Feds pick UAW monitor to oversee corruption reforms

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Detroit — Federal prosecutors asked a judge Monday to appoint a veteran lawyer and former prosecutor to oversee reforms at the troubled United Auto Workers union following a corruption scandal.

Prosecutors have selected New York attorney Neil Barofsky, who served as special inspector general for the $700 billion Troubled Asset Relief Program, a series of moves created during the Great Recession to stabilize and strengthen the financial sector.

UAW Solidarity House at 8000 E. Jefferson.

The request to U.S. District Judge David Lawson comes more than two months after the judge approved a consent decree that will put the beleaguered union under a federal monitor for six years. The plan also includes allowing members to vote on whether to amend their constitution to directly elect leaders. That referendum could happen by the end of the year.

The appointment of a monitor is part of a settlement between the government and the UAW aimed at eliminating fraud and wrongdoing within one of the nation's most influential unions following a years-long crackdown on corrupt labor leaders. 

If approved, Barofsky would head a team tasked with implementing reforms that target union election, compliance, and investigations.

Barofsky was selected after UAW officials proposed multiple candidates, who have not been publicly identified. Federal officials — who had veto power — interviewed candidates and conducted background checks.

"It's obnoxious the UAW had the ability to choose the monitor given the severity and extent of the crimes committed by our former leadership," Matt Horner, a General Motors Co. employee at the Fort Wayne, Indiana, truck plant and member of the UAW Local 2209, wrote in a text message to The Detroit News.

Asked for a response to Barofsky's appointment, UAW spokesman Brian Rothenberg replied: "Both the UAW and the government followed the procedures set up in the settlement agreement on the appointment of the monitor."

In all, the ongoing crackdown on auto industry corruption has led to the convictions of 15 people, including former UAW presidents Gary Jones and Dennis Williams. The investigation has revealed labor leaders and auto executives broke federal labor laws, stole union funds and received bribes and illegal benefits from union contractors and Fiat Chrysler Automobiles NV executives.

The UAW also will be subject to an adjudications officer. The monitor and adjudications officer will be able to employ the personnel necessary to perform their functions. The UAW will be responsible for compensating those positions and their activities.

Barofsky, a partner at the law firm Jenner & Block, leads the firm’s monitorship practice. He monitored Credit Suisse Securities LLC and Credit Suisse AG After billion-dollar settlements and was appointed by the Justice Department and New York State Department of Financial Services. He previously served as an assistant U.S. Attorney in the Southern District of New York.

The court oversight is going to be lengthy, expensive and paid for by the UAW: “Accordingly, Mr. Barofsky has agreed to discount his and his team’s normal rates for services related to the monitorship,” Assistant U.S. Attorneys David Gardey and Steven Cares wrote in a court filing Monday.

As special inspector general for the Troubled Asset Relief Program, Barofsky monitored the $700 billion Wall Street and auto bailout fund and built an investigatory agency from scratch to probe corruption and waste stemming from the program.

In a 2012 book, he wrote that the Obama administration pressured the old General Motors Corp. and Chrysler Group to close more than 2,000 auto dealerships without considering the impact on lost jobs.

The filing identifies others who would work alongside Barofsky. They are:

• Jenner & Block partner Kali Bracey, who would work on overseeing a referendum vote and other election issues. She participated in the Citigroup monitorship and is a former deputy assistant Attorney General.

• Glen McGorty, partner at the Crowell & Moring law firm in New York. He has served as independent monitor of the New York City District Council of Carpenters and is a former assistant U.S. Attorney in the Southern District of New York.

• Jenner & Block partner Reid Schar, who would focus on investigating corruption within the UAW. He is the former lead prosecutor in the corruption case against former Illinois Gov. Rod Blagojevich.

• Jenner & Block partner Erin Schrantz, who will focus on compliance. She has worked alongside Barofsky on the Credit Suisse monitorships.

rsnell@detroitnews.com

Twitter: @robertsnellnews

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