United Steel, Paper and Forestry, Rubber,

Manufacturing, Energy, Allied Industrial

and Service Workers International Union,
AFL-CIOCLC

Interim Audit
Report for
USW Local 1998

ANTHONY CATONZARO
Chief Auditor
BETTY J. BAILEY
Auditor
ROCH DRAPEAU
Auditor
Dated: December 11, 2014

Introduction
At the request of USW District 6 Director Marty Warren, the Auditing Section of the Local
Union Services Department initiated an audit of USW Local 1998. Reviews of the Local
Union records and interviews with Local Union officers and staff took place from
September 15 to October 2, October 14 to October 23 and again from November 5 to
November 12. Many additional hours have been spent in addition to these time periods
reviewing and analyzing Local Union records.
As detailed below, we have been unable to finalize our audit review based on our inability
to obtain access to additional requested financial records, as well as responses to questions
that we have raised with Local Union Officers. However, we have obtained information
sufficient to issue this Interim Audit Report for Local 1998.
General Concerns
The conduct of USW Local Unions is governed by the USW International Constitution, the
USWs standard By-Laws for Amalgamated Local Unions, specific Local Union By-Laws
as approved by the International Union that do not conflict with the standard By-Laws, and
on a day-to-day basis, the USWs Manual for Financial Officers. Extensive training in the
USWs policies and procedures is available to all USW local unions and the clear
expectation is that all of the USWs local unions will abide by these mandates.
Unfortunately, in the case of Local 1998, these policies and procedures have apparently not
been followed on a consistent basis.
1. Local 1998 Has Been Spending Without Membership Approval
This is a serious breach of the USWs standard By-Laws and financial policies. Article
V, Section 5(c) of the By-Laws provides as follows:
(c) All money paid out by the Local Union from its treasury must be approved by the
members at a Local Union meeting. Under no circumstances shall Officers or
members pay bills without authorization by a Local Union meeting, nor shall the
members authorize payment of any bill or incur any obligation for which funds are
unavailable, nor shall the members authorize the payment of or incur a debt for any
activity not in accordance with the Constitution and policies of the International
Union and these By-Laws. Bills charged to the Local Union shall be submitted to the
Recording Secretary, who in turn shall submit them to the Local Union meeting for
approval.
In general, we have been unable to locate specific membership authorization for
expenditures totaling hundreds of thousands, if not millions, of dollars over the audit
period of 2009 to mid-2014. Adequate membership approval requires information that is
sufficiently detailed to provide an informed basis for the decision. General statements
not supported with detail are inadequate, as are actions taken by Local Union Officers
that are not within the parameters of the financial authorizations of the Locals
members.

Locals are also not permitted to adopt standing expenditure authorizations, even in
nominal amounts, except as they relate to recurring expenses in amounts that do not
vary (e.g., rent payments). This is particularly the case where (as discussed below),
insufficient documentation of those expenditures is provided at its Executive Board and
Local Union meetings.
2. Local 1998 Has Not Been Adequately Reporting Its Finances To Its Members
Compounding the Locals failure to obtain sufficient membership authorization for its
expenditures, is its failure to adequately report on its income and spending, including
failing to expressly advise the membership when its monthly expenses have exceeded its
current income, as required by Article V, Section 4(e) of the USWs standard By-Laws.
In addition, instead of following the USWs mandated accounting procedures, the Local
generates QuickBooks summaries that provide minimal, if any, details of its
expenditures. This has led to wholesale violations of even the limited spending
authorizations that have been approved by members.
3. There Has Been a Virtual Absence of Oversight by Local 1998s Financial Officers
Part of the reason for the lack of detailed financial reporting has been the absence of a
Local Union Financial Secretary following the inexplicable reduction in hours of the
elected Financial Secretary, and then her replacement by a Financial Secretary who is
unable to perform the extensive requirements of the position due to the universitys
refusal to permit her necessary leave time. Reportedly, this individual has now been
temporarily replaced without following the USWs mandated procedures.
In addition, the Local Union Trustees have not presented a Trustees Quarterly Audit
Report since September 2012. USW reporting policies are being ignored which
continues to allow unaccounted for, and unapproved, spending.
4. Local 1998 Has Been Operating Without an Approved Budget
The By-Laws of Local 1998 require that the membership be presented with an annual
budget for membership approval. There is no indication that the membership has had
the opportunity to vote to approve a budget since 2011. To the extent that a budget is
submitted, it needs to be sufficiently detailed to meet the criteria discussed above.
5. It Appears That Local 1998 Is Spending Substantially More Than Its Income
Associated with the need to adopt and approve a detailed budget, is the need for that
budget to be balanced and sustainable. Although 2014s expenses are somewhat skewed
due to the expense of sending delegates to the USW International Convention in
August, the opinion of the auditors is that Local 1998 is not being prudent with respect
to committing to on-going expenditures where there is no assurance that the necessary
dues revenue to pay these expenses will be available.

