Report Release Dispute Prompts ULLICO Board Resignations

Also resigning director positions over the report controversy were AFL-CIO executive vice president Linda Chavez-Thompson and Frank Hanley, president of the International Union of Operating Engineers, reported BNA, a Washington-based legal publisher. The document was prepared by former Illinois Gov. James Thompson Jr.

In a December 2 letter to Robert Georgine, ULLICO president and chief executive officer, Sweeney said he was making the move because of conflicts between his obligation to ULLICO and to the labor movement. Sweeney, who said he had not seen the Thompson report, noted that it was made available to directors last week and that despite his repeated requests, the board has not addressed whether the report will be made available to shareholders, according to the BNA story.

“I am forced to conclude that if I am to fulfill my duty as a director to read Gov. Thompson’s report, I may be required to withhold that report from the labor movement institutions that are ULLICO’s shareholders. I cannot adequately fulfill both my obligation to ULLICO and to the labor movement under these circumstances,” Sweeney wrote.

Thompson was named last April by the ULLICO board of directors to lead an internal investigation of the company’s investment in Global Crossing Ltd. and allegations of insider trading by board members. Georgine and Sweeney have been battling over who will see the report.

Sweeney wants the report to be shared with shareholders after the board considers it and decides on appropriate action. Georgine wants to keep the report out of the hands of directors and shareholders, claiming attorney-client privilege, according to sources.

Chavez-Thompson, who was added to the board in May 2001 after the alleged insider stock trades took place, cited the reasons outlined by Sweeney in her resignation letter to Georgine.

Director Troubled By ‘Adverserial Approach’

In his December 1 letter of resignation to Georgine, IUOE President Hanley said he had become “increasingly troubled by the seemingly adversarial approach” taken by ULLICO towards Thompson’s probe and the manner of releasing the report to board members.

Hanley endorsed the decision to have Thompson investigate the stock offer and repurchase program.

According to the BNA, Hanley’s letter said “when serious allegations are made concerning self-dealing by corporate officers and directors, a corporation has an obligation to obtain an independent evaluation of the relevant facts to assure shareholders that their interests are protected. The labor movement has sought to hold corporate America to such a standard, and we can’t act differently when the target of the allegations happens to be a union-related enterprise.”

Hanley said he was pleased that a special counsel, instead of a board committee, was named to investigate the matter and equally pleased with the “thorough approach” taken by Thompson.