEW College was built to train the next generation of electrical workers in Newfoundland and Labrador. The facility was constructed even though proponents never got approval from the N.L. government to teach those programs. (John Pike/CBC)

A CBC News investigation has uncovered details about the bankruptcy of the college.

There are millions more at stake in lawsuits filed on behalf of former employees of the union local and college. Those court filings offer a peek behind the curtain of the financial turmoil that has engulfed IBEW College, as well as Local 2330.

Meanwhile, land transaction records raise questions about how some of the property was acquired to build the college in Holyrood in the first place.

Local 2330 says on its website that it has more than 1,600 active members. They pay dues. There was even a 50-cents-an-hour fee that came off their paycheques, specifically targeted at funding the college.

Much of that cash flowed from work on the publicly funded Muskrat Falls megaproject.

All of that money was collected locally. But for years, there have been complaints from some members about a lack of local accountability.

Local 2330 has been under trusteeship of the international union — and its Mississauga, Ont.-based Canadian head office — since June 2019, after a forensic audit of past spending turned up problems.

"The IBEW has been working for some time to turn around the financial situation at Local 2330," IBEW International vice-president Tom Reid said in a statement emailed to CBC News.

"The local will remain under trusteeship while that process continues." Reid did not grant an interview request, and did not outline a time frame for when that process might conclude.

That situation does not sit well with members of Local 2330. Protests most recently flared up in January, when electrical workers blocked the entrance to the college and union offices in Holyrood, about 50 kilometres west of St. John's.

At January's protest, IBEW Local 2330 vice-president Kevin Slaney described the state of the union: 'We have no say, we have no information.' (John Pike/CBC)

"We have no say, we have no information, we have absolutely nothing," Local 2330 vice-president Kevin Slaney said at the time. "And that's why you see the problem we have here today.… Our members are not being treated fairly."

The protests ended within a few days. But questions about how Local 2330 had gotten itself into this situation in the first place didn't.
Mystery company makes $600,000

Initially, the college was a joint initiative of two Newfoundland and Labrador-based IBEW locals — Local 2330 represents construction electricians, while Local 1620 is mainly for powerline workers.

In late 2014 and 2015, the two locals began buying land in Holyrood for the new training centre. They acquired two adjacent, equally sized pieces of land, then combined them into one parcel for the entire college campus.

Those transactions all involved companies under union control — all of them, it seems, except one.

A company linked to Local 2330 bought the northern half of the property from a Holyrood surveyor named Robert J. Power for $650,000.

The southern portion of the property was acquired by a holding company for Local 1620, also for $650,000. But that deal involved an extra step in between.

A mystery numbered company acquired the property from the original owner first, before reselling it to the union less than two months later, at a hefty profit.

That numbered company — 73661 Newfoundland and Labrador — bought the land from that same Holyrood man, Robert J. Power, for $50,000.

73661 Newfoundland and Labrador then sold the land to a union company for $650,000 — an increase of $600,000 in just eight weeks.

It's unclear why the union didn't buy the land directly from the original owner, instead of the mystery numbered company.

Work began on the IBEW College site in 2015. According to provincial government briefing notes, union officials were warned that the labour market outlook for the proposed programs was 'not positive.' But they proceeded with construction anyway. (CBC)

Officials with the IBEW head office, which is now running Local 2330, did not respond to questions relating to the acquisition of land for the college. Neither did former Local 2330 and IBEW College officials.

Current Local 1620 business manager and financial secretary Don Murphy declined an interview request.

Murphy indicated he has no information about the Local 1620 land purchase, noting it was done under a previous administration.

It's also not known who owns the company that appears to have benefited from the deal.

Under Newfoundland and Labrador law, corporate ownership details are not public information.

The only listed director of the numbered company is Bay Roberts lawyer Doug Moores. Moores — who did legal work related to the college beginning with its inception and for years afterwards — declined to address the details of what happened.

"I am not authorized to speak to you about this matter," he wrote in an email to CBC News.
Breaking ground, but no government approval

With the land now secured, ground was broken on the college in the summer of 2015.

But all was not well behind the scenes.

All private training institutions in Newfoundland and Labrador that offer courses of 50 or more instructional hours are required by law to be registered by the Education Department.

To get registered, they must prove the need for training programs they plan to offer.

While construction was underway, the college's application for provincial approval was grinding its way through the system.

Finally, in May 2016, a decision.

"There is insufficient labour market demand for new graduates in both occupations to support approval of the new programs," noted an internal government briefing note, obtained by CBC News through access to information.

"Prior to submitting the application, IBEW officials were advised by the department that the labour market outlook for the proposed programs was not positive. Nevertheless, construction began on the IBEW College facility in Holyrood in September 2015 without the department's approval of the school as a registered [private training institution]."

