Board Interlocks Embroil Banks in Labor Disputes

Labor unions are turning up the heat on banks with ties to companies locked in labor disputes.

In the latest examples, unions in Washington, D.C., and Nevada are putting pressure on banks with business links to a gas company and two Las Vegas casinos that are battling with unions. The unions are focusing on company executives and directors who also sit on the banks' boards.

Such campaigns, union organizers warn, will become more common.

"It's the kind of strategy that could turn the labor movement around," said Ray Rogers, president of Corporate Campaign Inc., a New York consulting firm that has organized such union pressure tactics for 20 years. "Especially with the new administration at the AFL-CIO, you're going to see a lot more of it."

New leadership at the AFL-CIO, voted in last October, campaigned on an "in-your-face" platform that they pledged would bring new tools of corporate pressure to bear on the union struggle, said Deborah Dugan, a spokesman.

Tough tactics against banks came into view last year when the International Brotherhood of Teamsters protested NationsBank Corp., in part because of the banking company's use of a courier service involved in a labor dispute. The teamsters, seeking to block some NationsBank merger plans, also attacked NationsBank's CRA record.

Last week in Washington, a coalition of labor unions threatened to withdraw more than $100 million from Crestar Bank in support of gas workers embroiled in a labor dispute with Washington Gas Light Co.

The unions see Richmond-based Crestar, a major lender to Washington Gas, as one of the utility's close allies. In addition, Washington Gas chief executive Patrick Maher and director Karen Hastie Williams are on the bank's board of directors.

And in Nevada, the state's largest labor union has been disparaging the financial performance of two Las Vegas community banks, whose boards include executives of two local casinos. The union is engaged in labor battles with both casinos.

In both cases, bank officials dismiss the union efforts. They claim that it's a matter for the unions and the companies to settle, not the banks.

"The union has a vendetta against these directors and I think it's inappropriate that they're trying to bring the banks into this," said John S. Gaynor, president and chief executive of Commercial Bank of Nevada, one of the targets in that state.

But Mr. Rogers said such tactics are too effective to avoid, and often result in resignations. In addition, he said, they generate more media attention than just a story about a labor strike. "It gets the message that these are anti-union institutions to a broader audience," he said.

The threats by the Washington unions are designed to back up the International Union of Gas Workers, which has been fighting Washington Gas since last summer. That union wants the company to revise a contract offer that weakens employee protections.

Five of the unions said they would withdraw a total of $33.7 million immediately. One, the teamsters, is threatening to withdraw another $80 million from Crestar's coffers depending on the results of a meeting with the bank in the next 10 days, according to union official Bob Nicklas

Separately, Commercial Bank and Community Bank of Nevada are battling a union's charges of insider lending violations.

Culinary Workers Union Local 226, a 40,000-member affiliate of the Hotel Employees and Restaurant Employees Union, is locked in labor disputes with Santa Fe Hotel and Casino, and Frontier Hotel and Gambling Hall. The union has been on strike at Frontier for more than four years, and has been attempting to unionize the Santa Fe Hotel for three years.

Executives of each - Sue Lowden of Santa Fe and Margaret Elardi of Frontier - are also directors of Commercial Bank and Community Bank, respectively. Both banks were formed within the past two years.

Observers say they have seen other instances of unions targeting interlocking boards.

"It's not an unusual tactic for unions," said George Freibert, president of Louisville-based Professional Bank Services. "We've found that they will try to get media attention to settle whatever issue they're involved with. It's designed to embarrass the director or get the bank to pressure the director to settle the problem."

Last year, NationsBank came under pressure from the International Brotherhood of Teamsters, in part for its use of Pony Express couriers to transport canceled checks in various cities.

Scott Smith writes for the Medill News Service.

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