"For a fund like this, that ($276,000) is just coffee money."
--William Zuckerman, senior trial attorney, Office of Solicitor, Plan Benefits Security Division, Department of Labor
The Teamsters Central States, Southeast & Southwest Areas Pension Fund pays a price for the court-supervised consent decree with the Labor Department.
It pays for legal motions and court hearings that have been continuing for more than 20 years, since the Department of Labor imposed the decree on the fund to root out corruption. The fund has been reformed for more than two decades, but the consent decree and the cost of managing the fund under it proceeds.
The $276,000 referenced in Mr. Zuckerman's quote was the most recently disclosed annual amount paid to William B. Saxbe, special counsel to the court in the Central States consent decree.
Mr. Zuckerman made the remark more than a year ago in response to a question about the cost of Mr. Saxbe's pay and the necessity of his oversight. He dismissed the cost offhandedly. Coffee money? The amount would provide a rich annuity to a Teamster beneficiary. His remark is a cavalier way to talk about plan assets, especially for someone charged with overseeing the prudent management of the pension fund.
The Labor Department at times makes no sense in, or no explanation of, some key decisions involving the Teamsters Central States .
In 1997, the fund sought to hire a second named fiduciary to diversify its investment allocation.
As required by the consent decree, the fund filed a motion for court approval for the move. The Labor Department objected, in part because the fund sought to have the named fiduciary manage some of the assets. But a year later, when the fund again sought to add a second named fiduciary -- leaving out the investment management discretion -- the DOL made no objection.
The question is why didn't the Labor Department, if it had such strong objections, have the Teamsters amend immediately its motion to delete the investment management aspect. Or why didn't the Teamsters quickly refile a motion for more limited authority. A year was wasted.
Last year the court approved the adding of a second named fiduciary, giving allocation authority over 15% of the fund's assets. But in December, just before the second named fiduciary -- Bankers Trust Co. -- took control of its proportion of the fund, the Central States filed a motion seeking to boost the allocation to 50%. A ruling was scheduled on the motion. Then Bankers resigned. Then in February, almost as soon as Central States filed a new motion on seeking a replacement named fiduciary the court granted the motion to increase the allocation.
Federal Judge James B. Moran in Chicago, who supervises the consent decree, doesn't serve to enlighten the public about decisions. In the example of Bankers Trust, he let the record show only that it resigned. Certainly, for all of the money the Central States spends on court supervision, and on searches for named fiduciaries, its beneficiaries deserve an explanation.
And despite all of his compensation, Mr. Saxbe, who is based in Florida, doesn't return phone calls or send out information involving the fund. How does he serve the public?
The DOL's and the court's time would be better spent regulating and adjudicating all of the thousands of employee benefit plans, rather than continuing to burden with costly supervision a single fund that has been reformed for 20 years.
There are enough regulations and civil protections to keep the Central States fund in line. It's time to end the consent decree.