Teamsters Chief Allegedly Showed Favoritism in Pact : Labor: FBI reportedly has evidence that union president gave printing business to a company set up by his son-in-law.

WASHINGTON —  Teamsters Union President William J. McCarthy has quietly shifted hundreds of thousands of dollars of Teamster printing business to a fledgling company set up by his son-in-law, according to evidence uncovered by the FBI and the court-appointed administrator of the giant union.

The firm, Windsor Graphics, operates out of the home of McCarthy’s daughter, Rosemary, and her husband, Thomas Treacy, in Sudbury, Mass. It has no printing facilities and farms out the work of printing the Teamsters’ 1.8-million circulation monthly magazine to other firms at a cost of about $350,000 a month. Windsor was incorporated by the couple after McCarthy became president of the Teamsters in 1988.

A Teamster official defended the arrangement as a cost savings but declined to discuss it further.

However, Frederick B. Lacey, the court-appointed administrator, is preparing what sources called a “scathing” report on the alleged favoritism of the arrangement for U.S. District Judge David N. Edelstein in New York.

Edelstein is overseeing the Teamster-Justice Department settlement of a massive civil racketeering suit last year in which McCarthy and other top union officials promised not to engage in the corruption that had long plagued the union.

Three of McCarthy’s predecessors--Dave Beck, James R. Hoffa and Roy L. Williams--were convicted of racketeering and other crimes while heading the labor organization and served prison terms. McCarthy succeeded Jackie Presser, who died while under federal indictment in a racketeering and ghost workers case.

Earlier this year, McCarthy announced that he would not seek reelection when union members, under court supervision, hold their first direct election of top Teamster officers late next year.

Teamster and government sources said that the move to give the magazine printing contract to Windsor Graphics began soon after McCarthy took over the 1.6-million-member union. McCarthy directed Duke Zeller, director of communications for the union, to solicit new bids for publishing the glossy, full-color magazine that is called The International Teamster, according to the sources.

They said McCarthy, who has authority to award contracts without review, gave Zeller a list of three companies that he wanted considered. The list included Windsor, and Zeller knew the makeup of that firm. Zeller declined to discuss the matter.

During the bidding, requirements for the contract changed several times but only Windsor learned of all the alterations and eventually submitted the lowest bid, sources said.

The printing contract runs about $350,000 a month, the sources said, and involves an unusual agreement under which Teamster headquarters guarantees payment of any obligations incurred by Windsor.

Since Windsor has no printing facilities, it takes a “brokerage fee” while farming out the actual work of publishing the magazine in a two-step process.

Windsor has contracted for one firm to prepare color photos, arrange paste-ups of the pages and make printing plates. It has these prepared materials sent to a second firm which runs the presses.

Officials of the second firm, an Arkansas concern known as Kreuger Inc., originally balked at the arrangement because Windsor had no capital investment and no publishing background, the sources said. But Teamster headquarters pledged in writing to guarantee payment of any Windsor debts that went unpaid more than 30 days.

“That meant that McCarthy had the union bankrolling his son-in-law’s business,” one government source said.

The Treacys did not respond to questions about the arrangement.

The FBI undertook a preliminary investigation to determine whether the McCarthy-Windsor arrangement constituted embezzlement under the Labor Management Reporting and Disclosure Act, a source said. That law provides that labor union officials have a fiduciary responsibility to represent their rank and file members without knowingly committing acts that damage them while benefiting outsiders.