SEIU in bed with billionaires? Andy Stern's lucrative 'retirement' package from corporate America is just a continuation of his brand of unionism
By the time I heard a local SEIU official in Chicago declare that Chicago's public schools were a disaster and that only charter schools could end the racist neglect of black children's education, I had had a front row seat to the ingenious manipulations — political, ideological, financial, and otherwise — in the name of working people. For a brief time, I had worked at SEIU Local 73, the sprawling two-state local that represents public workers from Gary Indiana's school bus drivers to toll collectors on the Illinois Tollway — and the dwindling number of non-privatized custodial workers in Chicago's public schools. At the time I was hired by SEIU Local 73, my main knowledge of SEiU had come from working with people in the old SEIU Local 46, which had been the second largest union local representing workers who worked for the Chicago Board of Education. By the time I went to work for SEIU, however, Local 46 had ceased to exist, and the remnants of its members had been loaded into Local 73, one of the mega-locals that were created under the leadership of then SEIU President Andy Stern.
The story is very complex, but one of the things that union leaders and members can't neglect is that capitalist will gladly turn a militant union into a company union if they can buy some of the leaders. A recent story that appeared on the Huffington Post updates us on the saga of Andy Stern.
HUFFINGTON POST ON ANDY STERN'S LATEST VENTURES
Andy Stern's Bizarre Alliance With Private Equity And Biowarfare (UPDATED) By Ryan Grim
ryan@huffingtonpost.com | First Posted: 10- 7-10 03:45 PM, Updated: 10-13-10 05:12 PM
UPDATE, Oct. 13: SIGA Technologies announced Wednesday that a lucrative contract with the U.S. Department of Health and Human Services is expected to go through. That’s good news for Andy Stern, who, as HuffPost reported below, received 25,000 stock options in June. On Wednesday afternoon, the company’s share value shot up to $12.85, a 50 percent jump and one of the largest increases on NASDAQ. The drug contract could go up to $2.8 billion, and SIGA estimates it will generate $500 million in revenue.
Former SEIU head Andy Stern has gone from leading one of the nation's largest unions to working on behalf of organized labor's historic enemy, private equity.
The Service Employees International Union and its affiliated unions waged an intense war against private equity when Stern was its leader. Today, he sits on the board of SIGA Technologies. Ron Perelman, a high-profile corporate raider ranked by Forbes as one of the richest men in the world, and his private-equity firm MacAndrews & Forbes, are the largest shareholders in SIGA Technologies. Perelman is the sole owner of MacAndrews & Forbes.
Perelman is able to exercise a fair degree of control over the company. Eric Rose, who works under Perelman at MacAndrews, is the CEO of SIGA, a publicly owned company. Rose named Stern to SIGA's board, according to the company's website. Stern was awarded 25,000 stock options in June, according to SEC filings.
Stern's new alliance with a private-equity baron undermines the purpose of his appointment to President Obama's deficit commission; he was named to the panel in order to represent the interests of workers, but SIGA Technologies, a biowarfare defense company, is in direct competition with other public priorities for federal dollars.
Savings from cuts the panel recommends to social programs could be used to fund defense and homeland security spending, which would benefit SIGA. David Cote, another panel member, is CEO of Honeywell, which also relies heavily on federal dollars, and has a similar conflict. But Cote is not presumed to be representing a progressive base. (Indeed, he's currently locking out striking workers at a uranium enrichment plant.)
Perelman first rose to prominence in the 1980s when infamous corporate raider Michael Milken helped him raise money for a leveraged takeover of the Revlon Corporation. Private equity companies are generally known for taking over a company, firing its workers and selling off assets before flipping the trimmed down company to another buyer for a huge profit. Such behavior puts private equity squarely in the sites of organized labor.
Stern and Perelman worked closely together when Stern was head of the SEIU and was attempting to organize Perelman's workers. Stern gave Perelman treatment that was unusually favorable to the private equity giant.
Stern and Perelman have a history of cooperation. The pair met in 2004 as SEIU was attempting to unionize AlliedBarton, a security company owned by Perelman's holding company, according to a labor official who knows them both. In September 2006, the SEIU surprised the labor movement by agreeing not to organize 10,000 security guards working for AlliedBarton, largely in the Philadelphia area, in exchange for organizing opportunities elsewhere. In 2008, the SEIU again surprised observers by not standing in the way of the sale of AlliedBarton to the private-equity firm Blackstone Group, as SEIU generally does in industries where it is organizing workers.
"In an unusual statement, the Service Employees International Union said it supported the deal," the Philadelphia Inquirer reported in 2008. "The SEIU, which has two million members, has been critical of private-equity firms for flipping assets, receiving favorable tax treatment, and paying huge compensation to the industry's top executives."
The labor official recalls how out-of-place the support for the Blackstone deal seemed at the time. "They were in the process of attacking private equity in general and the Blackstone Group in particular, and all of a sudden they said, 'Well, this is a company we can deal with,'" recalled the official.
One of SIGA's highest priorities is getting the Health and Human Services Department to grant SIGA a lucrative contract through the Biomedical Advanced Research and Development Authority (BARDA). SIGA now has the inside track on the contract, according to The Motley Fool's Richard Duprey. Wall Street is watching the contract award process closely and Stern's options stand to see a significant gain if the contract comes through.
During the health care reform debate, Stern worked closer with the White House than any other labor advocate, giving him regular access to administration officials, particularly to HHS Secretary Kathleen Sebelius. Stern joined SIGA in June 2010, less than three months after health care reform was signed into law.
SIGA was clear why it brought Stern to the company. When the company added Stern to the board of directors, Rose, SIGA's CEO, explicitly cited Stern's experience working with the administration as a reason to bring him on board. "His insight, experience, and leadership, particularly his understanding of how our federal government works, will complement the skill sets of our existing board members," said Rose in a statement.
A SIGA spokesperson didn't return calls, but Christine Taylor, a spokeswoman for MacAndrews, said that Stern is not lobbying on behalf of SIGA. "He has never spoken to anyone in the government about SIGA or any of SIGA's drugs or anything to do with SIGA. He's never, ever done that. He just provides oversight and advice as other board members do," she told HuffPost.
Taylor said that Stern's position on SIGA's board should not be construed as an alliance with private equity. "Andy Stern does not work for us," Taylor said. "He's just a member of a board of a company we have a minority stake in, so it's a big leap to say that he now works for private equity."
In 2003, Perelman bought 45 percent of SIGA through MacAndrews & Forbes. He increased his investment in August 2010.
Perelman has become one of the wealthiest people in the world. He is a major donor to both Democrats and Republicans. Forbes ranks him 52nd in net worth, which the magazine puts at $11 billion. He gave $50,000 to Obama's Inauguration committee. Stern was unavailable to comment and an HHS spokeswoman didn't respond to requests for comment.
Shahien Nasiripour contributed reporting
