Douglas J. McCarron, president of the International Brotherhood of Carpenters and President Bush's strongest ally in the labor movement, will return profits of $276,000 or more he made on stock transactions that are under investigation by three separate parts of the federal government.
"It is clear from recent newspaper coverage that the stock repurchase program . . . has resulted in serious questions being raised regarding actions taken by myself and other members of the current board," McCarron wrote in a letter to the chairman of a union-owned insurance company, Ullico.
In December 1999, members of the board of Ullico, a private company, were given special opportunities to buy Ullico stock at $54 a share when board members knew that the price would sharply increase. Less than a month later, the stock was revalued at $146, for a profit of $92 a share.
A year later, when board members knew that the Ullico stock was soon to be revalued downward, members of the board approved a special arrangement allowing themselves to sell back their shares to the company at the $146 price. At the end of 2000, the price of Ullico stock was cut to $74 a share; those who took advantage of the chance to sell at $146 avoided a loss of $72 a share.
McCarron sold 3,000 shares under the program, suggesting profits of at least $276,000. McCarron did not provide a specific figure in his letter, which was disclosed yesterday by the Bureau of National Affairs, a Washington newsletter.
In his letter to Robert Georgine, Ullico's chairman, McCarron wrote:
"Issues surrounding our implementation of the stock repurchase program have created such a diversion and have been used by those who oppose labor's goals to damage the interests or reputations of our unions and the trade union movement in general . . . This cannot be allowed to continue, and it is with this purpose foremost in mind that I have determined to return to Ullico all profits received through my participation in the stock repurchase program."
The Ullico stock transactions are under investigation by a federal grand jury, the Securities and Exchange Commission and the Department of Labor.