March 23, 2004, 1:35AM

Pay rate mixup costs city

Back wages due exceed $2 million



Hundreds of construction workers stand to receive more than $2 million in back wages because the city failed to use the correct prevailing wage rate on 12 airport projects.

Instead of paying workers at the higher rate mandated for projects that use federal money, the Houston Airport System applied the rate used on city projects.

Reimbursements range from 40 cents to $25,350.12 on one project.

"Oh my God!" yelled Alex "Buzz" Gonzalez, when he learned about the $2,156.10 the city calculated he has coming. Gonzalez, who worked for H&W Plumbing, was paid $22.28 an hour. He should have received $25.28 an hour.

In addition to making good on the workers' wages, the city will reimburse contractors to cover their costs of processing the payments and additional employment taxes such as Social Security.

Money for the back wages and contractor reimbursements will not come out of current city revenues, said Velma Laws, director of the Mayor's Office of Affirmative Action and Contract Compliance.

That's because all the contracts have money set aside to pay for such contingencies, Laws said.

"We've been working diligently to resolve it," Laws said. "It caught us off guard."

The 12 projects, which were budgeted at $436.4 million and include construction of a terminal at Bush Intercontinental Airport, runway expansions and taxiway relocations, were funded through federal grants and airport revenue bonds that are repaid with revenues generated largely by landing fees.

Architects and designers hired by the Houston Airport System had the responsibility to specify the correct wage scales for the contracts, said Ernie DeSoto, spokesman for the Houston Airport System.

Houston's legal department and City Council just double-checked the contracts, he said.

But two consulting companies said they weren't responsible for applying the wage rates.

A design team worked together to issue the construction documents, said Elwin Dobson, project manager for Lockwood, Andrews & Newnam, the architecture and engineering designer for the relocation of two taxiways at Hobby Airport.

The wage rates are determined at the beginning based on the project's funding and are continuously reviewed during the design, Dobson said. The contractor alone doesn't choose a wage scale and apply it to the construction documents.

In addition, Dobson said, an official from Houston's design department signs off on the guidelines.

Randy Rivin, senior assistant city attorney who does the legal work for the airport system, said if it can be determined it was the consultants' job to choose the proper wage rates, the city will look to them for financial relief.

But even if the city can't hold the consultants responsible, Rivin said the city sets aside 5 percent of each contract to pay for changes during construction.

In a few cases, the airport system didn't know if it would receive federal funds when it went out for bids, DeSoto said. But when it did, auditors had to go back and refigure employees' wages.

Laws said an alert compliance officer at City Hall uncovered the error two years ago.

Since then, the city has hired temporary workers to calculate the correct wages in the five remaining contracts, including the expansion of the Hobby Airport terminal. Laws hopes to finish the calculations, which vary from trade to trade and project to project, by June 30.

Houston Mayor Bill White said through a spokesman that the city is working hard to resolve the problem that was uncovered by city employees.

Though Laws credits a compliance officer for uncovering the mistake, the International Brotherhood of Electrical Workers claims it told city officials before the contracts were put out for a bid that they were making a mistake.

E. Dale Wortham, president of the Harris County AFL-CIO and a former organizer with the electricians union Local 716, recalled that officials at the Houston Airport System repeatedly argued there wasn't enough federal money in the project to require the city to use federal wage scales.

On one project alone the new Bush Intercontinental terminal the city owes $1.4 million to hundreds of employees.

Hundreds of other employees who worked on six other contracts that expanded runways, taxiways and other improvements have already divided up $50,666 in back wages, according to city reports.

One reason the amount is so high is because federal wage rates don't recognize the use of lower-paid helpers, said Richard Shaw, secretary-treasurer of the Harris County AFL-CIO. All the employees classified as helpers would have to be reclassified as higher-paid journeymen.

Jim Hall, administrator for W.W. Webber in Houston, said he was just glad the problem was caught.

Since September, Webber has sent out back wage checks by certified mail to several hundred employees who worked on four contracts to build runways and taxiways.

