The Star took a close look at the Kansas City, Kan. based Boilermakers union five years ago and found that union officials were making some of the highest salaries of union leaders in the U.S. and spent lavishly on travel and perks. Chris Ochsner The Kansas City Star
The Star took a close look at the Kansas City, Kan. based Boilermakers union five years ago and found that union officials were making some of the highest salaries of union leaders in the U.S. and spent lavishly on travel and perks. Chris Ochsner The Kansas City Star

Business

Union haul: Boilermakers leaders’ salaries and perks climb as membership sinks

By Judy L. Thomas

jthomas@kcstar.com

April 15, 2017 11:27 AM

Under scrutiny for lavish spending practices and a lack of accountability, leaders of the Boilermakers union five years ago took steps to show they were being good stewards of members’ dues.

They made across-the-board pay cuts and eliminated some positions — including that of the president’s then 23-year-old son, whose salary and expenses totaled $124,000.

But a recent examination of the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers found that things appear to have returned to business as usual.

Six-figure salaries for officers and their relatives. Fine dining, stays in posh hotels and expensive hunting retreats. Cars as parting gifts for retired employees, and hundreds of thousands spent on promotional events and videos. All while membership continues its downward spiral and the pension fund struggles to stay afloat.

The union, with headquarters in Kansas City, Kan., represents about 58,000 workers in the United States and Canada who assemble, install and repair boilers, fit pipes, and build power plants and ships.

The Kansas City Star investigated the Boilermakers in 2012, finding that the president and other executives were living the good life. President Newton B. Jones’ salary and business expenses totaled more than $607,000, which put him above the presidents of the biggest unions in the country.

The newspaper also found that several of Jones’ family members and relatives of other officers were earning hefty union salaries, as well.

In an updated analysis, The Star found similar concerns:

▪ While the union cut salaries across the board — including Jones’ — at its headquarters in fiscal year 2013, the numbers have climbed back up. Jones’ base salary, which was $295,628 in 2013, rose to $435,240 in 2016. And his total disbursements — which include salary plus expenses for official business, such as travel — grew from $491,866 in 2013 to $756,973 in 2016.

▪ The salaries of the union’s seven top officers now add up to $2.5 million, with total disbursements to those officers exceeding $3.5 million. Of the 107 other employees, 46 earn six-figure salaries, with 16 of them receiving total disbursements of more than $200,000 — including one of $365,546.

▪ Family members of executives are still earning healthy salaries working for the union or its affiliates, and Jones’ wife is now on the payroll along with his brother and son.

▪ The union headquarters continues to spend sizable sums on classy hotels, fine cuisine and entertainment, such as season tickets to professional sporting events.

▪ Federal authorities, including the U.S. Department of Labor, have investigated the $28 million Boilermaker Vacation Plan and one of its local lodges.

“This is so over the top,” said Ken Boehm, chairman of the National Legal and Policy Center in Falls Church, Va., a conservative ethics-in-government group. “It really tells you that there aren’t the kinds of checks and balances that are supposed to be there.”

The union did not respond to repeated requests for comment. But in a letter responding to The Star’s report in 2012, it defended executives’ compensation, saying that “pay for top leaders of the Boilermakers union is voted on, in true democratic fashion, by delegates representing rank-and-file members, every five years.”

The union said at the time that the hiring of family members was part of the Boilermakers culture.

“Those who work in our trade often do so because it is what their fathers, grandfathers and great-grandfathers did,” the union said. “It is quite common for working members — and their leaders — to have relatives employed in the industry at various levels.”

As executives’ pay is amassing, the union’s membership has steadily declined, from 57,203 in 2012 to 53,287 in 2016, according to its annual reports filed with the Labor Department.

Yet Jones’ base salary and total disbursements remain significantly higher than those of the leaders of the country’s biggest unions.

It’s not just the union members who are affected by the spending practices. Taxpayers have a stake in the issue, as well.

The Boilermakers, like most unions, are structured as a nonprofit organization, said Marcus Owens, a Washington, D.C., attorney who once headed the division of the IRS that oversees nonprofits. That means the union qualifies for exemption from federal income tax.

“They’re not paying income tax,” Owens said, repeating a concern he expressed five years ago. “So in a sense, we’re all supporting them.”

Because unions are exempt, Owens said, the law prohibits union officials from improperly benefiting from the tax-free money they raise.

“So when a tax-exempt organization abuses that tax-exempt status and ignores the boundaries, it really has something in common with somebody who cheats on their taxes individually,” Owens said. “They are eroding the very idea of a voluntary tax system, and that’s ultimately destructive for civil society.”

A group of relatives all working for one tax-exempt organization raises concerns about whether the income is being used for the benefit of certain members, Owens said.

“Labor unions are designed to further the interests of workers in collective bargaining,” he said. “They’re not a personal money-making business or an individual’s own enterprise.”

The steep salaries infuriate some rank-and-file Boilermakers, who note that the work they perform is physically demanding and dangerous. Many have to travel long distances to their job sites and live away from home for extended periods.