In June 2016, IBEW contacted the premier's office, the government records reveal, although no further details were provided.

Then, a meeting with the minister of advanced education, Gerry Byrne, was arranged.

There, according to internal government documents, "IBEW officials acknowledged that the current [labour market information] outlook for the two entry level programs submitted for approval was not optimistic."

But their efforts to push for approval did not end there.

Rick Dalton, pictured in 2015, was a key player behind the IBEW College plan. He has sued the union for defamation and wrongful dismissal. IBEW countersued Dalton for nearly a half million dollars, alleging that he was 'unjustly enriched' during his time as business manager of Local 2330. (CBC)

In late August 2016, college president Rick Dalton wrote to Byrne to stress the "critical need for the IBEW College at this time." CBC News obtained that correspondence, through access to information legislation.

But there was another issue, according to internal documents.

IBEW College was advertising for instructors for programs that had not actually been approved. That violated government regulations.

Byrne summed up the situation in a September 2016 email to officials in his department.

"What I know so far is that the IBEW started construction … based on information provided by IBEW before applying for a [private training institution] licence, and after breaking ground and entering into contractual relationships with builders, subsequently brought forward an application for licensing which was subsequently deemed incomplete," Byrne wrote.

"Labour market analysis of the trades/programs to be offered was not provided, which is considered a critical component of the licensing review."

The application was again denied.

As the calendar changed to 2017, it was a new year, a new minister — and a new application from IBEW College.

A new application, but the same answer: no.

That sparked a letter from IBEW to the new minister, Al Hawkins, in November 2017, pressing to see the departmental analysis that led to the rejection.

"We have spent years working collaboratively to create, develop and build programming and infrastructure to support our members. We constructed a state of the art training facility that is the best in this province where the best training programs can be delivered to produce the best and most productive electricians this province requires to grow its economy," the IBEW letter noted.

"Our members are demanding we explore all avenues to ensure the IBEW College is registered."

Education officials were unmoved. Their decision stood.
Growing frustration at union local

While all this was unspooling, there were other issues that were beginning to surface into the public view.

In 2017, Local 2330, which represents construction electricians, had bought out the interest in the college of Local 1620, which represents mostly powerline workers.

Local 1620 officials did not respond to questions about why they divested their stake in the project.

As the calendar turned to 2018, Local 2330 members were beginning to question financial accountability issues in the union hall.
Progress made with union heads, say protesting electrical workers

More than a dozen members said they were disqualified from running in an election to become officers of Local 2330. That sparked a gathering at the Holyrood union hall, where sign-toting members demanded an explanation, before the candidates were reinstated.

IBEW Local 2330 president Ann Geehan spoke to protesting members at the gate of the college property in July 2018. (Katie Breen/CBC)

Kevin Slaney was one of those protesting at the site — and protesting the lack of financial transparency.

"We just come through three or four megaprojects now and as far as we know, we're pretty much broke," Slaney said. "There could be lots of money there but without somebody telling us, giving us an actual financial report, we don't know."

When a protesting union member publicly confronted IBEW Local 2330 president Ann Geehan to ask for a "real meeting where our bills are presented as per our constitution," Geehan insisted there had been no "out-of-the-ordinary" bills that had been paid.

The international union hired a forensic auditor to look at the books in early 2019.

That report — which has never been publicly released — came to a different conclusion.
An audit, a trusteeship, an investigation launched

What happened next can be pieced together from court documents since filed in a flurry of lawsuits.

In March 2019, Rick Dalton was summoned to a meeting with an aide to the international vice-president.

Dalton served as business manager of IBEW 2330 until the summer of 2017, when he became the union's international representative in Newfoundland and Labrador.

As of early 2019, according to corporate records, Dalton was still a director of IBEW College.

At that meeting, Dalton was informed about the forensic audit.

Three months later, IBEW 2330 was placed under trusteeship. Dalton was fired soon after.

According to a statement of claim later filed by Dalton over his dismissal, a letter went out from the union's Canadian head office noting the trusteeship was effective immediately "to prevent and correct financial malpractice" and to "restore proper democratic procedure within the local union."

Union manager fired, officers internally charged, as financial wrongdoing investigation continues

The results of the forensic audit sparked an internal complaint over alleged violations of the union's constitution, which in turn prompted an internal investigation process.

Finally, in the fall of 2020, the results of that union investigation were released to IBEW 2330 members.

In the end, four current or former officers were expelled from the union, and ordered to repay a total of $2.2 million.

The bulk of the restitution order was targeted at two people — IBEW 2330 president Ann Geehan, at nearly $1.6 million, and former business manager Rick Dalton, at $457,000.