So far, only about 50 checks came back to the company as undeliverable. Hall said he will probably forward the money to the Texas Comptroller, which periodically publishes a list of unclaimed funds.

Laws, however, said she believes the Houston Airport System is entitled to receive the back wages that aren't claimed by employees after one year.

 Copyright 2004 Houston Chronicle


Note:  Teamsters, Local 988, is not affiliated with the Harris County AFL-CIO Council.  988 withdrew some years ago citing financial reasons.  988 did construct its new building non-union as per reports in the Houston Chronicle..

 Richard C. Shaw, Secretary-Treasurer, Harris County AFL-CIO Council

 March 29, 2004, 11:01PM

Kickbacks to union local's boss alleged


A former Teamsters secretary testified Monday that she was forced to give back $400 of her salary each month to her boss, who was trying to win an appointment to a regional vice presidency.

Shannon Fagan told the Independent Review Board investigating allegations of corruption at the Houston area's largest Teamsters local that in February 2001 she received an $830 monthly raise.

But Chuck Crawley, then the union's president, instructed her to return half to him in cash, she said.

Crawley said he needed to raise $75,000 for Jimmy Hoffa, the Teamsters' general president, and he hoped the money would encourage Hoffa to give him the powerful position when it became available, Fagan said.

Five other employees also received raises and kicked back similar amounts, Fagan told the three-member panel. She said her clerical duties often included "taking up the collection" when Crawley wasn't available to personally collect the cash.

Though the harshest punishment Crawley and others face is a permanent ban from the union, the stakes could rise significantly.

The FBI, which has been investigating the local for more than a year, sent two Houston-based agents to monitor the hearing. Also on hand was an assistant U.S. attorney from New York.

Hoffa suspended Crawley and secretary-treasurer Dennis Bankhead from their positions with the local last year after investigators for the Independent Review Board, created a decade ago to weed out wrongdoing in the Teamsters union, reported several instances of alleged corruption to him.

Former Teamster employee Marie Espinosa also faces banishment from the union.

In sometimes sharp questioning, former FBI and CIA Director William H. Webster; Benjamin R. Civiletti, former attorney general under President Jimmy Carter; and Joseph E. diGenova, a former U.S. attorney, asked Fagan and other witnesses about the cash payments, kickbacks and falsified invoices.

Fagan testified she had no choice but to give Crawley the cash.

"He put it to me in a way that I would be replaced if I didn't do it," said Fagan, who figured she ended up with an extra $150 each month after paying the taxes.

Washington, D.C., lawyer Robert Baptiste, the former general counsel of the International Brotherhood of Teamsters, is representing Crawley, Bankhead and Espinosa.

Fagan's husband, David, also testified that when he submitted his $32,000 bid to install a new telephone system for Local 988's new union hall, Crawley asked him privately: "Is there any way you can put 20 grand in for me?"

Crawley eventually hired David Fagan in 2002 for the job.

David Fagan said he told Crawley that if he inflated the bid that much it wouldn't be competitive and worried other installers would win the job.

Crawley told him that it was "OK to put stuff in there you aren't installing just get it up," David Fagan told the panel. So, he said, he resubmitted his previous bid with an added $20,000 on top.

David Fagan said he gave Crawley $10,000 in cash after cashing the first installation check, and then he and his wife delivered the remaining $10,000 in cash to Crawley from a subsequent check.

The union planned to celebrate the opening of the new hall with a three-day barbecue gala. Espinosa was hired to do the catering.

During the hearing Monday, Shannon Fagan testified that Bankhead told her he and Crawley planned to each pocket $5,000 on the grand opening by inflating receipts.

Former Local 988 employee David McCormick also testified that he participated in a scheme of Crawley's to inflate the cost of union T-shirts by about $2,000. The membership was told the shirts cost about $6,000 when they actually cost only $4,000.

McCormick said that when investigators for the Independent Review Board began asking about the invoice, Crawley told him to deny the padding or everyone could go to jail.

McCormick said he lied as he was told to in 2000 but recanted to Independent Review Board investigators two years later.