“This is just more proof that they’re completely out of touch with the rank-and-file membership,” said Nick Giannone, a trustee of Local 29 in Boston who was sued by Jones in 2012 after creating a Facebook page called “Lord Newton B. Jones, Monarch” that pilloried Jones and criticized his salary. The lawsuit was later dismissed.

The median annual wage for boilermakers was $60,120 in May 2015, according to the Department of Labor’s Bureau of Labor Statistics. The lowest 10 percent earned less than $36,810, and the highest 10 percent earned more than $86,290.

Boilermaker members pay dues to the international headquarters that range from $26.55 to $27.10 per month.

“The union is supposed to be for the benefit of the members, not a family clique,” Giannone said. “It’s a living for us. But it’s a family business for them.

“I think we need to shine a light into some of these places and expose it.”

Family ties

As they gathered at an annual conference at the Hilton Marco Island Beach Resort and Spa in Florida in 2013, union leaders discussed what they called The Star’s “attack articles” from the previous year.

Jones told those in attendance that union officers had voluntarily cut their own salaries by 15 percent and slashed staff salaries by 10 percent because of the economic downturn and recent implementation of “hyper-restrictive” Environmental Protection Agency rules.

Jones told fellow Boilermakers that he’d recently had to let his son, Cullen, go, “because he was low man on the totem pole during a time when cutbacks have become necessary.”

Cullen Jones, now 28, was back on the Boilermakers’ payroll the next year. His 2016 salary was $93,926, with total disbursements of $178,963.

Newton Jones’ brother, Charles A. Jones, and sister, Donna Jones, have been on the payroll for years, making six-figure salaries, as was another relative until he retired in 2015. Donna Jones recently retired.

And a new family member has joined the payroll in the past two years. Kateryna Jones, Newton Jones’ wife, was paid $123,328 in 2016 and received total disbursements of $248,517 in her role as special assistant to the international president.

In all, Jones and his family members were paid $950,069 in salaries in 2016 and received total disbursements of $1.6 million.

Newton Jones also receives a salary for his role as chairman of the board of the Bank of Labor, formerly called Brotherhood Bank and Trust, a bank controlled by the union. In 2015, he was paid $47,790 for director’s fees.

Relatives of other Boilermakers executives continue to hold high-paying jobs with the union, as well.

“It’s all a family affair,” said Craig Sparks, a retired Boilermaker from the 1,200-member Local 83 in Kansas City. “They pay ridiculous salaries to these people. But they’re not playing with their money; they’re playing with our money.”

Many union members say they feel helpless to change the culture. Jones became president after his father retired in 2003, they note, and officer elections are only held every five years.

The most recent election was last year at Caesar’s Palace in Las Vegas. Jones and the other officers, who ran on a slate they called the “Proven Leadership Team,” were all re-elected.

“They go to the convention, and everybody falls right in line,” said Ed Lacey, a retired Boilermaker and former president of Local 83. “Usually, one person from every local has a delegate to the convention, and usually that person is either the business manager or the president, and so whoever the three or four other delegates are from that local, they’re not going to rock the boat. There’s nothing democratic about anything they do.”

Golf balls and go-karts

Union officials have said they’ve reduced spending in recent years, even eliminating some executive positions.

Their annual reports show that the union dropped one of the two airplanes in which it had a fractional ownership, and it no longer pays tens of thousands a year for a suite at Kansas Speedway. From 2007 through 2012, it had spent nearly $250,000 on the suite at the racetrack, plus $80,000 for catering and concessions.

But other longstanding — and costly — Boilermaker traditions are alive and well.

In the past five years, the union spent $22,000 on Kansas City Chiefs tickets and $90,000 on Kansas City Royals tickets. It also spent $173,000 for tickets for an NFL team in Washington, D.C.

The union also still gives cars as gifts to executives when they retire and pays “consulting fees” to officers after retirement.

While union officers may now have to travel more often on commercial airlines to get to their conferences, they’re still holding some of them at swank hotels in popular destinations.

Among the gatherings reported in 2016:

▪ Hilton Marco Island Beach Resort and Spa, where the union spent $51,560 for an international executive council meeting and $320,511 for a construction division conference.

▪ The Mirage Hotel and Casino in Las Vegas, where the union spent $343,879 on industrial sector operations conference expenses. An added bonus for those attending: Pole Position Raceway, a Las Vegas go-kart track where the union spent $5,250.

▪ The InterContinental Hotel on the Country Club Plaza, where the union spent $16,356 on a holiday party.

Expenses reported in 2015 include $270,239 at Hilton Marco Island; $15,962 at Hotel B, a luxury arts boutique hotel in Lima, Peru, for a United Nations climate change conference; and $5,966 at the Hotel Bristol, a luxury five-star hotel in Paris, for a World Energy Conference. Some union members also took a trip to Hawaii, dropping $37,665 at the Sheraton Maui Resort and Spa for a “2016 convention planning meeting.”

Not all the conferences were held in bustling locales.

In 2016, the union spent $70,000 at Paul Nelson Farm, a renowned hunting lodge and corporate retreat center in Gettysburg, S.D., for a gathering of its international executive council — which consists of the president and vice presidents — and the Union Sportsmen’s Alliance, a nonprofit, union-operated conservation organization to which the Boilermakers heavily contribute.