That investigation was not a formal legal proceeding, and Dalton disputes its results in his lawsuit. Geehan did not grant an interview request.
Flurry of lawsuits filed

But that's not the end of the financial turmoil facing IBEW College and Local 2330.

Rick Dalton sued the IBEW for defamation and breach of contract/unjust dismissal in early 2020.

Dalton alleges that proper process was not followed in his termination because there was no conclusive evidence, and he was not given the opportunity to defend himself.

IBEW and IBEW 2330 have since countersued, claiming that Dalton was "unjustly enriched" $457,000 during his time as business manager of the union local.

That total included:
$283,827 in excess salary payments.
$11,000 in unapproved bonuses.
$88,600 in unapproved vacation pay.
$73,650 in unapproved car allowances.

The union accused Dalton of misappropriation of funds and/or fraud while noting that he was in a position of trust.

None of the allegations from either side has been proven, and the matter remains before the courts.

A number of lawsuits related to IBEW College and IBEW Local 2330 have been filed at Newfoundland and Labrador Supreme Court in St. John's. (Eddy Kennedy/CBC)

Another significant lawsuit is also pending.

The former training director of the college, Kelly Power, has sued IBEW College Inc. for more than $3.6 million. That's according to college bankruptcy records and court filings.

She has since filed another lawsuit naming the union, Local 2330, and two college directors.

Power was terminated without cause in April 2020. In court documents, she said she signed a 10-year contract in 2015.

But the college said in court filings that Power was terminated "due to a shortage of work" linked to the pandemic, as there were no students to teach.

The college's statement of defence added that "it has since uncovered evidence which gives rise of cause for dismissal."

All of those matters remain before the courts.
Union companies owed millions by bankrupt college

The college built to train the next generation of electrical workers has instead offered courses that took less than 50 hours, on safety-related topics like fall protection and first aid.

Today, IBEW College Inc. is bankrupt. There are only three creditors.

Two of them are described in insolvency filings as related parties or companies "under common control."

Essentially, the college run by Local 2330 owes $3.2 million to other Local 2330-related interests.

The third is former training director Kelly Power. Her multimillion-dollar claim against IBEW College is also listed in bankruptcy documents as a potential liability.

The total assets at the time the bankruptcy was filed? Slightly over $18,000. More than half of that amount was an expected HST rebate.
Police investigation

In January, about a dozen Local 2330 members assembled in the pre-dawn cold to block the gates to the Holyrood college and union offices.

"Unions are supposed to be forthcoming with all their information, and provide information to their members, and treat their members with respect and dignity, and it's certainly not happening here," Slaney said at the time.

"The reason we are here today is we're taking our hall back, it's as simple as that."

But that hasn't happened — at least not yet.

And the IBEW head office is remaining tight-lipped for now, citing those ongoing lawsuits.

"I can confirm that there were several internal union charges filed against former officers of the union concerning the manner in which the local had been operated," IBEW International vice-president Tom Reid said in an email to CBC News.

"I can also confirm that some former officers and employees who are no longer employed by the IBEW, Local 2330 and/or the IBEW College have filed lawsuits concerning their separation from employment. Because of that ongoing litigation, the IBEW will not comment further on the trusteeship or any other matter related to Local 2330.

"The IBEW does, however, look forward to the day when the trusteeship of Local 2330 will be lifted and the members will enjoy a financially stable local union that operates in accordance with IBEW management practices."

For now, the trusteeship continues — more than two years and counting.

Discontent at IBEW Local 2330 spilled out into the public in July 2018, as members protested outside the union's offices in Holyrood. (CBC)

Members have not gone public with their concerns since that protest wrapped up in January.

"The people in this province join unions for fairness. And when the international office steps in and makes that unfair, there's something seriously wrong with that," Slaney said in January.

"We've had to go to the media for just about every bit of information that we got, and that's not the way it's supposed to be."

At that protest in January, Slaney said he had been interviewed by the Mounties. "They're doing their best to get to the bottom of this," he said.

In an email to CBC News, RCMP Cpl. Jolene Garland confirmed that the investigation is ongoing and active.

While the IBEW isn't saying much about any of this, neither are those who ran Local 2330 — and the college — before the fiscal situation finally came unglued.

Former Local 2330 business manager and college president Rick Dalton did not respond to detailed correspondence from CBC News. His lawyer, Greg French, said Dalton will not be commenting, as the matter is before the courts.

The college's former training director, Kelly Power, also did not respond to detailed inquiries. She is represented by the same law firm as Dalton, and also declined to comment.

Meanwhile, the college is now listed online for sale, described as an "outstanding opportunity."




ABOUT THE AUTHOR

Rob Antle
CBC News
Rob Antle is producer for CBC's investigative unit in Newfoundland and Labrador.

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