Statement on Investigation To Reform Teamsters' Central States, Southeast and Southwest Areas Pension FundGao ID: 119252 July 26, 1982
GAO discussed its review of the Government's investigation to reform the Teamsters' Central States, Southeast and Southwest Areas Pension Fund. Since the Fund's inception in 1955, its trustees have been the subject of controversy and allegations of misuse and abuse of its assets. Over the past 14 years, various Federal agencies have investigated the Fund and the alleged misconduct by the trustees. The most recent Government investigations have been conducted by the Department of Labor and the Internal Revenue Service (IRS). Due to congressional concern over the progress of Labor's investigation, GAO undertook a comprehensive review of the adequacy and effectiveness of that investigation and the adequacy of its coordination with IRS and the Department of Justice. GAO stated that the investigations by those agencies indicated that former Fund trustees and officials had apparently mismanaged Fund assets and failed to prudently carry out their fiduciary responsibilities. Also, the Fund had not been operated for the exclusive benefit of plan participants and beneficiaries as required by law. In June 1976, the Fund's tax-exempt status was revoked and, before it was restored in April 1977, Labor and IRS imposed several demands on the trustees to reform the Fund's operations. The trustees agreed to several significant changes, including: (1) the appointment of independent investment managers to manage most of the Fund's assets and investments, and (2) the adoption of amendments to have the Fund conform to Federal law and the Internal Revenue Code. Despite the apparent benefits from the Government's investigative efforts, the investigation and subsequent dealings by Labor and IRS with the Fund's trustees had significant shortcomings and left numerous problems unresolved. GAO found that: (1) Labor's investigation was incomplete and hampered by staffing problems, poor management, and ineffective coordination between internal offices; and (2) Labor failed to adequately coordinate its investigation efforts with IRS and the Department of Justice. GAO also found that Labor and IRS failed in their dealings with the trustees to: (1) gain lasting reforms and improvements in the Fund's operation, and (2) adequately monitor the current trustees' operations and compliance with the conditions for requalification imposed by the Government.