United Mine Workers President Sam Church Jr. has had himself appointed chairman of a special oversight committee making key decisions about the operations of the union-owned National Bank of Washington.
Church's five-mother committee, the majority of whom are union associates, was formed last month. Its establishment represents a marked policy departure on the past 30 years has maintained that it keeps an arm's-length distance from operations of Washington's oldest and third largest bank even though UMW owns three-fourths of the bank's stock.
The committee has already decided to make sweeping changes in the top management of the bank, including the removal of NBW President Dale L. Jernberg, according to sources familiar with the committee's work.
Moreover the committee is directly negotiating how much of the bank's records will be turned over to a federal grand jury investigating alleged kickbacks, possibly illegal transactions and questionable loan practices involving UMW officials and their representatives on the bank board, the source said.
A federal grand jury last month issued a subpeona for a broad range of NBW records. And, while the bank has not yet declined to turn over any records, there have been delays that some federal investigators say have already called into question NBW's pledge to cooperate fully with the grand jury investigation.
A showdown over records that have yet to be produced could some as early as this week, sources said.
NBW has retained the law firm of Shea & Gardner, whose partners have historical ties to the union, to represent the bank in its negotiations with the grand jury.
Jernberg would not comment on his anticipated removal or on Church's role. But well-informed sources say that Jernberg is resigned to the fact that he will soon be replaced and has sought legal advice.
Jernberg's expected removal is an outgrowth of several events that together have propelled him from a coveted position as the "union's man" at the bank to that of persona non grata.
First, Church was said by sources to be outraged over Jernberg's unilateral decision last April to report serious loan irregularities involving a former Church protege and general counsel of the bank, Ronald G. Nathan, to federal investigators without consulting Church.
Secondly, Jernberg was blamed by a subsequent internal NBW investigative committee for overzealously pressuring subordinates to make loans to people who had "perceived" influence with NBW officials.
Church said yesterday through a spokesman that the oversight committee was established by the NBW board of directors. He said the committee is not involved in the bank's operations, but is charged with implementing the recommendations of the internal investigative report.
Concerning possible management changes at the bank, the spokesman, Eldon Callen, said, "Those decisions are not final."
Other sources revealed that Church's committee has asked for and received a copy of Jernberg's employment contract under which he is paid $149,000 a year and which protects him from dismissal except for "negligence or malfeasance."
As chairman of the oversight committee, Church, a 43-year-old former coal miner, is in a position to control the degree to which the bank cooperates with federal investigators at a time when Church, his top lieutentants and the union's representatives on the NBW board of directors are under investigation.
In recent weeks, according to one source, the U.S. Securities and Exchange Commission (SEC) has begun an independent investigation to determine whether insider transactions between bank officials and major customers violated securities laws requiring sufficient disclosure to prevent conflicts of interest.
All the investigations were touched off in early April when NBW officials discovered that Nathan held a secret interest in a gas well investiment venture that received $1 million in loans from the bank.
Nathan has denied wrongdoing. He resigned his position as the bank's general counsel, however, two weeks before the bank's internal report was pushished.That report concluded that Nathan's action "were subject to criticism," but that he did not hold an interest in the gas well venture at the time the $1 million in loans were approved.
The other major loan involving alleged mine workers unin influence was made in August 1973 to a New Jersey real estate interpreneur, Joseph E. Shamy, at a time when Shamy was under investigation by the FBI for allegedly misappropriating funds from the Laurel Raceway north of Washington.
Shamy, who owned the raceway with his wife and father-in law, has since been convicted by a federal jury in Baltimore on those charges.
The loan to Shamy, which went into default months after it was made, was enthusiastically supported by NBW director Willie Runyon, a close friend and adviser to Church.