Crawley also installed surveillance cameras in all offices except Espinosa's, according toShannon Fagan, who testified that she believed that was discriminatory.

"He was trying to trap his employees into doing something wrong," Fagan said.

She also testified she felt it was was unfair that Crawley, who dipped chewing tobacco, banned smoking from the new building. Other former union employees have said that anger about the smoking rules started the rebellion against Crawley.

The hearing, which is open to the pubic, will resume at 9:30 a.m. today at the J.W. Marriott Hotel on Westheimer.


  Copyright 2004 Houston Chronicle


March 30, 2004, 11:47PM


Suspended union president denies kickbacks


Chuck Crawley, the suspended president of Teamsters Local 988, testified on Tuesday that he never took kickbacks from vendors or his employees.

Crawley's comments, his first publicly on the allegations, contradict earlier witnesses who claim he pocketed $20,000 from the installation of a new telephone system and thousands more from union staffers.

A three-member panel created by federal court order is in Houston this week investigating allegations leveled against Crawley and two others by members of the Houston area's largest Teamsters local.

Crawley also told the Independent Review Board he never indicated to anyone he was trying to raise $75,000 from employee kickbacks to give to Teamster General President James P. Hoffa, expecting to receive a job as regional vice president.

On Monday, his former secretary testified that she was forced to contribute $400 each month to Crawley's effort at winning the appointment.

"Absolutely not," Crawley said, when questioned by his lawyer Robert Baptiste. "That's ridiculous."

Crawley and the others under investigation face possible expulsion from the union. Crawley and Local 988's secretary-treasurer Dennis Bankhead have already been booted from their official positions based on the findings of the 92-page report compiled by the panel's investigators.

The board's investigators also accused former Local 988 employee Marie Espinosa of embezzlement by submitting inflated invoices for beer and soda for a three-day grand opening gala of the union's new hall.

Crawley also denied the testimony of David Fagan, who installed the telephone system at the new union hall.

Fagan said Crawley asked him to inflate his $32,000 bid to install the system by $20,000 and give him the difference.

But Crawley testified that on the day Fagan said he made a cash payment to Crawley, he was signing up UPS employees for the Teamsters' political action fund. Crawley presented photos to prove he was there.

The other time that Fagan said Crawley received a payment, Crawley testified he was at Luby's and then spent the entire afternoon at a freight company working out a grievance and therefore, wouldn't have been at the union hall.

Evidence was also introduced Tuesday that raised the question whether the new $2 million union hall could have spent as little as $32,000 to install the new phone system.

Kevin Barnes testified that when he was the national sales manager of NACR, a telephone installation company, he was asked by Crawley to estimate how much it would cost to install the same system. Barnes said Crawley told him he had been accused of receiving a kickback on the year-old phone system and wanted to know whether $52,000 was an inflated price.

Barnes said he examined the installed system and determined his company would have charged $50,308 before applying any discounts. It couldn't have been installed for $32,000, testified Barnes, who added that while he once worked at the same communications company as David Fagan, the two didn't know each other.

As for David Fagan's claim he made a $13,000 profit on the $32,000 installation, Barnes said that was impossible.

In other testimony, Local 988 business agent Ron Kaluza said he had never given Crawley a kickback, nor had he been asked to provide any kickbacks.

Shannon Fagan, David Fagan's wife and Crawley's former secretary, testified Monday that in addition to herself, Kaluza and four other employees also kicked back $400 a month to Crawley.

In other testimony, Crawley told the board he never profited from Teamster T-shirt sales. The shirts are a popular giveaway to members along with barbecue and Crawley wanted to make sure he had enough during summer get-togethers.

Crawley said he was anxious to get the T-shirts printed and gave one of his former employees, David McCormick, the responsibility.

He said he didn't know McCormick had arranged to buy the shirts from his sister and when Crawley discovered the connection, he said he put an end to that business relationship.

McCormick testified Monday that he inflated the bill by about $2,000 at the request of Crawley, who was well aware that he was using his sister.


 Copyright 2004 Houston Chronicle