The Paul Nelson Farm website offers packages that include three days of hunting with private rooms, guides and dogs, ammunition, complimentary use of 12-gauge shotguns, pheasant cleaning, and meals and beverages. For a group of six or more, the package runs $5,695 per person.

When it comes to dining, the Boilermakers still enjoy a good spread.

Among their favorites? The Capital Grille on the Country Club Plaza, where the union spent $47,000 from 2012 through 2016. Meal expenditures in 2016 included $11,931 at Joe’s Stone Crab restaurant in Washington, D.C., and $7,672 at Chop 239, a steak, lobster and wine bar on Marco Island.

The Boilermakers are proud of their union and its rich history, and they like to showcase it. The union’s 2016 annual report shows it paid Wide Awake Films $450,000 for creating a series of documentaries for its 33rd Consolidated Convention at Caesar’s Palace in Las Vegas.

The union has hired the Kansas City film company for numerous projects. From 2012 through 2016, records show the Boilermakers paid Wide Awake Films nearly $1.2 million.

In another effort to promote goodwill, the Boilermakers turned to Par Golf Supply, a company in Schaumburg, Ill. According to the union’s 2016 report, it spent $27,250 for golf balls imprinted with the International Brotherhood of Boilermakers logo.

“This is outrageous,” said Richard Berman, executive director of the Center for Union Facts, a watchdog group critical of unions. “For sure, these guys are not mainstream in terms of the union movement. They’re not the only ones who are guilty of this kind of questionable financial practices, but they certainly are one of the worst in terms of taking care of member dues.”

Federal investigations

Spending practices at one of the Boilermakers’ local lodges have drawn the attention of federal agencies.

Local 154 in Pittsburgh said in a recent report that “investigations were initiated during the year ended June 30, 2015, by the International Brotherhood of Boilermakers as well as government agencies into the financial practices of the local.”

“These investigations are ongoing,” said the lodge’s annual report for fiscal 2016. “As such, a final determination of any loss has not been determined.”

The next annual filing isn’t due until this fall. The status of those investigations is unclear.

Raymond Ventrone, the local’s former business manager, resigned from Local 154 in March 2015, and Pittsburgh media reports said the FBI was investigating Ventrone for allegedly mishandling union funds. Ventrone has denied any wrongdoing, saying the expenditures were approved by the union.

The Boilermakers’ international office in Kansas City, Kan., told Pittsburgh TV station KDKA that authorities had asked the union not to comment on the investigation but said the union “is conducting its own investigation and is fully cooperating with the authorities.”

Besides heading his local lodge, Ventrone served on the board of the $1.2 billion Boilermakers National Annuity Trust, according to the union’s website. Union officials did not respond to a question about whether he remains a trustee.

Federal investigations are not new to the Boilermakers. Issues raised in one dating as far back as 2003 involving questionable spending and acceptance of gratuities by some of the union’s pension fund trustees still appear to be unresolved.

A 2006 letter from the Department of Labor to pension fund officials said the investigation revealed that Boilermakers National Funds, or BNF, trustees had received a variety of gratuities from investment managers including massages, college and professional football tickets, major league baseball tickets, hotel accommodations and rounds of golf at premier courses.

A later letter said questionable expenditures of three BNF trustees, including Lawrence McManamon Sr. — a longtime Boilermakers international vice president whose son and daughter hold key positions in union affiliates — had yet to be resolved.

The Labor Department said the trustees had violated sections of the Employee Retirement Income Security Act on multiple occasions and that they “should never again be appointed to serve as Trustees on any BNF Boards of Trustees or in any other fiduciary capacity to the BNF.”

Yet McManamon remains a trustee of the Boilermakers National Annuity Trust and the $7.2 billion Boilermaker-Blacksmith National Pension Trust, according to the BNF website. He’s also chairman of the board of the Boilermaker Vacation Plan, which according to its most recent annual report had net assets of $28.6 million.

And The Star has learned that the Vacation Plan has been investigated by the Department of Labor. The report, for the fiscal year ending Sept. 30, 2015, says the Labor Department was investigating the plan for the years 2007 through 2013.

The union did not respond to questions about its pension and benefit plans or the outcome of the investigation.

But rank-and-file members and retirees want to know why little appears to have come from the investigations. They’re also upset about changes made to the struggling pension fund in January that will require active Boilermakers to work longer before retiring.

“It makes me ashamed that I’m a member of this union, because of what’s gone on,” said Lacey, who said he has talked to federal investigators on multiple occasions in recent years. “People are upset, and now they’re scared with what’s going on with the pension fund. We shake our heads and wonder, ‘What’s next?’ 

Judy L. Thomas: 816-234-4334, @judylthomas

By the numbers

Boilermakers executive pay

▪ Newton B. Jones, international president

$435,240 salary

$756,973 with expenses

▪ William Creeden, international secretary-treasurer

$332,627 salary

$436,187 with expenses

▪ Lawrence McManamon Sr., international vice president

$350,661 salary

$484,111 with expenses

▪ Median annual wage for rank-and-file boilermakers: $60,120

Source: U.S. Department of Labor

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