The Giant Food Corp. pleaded guilty yesterday to making an illegal payment of $10,896 worth of carpeting to a Teamsters Union official to insure labor peace in 1973.
By admitting that charge, Giant and two of its top corporate officers avoided facing more serious charges that they engaged in a six-year pattern of giving illegal benefits to a union official, Maryland Assistant U.S. Attorney Robert A. Rohrbaugh said yesterday while presenting the facts of the case.
"The (union) official in question could inflict sufficient economic harm (on the company)," said Rohrbaugh. "Every time they were asked, Giant responded (to the official)."
Rohrbaugh said Giant gave the official other gifts: $785 worth of carpeting in 1971, services of a Giant-retained architect to design a home in 1973 and a beach house in 1972, jobs for the union official's son, daughter and her boyfriend and season tickets for the Baltimore Colts football team in 1976.
The official was not named throughout the case because he may be involved in a major ongoing investigation into alleged labor-management racketeering in the Baltimore and Washington areas, according to Maryland U.S. Attorney Russell T. Baker.
Federal District Judge Alexander Harvey II accepted the plea bargain arranged between the federal attorney's office and Giant. It requires the multi-million dollar firm to pay a $3,000 fine and make a $5,000 contribution to charity and to continue cooperating fully in the federal investigation.
Only Giant attorney Alan Barron was present at the brief hearing and he did not contest the statement of facts read by Rohrbaugh. The federal prosecutor said that Giant's current president, Israel Cohen, and its vice president in charge of warehousing, Alvin Dobbins, gave the unnamed union official these gifts because the firm was especially vulnerable to union disturbances.
Giant according to the court statements, originally tried to bill the union official for some $7,000 for the carpeting. But once it became obvious that the official would not pay and never intended to pay, Giant wrote off the cost on its books last February.
The firm has 115 grocery stores in the Washington metropolitan area and throughout Maryland and did $237 million in business during its last reported 12-week period. The union official headed a Teamster local that represented drivers who are crucial in the daily transfer of spoilable produce to the chain's stores, according to Rohrbaugh.
Barron contended that the union had "the capacity to shut the company down" and that the official "in a sense extracted them (the gifts) from the company because they felt they could not antagonize him. They were most vulnerable to the Teamsters."
The greatest threat, Giant's attorney said, came when the 8 union contract was under negotiation in 1973.
Barron also said that the gifts to the union official did not harm the rank and file members of the union, that wages paid by Giant are up to union standards and that grievances and arbitrations were not mishandled because of the arrangement.
He also said that Giant has been a "respectable member of the community" and he listed the millions of dollars paid annually by the firm to charities. "It is an indication of the company's attitude generally that we came up with the idea to pay $5,000 to charities," Barron added, referring to part of the plea bargain.
Judge Harvey then asked if Giant knew the tax effect of a charitable contribution rather than a fine for a penalty and Barron said "no," to the laughter of courtroom spectators.
Giant's guilty plea of a misdemeanor charge yesterday was to result from the long-range investigation by the federal prosecutors in Baltimore into allegations of labor-management racketeering. That probe involves at least two former Teamster Union officials and firms in Baltimore and Washington that employ the union members.
The investigation into such alleged practices in the Washington area has largely centered on Frank DeBrouse. DeBrouse headed Teamster Local 639 until he was ousted by union dissidents.
DeBrouse lost the union leadership in 1977 after the dissidents raised charges in their campaign that he was not an effective leader because of his close ties to management.
According to records and documents obtained by the Washington Post, DeBrouse had an uncommon relationship - for a union leader - with John W. Lyon, president of Excavation Construction Inc., a construction conglomerate responsible for building million-dollar public works projects in the capital region.
Local 639 is the largest Teamsters local in the region, representing thousands of drivers and workers who are not in the specialty locals like those for drivers of bakery trucks or milk trucks.
Included in their membership are the 175 drivers who work for Giant Food.