The International Brotherhood of Teamsters is receiving limited support in its call for a boycott of Merrill Lynch & Co. from public and union pension funds following union accusations of improprieties in several municipal bond underwriting deals.
In a 15-page hotly worded document titled "The Bull in the Glass House: The Case for Reform at Merrill Lynch" being circulated to various state and local finance officials as well as union pension funds, the Teamsters focus on various ongoing investigations by the Securities and Exchange Commission and state agencies, most notably in Massachusetts, New Jersey, Arkansas, California, Indiana, Michigan and Oklahoma.
Most of the allegations by the Teamsters center on the way Merrill Lynch obtained underwriting business by negotiations, rather than through competitive bidding.
The document says Merrill Lynch has a "nationwide pattern of documented problems." The union asks public officials to pressure Merrill Lynch to re-evaluate how it does business and to raise its level of integrity. As part of the pressure, the union is asking public and union pension funds to boycott Merrill Lynch until its ethical standards are improved.
The call for a hard line against Merrill Lynch may have softened somewhat recently. A union spokesman said there has been some "encouraging communications." He declined to characterize the effort but added there have "been some constructive discussions" regarding the issues.
A Merrill Lynch spokesman denied any discussions have taken place with the Teamsters and said the boycott efforts "have had virtually no effect on our business."
Merrill Lynch branded the Teamsters charges as distortions, and in a letter to Illinois State Treasurer Patrick Quinn called the union comments "outrageous and false."
The letter said the purpose of the Teamsters "disinformation campaign" is to pressure Merrill Lynch to participate in a labor dispute between the Teamsters and a subsidiary of a company in which Merrill Lynch and several investment funds have an interest. The company is Pony Express Corp.; Merrill Lynch has a 13% interest in the parent corporation, Borg-Warner Corp.
"As part of an orchestrated propaganda campaign to pressure Merrill Lynch to improperly interfere in this matter, the Teamsters are circulating a scurrilous document that attempts to impugn Merrill Lynch's integrity," said the letter.
Teamsters officials have letters of support from the Illinois state treasurer, Minnesota State Treasurer Michael A. McGrath and the city of St. Louis.
Most pension consultants declined to discuss the dispute on the record and many were not yet aware of the Teamsters' call for a boycott of Merrill Lynch.
Most consultants aware of the Teamster effort said the boycott has not been totally effective yet, with most public pension plans taking a wait-and-see attitude.
A spokeswoman for Segal Advisers Inc., New York, said the firm was aware of the Teamsters efforts and is attempting to gather additional information and will try to meet with Merrill Lynch officials "to ensure our clients are being well served."
The Teamsters spokesman said the union is not seeking resignations or to "clean house" at Merrill Lynch but rather a "wholesale examination of how they do business" from an ethical standpoint similar to what financier Warren Buffett introduced at Salomon Brothers when he temporarily assumed control of that firm in 1991.
