The Reagan administration, expressing concern over the safety of workers' retirement benefits, has asked Congress for new powers to help police the troubled $3.3 billion Teamsters Central States Pension Fund.
The request stems from a dispute between the government and fund trustees over guarantees that the fund's assets will be managed by independent outsiders after their contract expires Oct. 3. The matter has been the subject of negotiations since June, 1981, which were deadlocked as late as last March.
But fund representatives said the negotiations had shown progress this month, and they expressed surprise that the government would ask for legislative action now.
Secretary of Labor Raymond J. Donovan is scheduled to outline the plan at a House hearing today. The administration position was first detailed in a stern letter from Donovan to Congress July 2 and reportedly was reiterated in an embargoed briefing for reporters last Friday.
Fund representatives, who include former senator John Culver (D-Iowa) and Fred D. Thompson, Republican counsel to the Senate Watergate committee, said the administration's tough stance surprised them.
George Lehr, executive director of the fund, said in a phone interview late last week, "Since that letter was written there have been significant negotiations, in my opinion. I'm satisfied with our relationship with the Department of Labor." But he added that the negotiations were at a "most critical juncture."
One of his associates, however, accused the administration of "posturing and grandstanding."
The central states fund has been the target of government investigations and lawsuits for years because of charges Teamsters officials misused it and made loans to organized-crime figures. The Senate Permanent Subcommittee on Investigations characterized it as a bank for the Mafia and has recommended stronger corrective action than the administration has.
Teamsters' President Roy L. Williams and others are scheduled to stand trial after Labor Day on charges that they conspired to bribe Sen. Howard Cannon (D-Nev.) with land that the fund's independent managers were supposed to control.
One fund source suggested that Donovan might feel compelled to criticize the pension trustees because of embarrassment over his own alleged links with organized-crime figures. A special prosecutor recently found insufficient evidence to charge Donovan.
The fund's assets are now being managed by Equitable Life Assurance Society of the United States and Victor Palmieri and Co. Inc., whose contracts expire Oct. 3.
Donovan is scheduled to outline to the House Ways and Means oversight subcommittee an administration proposal that would give the government an alternative to yanking the fund's tax-exempt status in case of violations of Internal Revenue Service conditions.
The IRS revoked the fund's tax-exempt status in 1976 after earlier reports of mismanagement. The exempt status was returned in 1977, and pulling it again would hurt innocent parties, Donovan wrote Congress.
The administration plan would allow IRS to levy an excise tax--in effect a fine--against the fund's trustees if they violated the independent-management conditions set by IRS. Lehr said that the proposed tax--one-half of 1 percent of the assets involved--could amount to $15 million a month.
Donovan's letter to Rep. Dan Rostenkowski (D-Ill.), chairman of the Ways and Means Committee, said the new remedy was needed because the fund trustees have "steadfastly refused" to put the independent-management requirement in a court-enforceable consent decree.
Lehr disputes that, saying the fund is ready to include such a guarantee in a "comprehensive" settlement that includes resolution of pending government lawsuits.
The Labor Department's briefing Friday was in anticipation of today's hearing. Under ground rules of the briefing, information from it was not to be published until Donovan testified today. This newspaper declined to attend, but Lehr said reports filtering back to him described Labor officials as again saying the negotiations weren't progressing.
Donovan said that because of the fund's refusal to put the independent-manager condition in a consent decree, "there exists a significant likelihood" that the fund's assets would be controlled again by the trustees after the Equitable-Palmieri contracts expire.
He said the administration believed action was needed to prevent the fund's assets "from reverting...to the control of people whose judgment we have good reason to question. . . ."
Donovan, noting that a recent General Accounting Office report said the current fund trustees "have repeatedly and openly sought to undermine the independence of the investment managers," said it was important that the legislation be enacted before Oct. 3.
Lehr, a Kansas City banker who moved to Chicago for the fund last October, said he was ready to challenge Donovan's characterizations in the hearing today. He said he resented the implication that the management issue was a problem and said that although he felt this legislation is unnecessary, the fund would not oppose it.
But an associate said Lehr, after hearing reports about the department's embargoed briefing, was "enormously frustrated."
"The signals he'd been getting from official quarters were positive," the source said. "The letter, and now what he's heard about the briefing, are very difficult to comprehend."