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Article 12.07.07

To provide for the bonding of five Local Officers who handle Union funds and property within limits established by the National Executive Board;(This Article will be temporarily suspended until the National Executive Board has found a solution to the problem of bonding.)

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Constitution of the Communications, Energy and Paperworkers Union of Canada (PDF file)

The main consequence of this is if anything goes wrong, the officers in question are on the hook personally. I doubt the union can indemnify them in lieu of a bond. Simply put, absent the necessary bond(s) anyone would be foolish to take the job.

[ 25 August 2007: Message edited by: abnormal ]

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The national has off loaded the cost of bonding to the locals because the insurance companies raised the rates.

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The obvious question is "why did they raise the rates?"

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My guess is that the majority of the locals out there now are not bonded, and just have multiple signatories.

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If it were that simple the insurance companies would be all over this. The exposure here is not simply one of theft. Union officials have a fiduciary responsibility (read liability) with respect to union funds. That goes far beyond the question of theft. And that's the only thing that multiple signatories tend to address.

The obvious questions that come to mind are: (1) how much money are we talking about, (2) what is it used for (general expenses or are there pension funds mixed in here - even if they are only held briefly before being sent to the pension fund proper, and so forth), (3) does anyone have to make any investment decisions, (4) what sort of controls are there in place on funds coming into the union accounts, (5) how are funds segretated internally, ...

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This is referring to local monies- dues.

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Which still leaves my questions unanswered. Even assuming that there are no pension funds involved there are still a number of issues involved. Fiduciary liability goes far beyond the question of theft (which can be partially solved by the use of multiple signatures).

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I believe the suspension is due to the fact that most locals cannot afford bonding insurance.

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The other possibility is that no insurance company is willing to provide the coverage.

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I am unaware of any fraud or missappropriation within the CEP locals, but it is certainly possible.

The books of each local are audited quarterly by Trustees elected by each local.

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For whatever reason it sounds like no insurance company is willing to provide the coverage or, if they are, it's too expensive. The real question is why? I can think of a few options: (i) they don't like the individuals involved, (ii) they don't like this particular Local, or (iii) they don't like the class of risk [i.e., for some reason they are afraid of the exposures here].

If these were negligible somebody would be willing to issue a policy. After all, insurance companies are in business to make money and, if there wasn't some issue that causes concern they'd happily collect their premium.

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when the insurance company raised the rates

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Why?

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the locals are not handling dues or pension in most cases

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Then what are they handling?

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the constitution provides enough indemnity for the locals/national

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In our local, we are really just dealing with petty cash; our budget is approved by the membership and any expenditure over 500 dollars has to be approved by the membership.

This is not a total non issue, but there is not some hidden scandal either. This is what happens with insurance. Rates go up according to a sense of overall risk in the marketplace. If you are suggesting that there is an unusual amount of malfeasance withing the CEP, I would say you are barking up the wrong tree.