March 21, 2016 Wells Fargo Chair and CEO John Stumpf appeared before the Senate Banking Committee to discuss his company’s settlement with federal officials in which Wells Fargo agreed to pay $185 million in fines over alleged fraudulent accounts opened without customers' permission. Senators questioned Mr. Stumpf about the corporate behavior and practices related to over 2 million unauthorized accounts, and which led to the termination of over 5,000 Wells Fargo employees nationwide. Following Mr. Stumpf, regulators, including Consumer Financial Protection Bureau Director Richard Cordray, answered questions about their investigations into Wells Fargo, and what they recommended to not only address wrongdoing within that company, but prevent future abusive practices across the financial services industry. Elizabeth Warren
"This just isn't right. A cashier who steals a handful of $20s is held accountable, but Wall Street executives who almost never hold themselves accountable, not now and not in 2008 when they crushed the worldwide economy. The only way that Wall Street will change, is if executives face jail time when they preside over massive frauds."
Elizabeth Warren
"We need tough, new laws to hold corporate executives personally accountable and we need tough prosecutors who have the courage to go after people at the top. Until then, it will be business as usual. And at giant banks like Wells Fargo, that seems to be cheating as many customers, investors and employees as they possibly can. ' Thank You, Mr. Chair."
Do you know who Ann Twomey is, and what she is alleged to have done?No matter how you feel about unions conceptually, and no matter what you think about the very top union representatives and their true intentions, one thing is for certain: private sector unions are made up of largely hard working, blue color American men and women, who are just trying to do their best to support their families in dignity. Steelworkers in Ohio, auto plant mechanics in Michigan, flight attendants in Illinois, or nurses in New Jersey, they are the backbone of our labor force.
That’s why corruption within a union feels so much worse than any Wall Street-manufactured Ponzi Scheme.Somewhere deep inside we find it harder to cry for some hypothetical fat cat investor that comes to mind, even though in the reality, of course, it’s false and financial fraud often hurts the most vulnerable members of the society.
Yet there is something particularly morally repugnant about schemes and corruption associated with unions. Because, at least on paper, unions are there to serve and protect the interests of hardworking middle-class Americans -- your average Joe the neighbor next door, and Jane the single mom down the block. They faithfully pay their union membership dues and come out to support union activities because they sincerely believe that the union is there for them, and will give them if not prosperity, then at least a sense of financial security. Taking advantage of these people’s goodwill and defrauding them seems like a step out of the boundaries of “usual evil.”
Ann Twomey is the president and a founder of Health Professionals and Allied Employees, New Jersey’s largest health care union and accused of serious wrongdoing. The actual allegations surfaced in a lawsuit filed back in 2014, with new allegations being added in 2015, but the case has resurfaced again now because of the latest round of depositions and the things one can glean from it.
Ann Twomey started HPAE and has been it’s unchallenged leader for the last 30 years. By all accounts, she turned the HPAE into a powerful regional union with her personal influence extended well beyond the Garden State. Listed at one of the 30 Most Influential Women in New Jersey Politics, Twomey’s national ambitions are absolutely transparent. She is a vice president of AFT (American Federation of Teachers), where she serves as vice chair of the AFT Nurses and Health Professionals program and policy council, a member of the AFT human rights and community relations committee; vice president of the New Jersey State AFL-CIO; co-chair of Patients First Coalition in New Jersey; a board member of New Jersey Citizen Action; Board Trustee at the American Labor Museum, and a member of the Advisory Board of the Felician College Nursing Program.
While HPAE is a union for health care professionals, it’s also used as a platform to advance issues that have little or nothing to do with health care itself. The union regularly pushes to abolish the Second Amendment and extends support to politicians promoting gun control. They played a vital role in forcing the New Jersey legislature to advance the $15/hour minimum wage. And just in these past months, HPAE has been involved in the Verizon worker’s strike, as well as the union move to bring down Atlantic City’s Trump Taj Mahal Casino.Union dues and volunteers are being used to pursue her broader political agenda, often bringing no real benefit to the nurses and other health care professionals it’s meant to serve.
And then comes the lawsuit, Fonti v HPAE Retiree Medical Trust. The suit provides a rare opportunity to get a glimpse on the way this surprisingly secretive organization operates. It opens the veil on an organizational culture void of transparency, driven by personal ambition, and with either negligence or, as alleged in the lawsuit, by greed and personal gain.
