O.V. Delle-Femine, national director of the Aircraft Mechanics Fraternal Association (AMFA) asserted in a letter to Department of Labor Secretary Elaine Chao and Bradley Belt, executive director of the Pension Benefit Guaranty Corp. (PBGC), that the officials should conduct “full forensic audits” of distressed plans including those of the beleaguered air carrier, a news release announced. The PBGC, the agency that insures private-sector pensions, recently took over United’s plans in a controversial move (See United Pension Hearing Delayed, But Okayed By Court ).
Delle-Femine’s letter said the forensic audits are needed “to determine whether any of the parties providing financial services to the plans may have contributed to their demise. While the plan sponsor may be bankrupt, the parties that have been dealing with the plans are not and it may be possible to recover assets from these parties on behalf of the plan’s participants.”
Citing a recent report from the US Securities and Exchange Commission (SEC) warning about widespread undisclosed conflicts of interest in the pension consultant community (See SEC Calls for Pension Consultant Disclosure Reforms ), Delle-Femine said such a probe was particularly appropriate in the case of the United plans.
“When the PBGC assumed partial responsibility for United’s pension plan obligations, employees and retirees covered by the plan, along with their families, lost a lot of money they deserved and were counting on. It would be irresponsible to risk harming these people a second time by failing to ensure that the plan has been responsibly managed,” Delle-Femine said.
Delle-Femine said the PBGC should also begin a forensic audit of the Northwest Airlines pension plan. Northwest has signaled lately that it may be slowly heading toward bankruptcy. “There’s a real danger of a domino effect in the airline industry and beyond, where companies feel they can’t compete unless they dump their pension obligations onto the PBGC. If that happens, the PBGC may have to ask Congress for an enormous bailout that would be funded by all American taxpayers,” Delle-Femine claimed.
The union’s legislative liaison, Maryanne DeMarco, told Forbes that the group was not aware of specific wrongdoing in the management of United’s pension funds.