Concerns about Certain Individuals and Positions

6. Paul Tsang Vice President 2009 to 2012, President 2012 to Present
There are questions about approximately $26,000 of payments to Paul Tsang during the
audit period:

Double payments for expenses.

No receipts for reimbursements for claimed Local Union purchases.
Questionable reimbursements for meetings, gifts, computers, software and travel
purportedly covered by the standing expenditure authorization of the Local.

Tsang has not replied to date to the request by the auditors for further information
concerning these payments.
7. Ezinwanne (Ezi) Odozor Unit Chair
The membership status of this individual is not entirely clear. There is also the issue of
overpayments for a period of time when she worked for the University of Toronto as
well as the Local Union.
If it is finally determined that she is indeed a member of Local 1998, it appears that she
may have been paid substantial amounts in excess of the USWs required lost time
reimbursement policies. There are also issues with respect to required membership
authorizations and notices for all compensation paid.
8. Patrick Legay Local Union Representative
Legays duties, which include overseeing the Locals Job Evaluation Committee (JEC),
along with other assignments, fall within the parameters of Article IV, Section 1(a) of the
USWs standard By-Laws which control the hiring of non-clerical Local Union
employees:
Section 1(a). The Officers of this Amalgamated Local Union shall be: President,
Vice President, Recording Secretary, Financial Secretary, Treasurer, Guide, two (2)
Guards, and three (3) Trustees.
Note: Prior to the promulgation of these By-Laws, some Amalgamated Local
Unions have had representatives, either elected or appointed, in addition to the
eleven Officers specified in Article IV, Section 1. Such representatives have been
referred to, for example, as Business Agent, Business Representative, Chief
Grievance Committee Person, Local Union Representative or other title approved by
the Local Union, District Director and International President. This representative
shall be referred to in these By-Laws as the Local Union Representative. It is the
policy of the International Executive Board that the appointed position of Local
Union Representative should be limited to those circumstances that clearly and
demonstrably warrant the continuation or creation of such positions. However,
those Amalgamated Local Unions that have had such representatives may continue
those positions, subject to the approval of their District Director and of the
3