The new charges allege that Twomey steered $1.4 million in legal fees to her boyfriend, New Jersey attorney Richard Loccke, without properly disclosing the relationship. According to the New York Post, the filing reveals that since 2006, Twomey has “awarded virtually all of the union’s legal work to her live-in boyfriend. The no-bid contracts directly benefit Twomey, who has been dating Loccke for 30 years and resides in his spacious Rutherford, NJ, home, the suit says.”
Most would agree that this is illegal under federal law and that the Department of Labor rules would require Twomey to disclose this conflict of interest. The $1.4 million in legal fees to her boyfriend was spent even though the HPAE already pays for an in-house council.
Court documents also show that HPAE is a defendant in the case, which means that union dollars are being used to defend Twomey’s alleged graft. So much for oversight, transparency, and fiduciary duties to the members.
A closer analysis of the financials available through public records paint an even grimmer picture. For the HPAE Retiree Medical Trust, according to their 2014 990 Disclosure statement. The plan’s revenue is 97.8% from plan participants and 2.2% from employer contributions.16.7% of the expenses were plan benefit and 83.3% in administrative fees, including plan administration fees, legal and accounting with total assets of $9,970,775 for 5,800 members. These numbers beg the question will there be enough to cover the 5,800 plan members with an average of only $1,719.10 in assets available per member and all of their dependents?
Where is the oversight? Why has Twomey, been the uncontested president for 30 years, why has the union dissipated member funds by directing funds to live in boyfriend(s?), supporting unrelated causes, and giving money to other bodies unrelated to their cause? Is her top deputy and heir-apparent Jeanne Oterson compliant in all of this, and what can members expect from her leadership, given the fact that her husband, Richard Engler, has brought attention to himself by rewarding over $100,000 in sole-source contracts for outside lawyers and consultants without public notice or discussion at the U.S. Chemical Safety and Hazard Investigation Board, which he leads.
Can you imagine an investment pool that awards all legal work to relatives without disclosing the conflict of interest, gives member money to other funds, wastes member money on issues and events that are of zero benefits to the investors, and at the all the time funds management’s selfish quest for awards and adulation of public? I can, and I have, with names such as Magnus Peterson, Raj Rajaratnam, and Bernie Madoff and all end with the perp walk of shame.
The AACI delivers globally a disciplined anti-corruption certification program to organizations seeking to prevent fraud and corruption inside their business processes, operations, and culture.
This certification process is the first of its kind worldwide and forms a basis for institutional change in fighting fraud and corruption. It is available to organizations of all types. The process is “principally” administered and completed online.
As we received too many questions about this new certification program, the technical staff of The AACI addressed the substance of these matters in the following question and answer blog.
Q: What is the Corruption Prevention Management Test (CPMT)?
The AACI: The CPMT is an online test authored by and copyrighted to The AACI. It is the core of the organizations' anti-corruption certification program. Except for the CACM members of The AACI, the CPMT is not available to individuals; it is only available to organizations ( private, public, or nonprofit) seeking to get certified through the organization anti-corruption certification program. As the exam unit of The AACI administers it, we use third party software to deliver the CPMT (software provider).
Q: What are the benefits of getting an organization certified?
The AACI: The certification process enables those charged with governance of the organization to:
1.Evaluate and measure relevant corruption prevention knowledge competencies of the board members, senior management and employees.
2.Identify the strengths and weaknesses of the entity's corruption prevention knowledge that is necessary for preventing fraud and corruption.
3.Select appropriate responses to address identified corruption prevention knowledge weaknesses.
4.Set apart the organization as taking the risks of fraud and corruption seriously from those that do not.
5.Support the board members, executive management, and other decision makers to meet their fiduciary and legal duties.
6.Support organizations to show their sincere duty of care efforts to protect the interests of all stakeholders.
7.Help those charged with governance to set a proper tone at the top.
8.Support an effective implementation of and compliance with corporate governance code or principles.
9.Support an effective implementation of comprehensive anti-corruption policy, internal control and processes, and code of ethics (conduct).
10.Support the organizations to comply effectively with the requirements of ISO 37001: anti-bribery management systems.
Q: Are there any other benefits for stakeholders?
