AFL-CIO Exec Council Meeting Place:
Opulence & Corruption Charges Abound
from: steve zeltzer
Fla. Union-Run Hotel Under Investigation
date: Sunday, Feb. 23, 2003
WASHINGTON (AP) - The luxury hotel in Florida where labor leaders
hold an AFL-CIO executive council meeting this week is at the
center of a federal lawsuit against its union owners and the
pension fund used to buy and renovate it.
Approved in 1997 as a $100 million investment by officials of
the plumbers and pipe fitters union, the 998-room Diplomat Resort
and Spa in Hollywood, Fla., opened five years later at a cost of
Several union officials and activists privately expressed
distaste for the hotel's opulence and the message being sent to
rank-and-file members and potential recruits, especially during a
weak economy and with the labor movement struggling.
The 39-story structure at the edge of the Atlantic Ocean has art
deco features, a full-service spa, an 18-hole golf course and a
tennis center with 10 clay courts. An outdoor pool has a
see-through bottom and waterfalls that flow into a 240-foot lagoon
pool. The lobby features a 60-foot glass atrium.
``It's Florida. Nobody is going to stay there if it looks bad.
You've got to compete,'' AFL-CIO spokeswoman Kathy Roeder said.
The Labor Department has sued officials in charge of the
plumbers and pipe fitters' union pension fund, alleging imprudent
use of the members' money. The civil suit claims that trustees
moved forward on the hotel project before studies were done on
feasibility, market and budget costs.
Union officials say the suit is baseless and have moved to
dismiss the case.
Organized labor was criticized roundly in years past for holding
the AFL-CIO's annual February executive council meetings at a
luxury resort in Bal Harbour, Fla. That location was abandoned
after AFL-CIO President John Sweeney was elected in 1995, and the
meeting now rotates locations.
AFL-CIO spokeswoman Lane Windham said the federation would have
lost close to $100,000 had the 2003 meeting not been held at the
In 1999, before the hotel was built, the AFL-CIO booked it for
the national convention in the fall of 2001. But construction was
behind schedule, and the hotel was not open, so the AFL-CIO had to
move that event to Las Vegas. The contract with the Diplomat
required another event to be scheduled at the hotel or the money
would be lost, Windham said.
``If we didn't use that credit, union members would have lost
about $100,000,'' she said. ``So we're holding our executive
council meeting there. It makes sense to do that.''
The hotel opened for business under the Westin brand 18 months
behind schedule, in January 2002.
``To the disappointment of those who would tear us down, the
Diplomat is doing very well indeed,'' the union's president, Martin
Maddaloni, said in a statement.
``Even during the offseason, the hotel has experienced many
sold-out periods. It is quickly becoming known as the premier
destination in America, especially in South Florida, and it is
fulfilling its promise as the linchpin of an entire redevelopment
of this once-depressed area.''
The union, officially the United Association of Journeymen and
Apprentices of the Plumbing, Pipefitting and Sprinkler Fitting
Industry of the United States and Canada, bought the hotel in 1997
from Ullico Inc., a union-owned life insurance company itself
embroiled in an insider trading scandal. Such a sale typically
would violate a federal law that prohibits large portions of
pension assets to be in a single investment or in a property with
ties to pension trustees.
But in 1999, the Clinton administration's Labor Department
granted an exemption. The Bush administration now says the old
Diplomat was imploded and construction began before the exemption
was granted and a feasibility study performed. It also alleges
trustees failed to investigate properly the project's service
providers, contain costs and monitor the work.
Maddaloni's statement noted that the lawsuit was civil, not
criminal. ``In the end, we will all be vindicated,'' he said, ``and
the (union) will get the recognition it deserves as the most
progressive and forward-thinking union in North America.''