International President; and Amalgamated Local Unions that have not had such
representatives may create such positions, subject to the approval of their District
Director and of the International President. All newly created Local Union
Representative positions shall be appointed by a majority of the Local Union
Officers, subject to the approval of their District Director and of the International
President. In those cases where the Local Union Representative is appointed, the
following provision shall be added to Section 1(a) of this Article: In addition to
these eleven Officers, there shall also be (a) position(s) in this Amalgamated Local
Union known as the Local Union Representative. The Local Union Representative
shall be an employee of the Amalgamated Local Union and all appointments shall be
reviewed on an annual basis. The Local Union Representative shall not by virtue of
that position be an Officer and shall not be responsible for setting policy for the Local
Union in the capacity of Local Union Representative. However, a duly elected
Officer of the Local Union may serve as the Local Union Representative. It shall be
the duty of the Local Union Representative to assist the Units in the handling of
complaints and grievances; where contractually appropriate, to conduct an appeal
step in the grievance procedure to assist the Staff Representative and other
representatives of the International Union in the handling of grievances and the
preparation of arbitration cases; to assist in the negotiation of collective bargaining
agreements: to engage in organizing activity in accordance with these By-Laws; and
to perform such other duties as the District Director may assign, and, where
consistent with these By-Laws, the Constitution, the policies of the International
Union or any assignments by the District Director, such other duties as the Local
Union may assign." In the alternative, the Local Union may assign these duties to the
Local Union President.
As required by the standard By-laws, the Local earlier this year asked the Director of
District 6 to approve Legay as a Local Union Representative. Efforts to reach an
understanding on Legays responsibilities and accountability were not successful, and
the formal required approval from the District Director (let alone the International
President) was never obtained, yet Legay continues to perform job duties that fall within
the Local Union Representative classification. In addition, his compensation, including
benefits, is not supported by the Local Unions minutes or other records.
9. Other JEC Employees
In addition to Legay, Local 1998 hired on a contract basis a number of non-members to
non-clerical staff positions. In addition to the fundamental issue of authorization
discussed in number 8 above, the auditors have general reservations about these hirings,
including:

Adequate Local Union Executive Board and membership notice and approval.
Compensation, including benefits, in excess of any authorization that was given.
Completely inadequate documentation of the hours worked and projects
completed.
Fundamental concerns about committing to very significant costs without
analyzing the Locals long-term financial picture.

Initial Conclusions and Recommendations

Although this is an Interim Audit Report, we are firm in our conclusions concerning Local
1998s apparent inability (or unwillingness) to follow the same basic financial procedures as
all other USW Locals. Local 1998 needs to work with International Representatives,
including the Local Union Services Department, to immediately adopt policies going
forward that will address the serious general concerns that we have raised above.
Specifically, the Local needs to adopt at its January 2015 Local Union Executive Board and
General Membership meetings a detailed balanced budget that accurate reflects anticipated
Local Union income and expenses. Any expenditures by the Local need to be in accordance
with that budget and no standing authorizations should be included other than items such
as rent that are regularly recurring.
In order to provide for the detailed accounting of Local Union finances that are required by
the USWs Constitution, By-Laws and policies, the Local needs to adopt the required
International accounting methods. In order to successfully do so, it needs a full-time Local
Union Financial Secretary. It is also essential that detailed training be provided to the entire
Local Union Executive Board so that there is no confusion about the USWs policies and
procedures.
With respect to the auditors concerns about specific individuals and positions within the
Local, the Local Union President needs to account for the undocumented expenditures that
we have identified and reimburse the Local. The Unit Chair needs to clarify her
employment and membership status and repay any monies received that exceed USW
policies.
The Local needs to obtain the required approvals for its proposed Local Union
Representative or immediately direct this individual to stop performing those duties. It also
needs to evaluate whether this position is required if its responsibilities are limited in order
to comply with the standard By-Laws.
The same analysis needs to be applied to the JEC Committee. It appears to us that trained
Local Union members on lost-time can effectively perform these duties, while also
providing the Local with financial flexibility going forward.
Additionally, the Local Union needs to respond to our numerous outstanding information
requests and questions that have essentially been ignored to this point. To the extent that
there are legitimate questions or concerns about the requests, we will be happy to address
them on January 5, 2015, when we will return to the Local. But absent such questions, the
Local needs to produce the requested records at that time.
We are reluctant to do so, but we finally recommend that if progress is not made in the very
near future with respect to our Recommendations, the International President should
seriously consider initiating the procedures to put Local 1998 under administratorship to
assure that the democratic rights of its members are protected.

Respectfully submitted,
ANTHONY CATONZARO
Chief Auditor
BETTY J. BAILEY
Auditor
ROCH DRAPEAU
Auditor
Dated: December 11, 2014