The AACI: Yes there are. For example, the certification
1.Supports regulators or chambers mitigate and control bribery, fraud, and corruption in a business sector or segment.
2.Enables local governments or states to bring about real and visible anti-corruption efforts to be part of their local healthy business practices.
3.Supports the investment optimization in human capital.
Q: Is there a passing score for the organization under this certification program?
The AACI: No. There is not a pass or fail score. We report on the results of the certification process and issues a CPMT certificate reflecting the score of the organization as a whole.
Q: What are the primary topics the anti-corruption certification program of organizations tests?
The AACI: Most of the online test questions primarily deal with the following fields:
More than 80% of the questions cover the following:
1.Anti-fraud and corruption
2.Corporate governance
3.Internal control
4.ISO 37001: anti-bribery management systems
However, The rest of it touches on the following:
1.Accounting
2.Auditing
3.Management and ethics
Q: The certification process requires the organization to submit management representation letter stating in it the decision makers of the organization it has so that they sit to the CPMT. What do you mean by decision makers?
The AACI: For the purpose of this certification process, decision makers of an organization are the following:
1.Board members / partners / owner - manager
2.Chief executive officer (CEO)
3.Deputies of the CEO
4.Department heads
5.Deputies of department heads
Q: What would an organization obtain as a result of getting certified?
The AACI: The organization will get the following:
Q: How would this certification program assure an organization of preventing fraud and corruption inside it?
The AACI: The certification program, on its own, will not provide any assurance of preventing fraud and corruption inside any organization. It all depends on those who are charged with governance to bring this confidence. Those who are charged with governance in any organization are responsible for institutionalizing corruption prevention and deterrence inside their organization.
This certification program is an effective tool decision makers can use it to fight corruption inside their organization and in the organization's business dealings with all stakeholders.
Q: How can an organization measure the impact of the certification program?
The AACI: The answer consists of two parts: the first part is the visible one. An organization can compare its aggregate CPMT scores and CPMT reports over years and find out the results of its responses to earlier results.
For example, assume that in year 1, an organization had an aggregate CPMT score of 60% while two board members did not sit for the CPMT test- they had qualified CPMT report. After one year, this organization got certified and obtained aggregate CPMT score of 40% and unqualified CPMT report. Under these circumstances, those who are charged with governance of this organization have a duty to all stakeholders to answer for these results.
The other part of the answer to this questions is straightforward: corruption in any organization is unknown until it is discovered. As we do not know what the corruption level was at an organization, we cannot provide any precise and conclusive evidence about the exact level of corruption level reduction this certificate program affected.
What we are confident of is that when there is a proper tone at the top, and the top management has "real" will to fight fraud and corruption, this certification program is an effective tool to materialize their efforts.
Q: Why is the certification program an annual one?
The AACI: It is an annual certification program to
1.Maintain its credibility and public confidence in it.
2.Reflect changes in decision makers composition and / or their competencies over one year period.
Q: How would an organization benefit from the certification process in dealing with its suppliers?
The AACI: When an organization gets certified, it can ask its suppliers to get certified to continue business dealings with them. Integrity and culture of vendors affect corruption risks of any organization directly.
Q: How would a government utilize the certification program to fight fraud and corruption?
The AACI: A government and its agencies are well positioned to utilize this certification program to combat fraud and corruption effectively and efficiently. Presuming a government has a national strategic corruption prevention strategy, we believe a government can:
1.Set the example and have all its ministries and agencies certified.
2.Respond adequately to the results of the certification and start implementing national changes to improve its ministries and agencies score.
3.Set the certification program as a prerequisite for private sector organizations that want to transact with the government.
4.Start gradually requesting private sector entities to get certified.
5.Issue adequate rules, laws, and regulations to institutionalize corruption prevention.
Q: Will The AACI consider nationalizing the certification program to suit the local language, culture, laws, and regulations?
The AACI: In principle, yes we will. The AACI will also consider partnering with local governments or states to have a national CPMT certification program.
Q: How much does it cost to have an organization certified?
The AACI: The annual cost of certification depends on the number of decision makers who will sit for the test. There is also a fixed administration fee. For more information, you may contact us at Exam@THEAACI.com.
The AACI offers governments planning for nationalizing this certification program significant discount.
