2006 FINANCIAL REVIEW COMMITTEE REPORT

2006 FINANCIAL REVIEW COMMITTEE REPORT

MEBA Headquarters
Washington, D.C
April 24 to April 26, 2006

Dear Brothers and Sisters.

The elected 2006 Financial Committee convened at the MEBA Headquarters from April 24 through April 26, 2006, to review the finances of the MEBA District l-PCD in accordance with the bylaws detailed in Article 6. Section 9(d).

The following elected members were in attendance:

Charles Feist, New Orleans (Chairman)
Dominic Walsh, Baltimore
Robert Fauveil, Houston
Gerald Bellows. San Francisco
Larry Brown, Seattle
Joseph McElhinney, New York Alternate)


The FRC reviewed the previous three years FRC reports. Many of the recommendations of these reports have been implemented. The 2005 LM-2 Report and the audited financial statement were also made available and examined. The audit was conducted by the firm of Buchbinder, Tunick & Company, LLP, for the Independent Auditor Report. The report was issued without qualifications as a fair representation of the Union’s financial situation. A status of “Unqualified Auditors Opinion” was issued.

MEBA Net Worth and Budget Projections

The Revenues of $10,586,436 and Expenses of $10,196,716 result in the Union finishing the year in the “black” with $389,720. This increase includes a one time windfall of $314,972 in Sealand/Crowley interest.
The Union Net Assets at the end of 2005 are reported as $12,521,524. This figure is an increase from $12,057,685 from the previous year.
These figures are based on Total Assets reported of $17,057,099 with Total Liabilities reported of $4,535,575 at the end of 2005.

The 2306 Budget Projections are as follows:
Estimated Revenue: $10.283,698
Estimated Expenses: $10.283,698

In 2005, $3.9 million in vacation dues were projected, with an actual amount of $3.4 million received. For the year 2006, a figure of $3.6 million is used for budget projections.

The Sale of the San Francisco Union Hall

The process of the sale of the San Francisco Hall and subsequent move to a new hall in Oakland continued in 2005.
A business loan of $2.8 million was obtained. $1.7 million was used for the purchase of the Oakland hail. $960,141 was used to pay off the New Jersey Hall. which is now owned by the MEBA. This transpired as follows:
On March 24, 2005, the District refinanced this loan (New Jersey Hall) with a term loan single payment for $2.8 million. This loan is due in full when the District obtains a mortgage loan secured by the Oakland property, the date the District sells its Union hall in San Francisco, CA or May 24, 2010. This loan bears interest at 1.5% plus LIBOR and the interest is due monthly and is secured by a first priority security interest in all securities, financial assets and other investment property of the District.
There are additional restrictions in this loan including debt service coverage and the making of loans and advances. Also, the District pledges 24 months of debt service reserve in the amount of $168,000 of side collateral for this loan.
The sale of the San Francisco Hall is scheduled to be finalized this summer. The sale price has not been determined at this time, due to San Francisco Planning Commission regulations which may lead to a higher sale price.
The minimum amount for the sale of this Hall should not be lower than $4.8 million, with the possibility of $6.8 to $7 million, pending approval of the building plans by the City Planning Commission.

Joint Employment Committee

The sum of $3,605.581 was disbursed from the JEC Fund to the MEBA. This fund was
depleted approximately $2.6 million for the purpose of running the union halls.
The estimated contributions from contractual negotiations were close to $1 million.
The remaining principal in the JEC fund is just under $9 million.

Summary

The FRC has determined that the union is operating on solid financial footing. The expenses are reasonable considering projected revenues and recent history of expenses.

FRC Recommendations

1)All members are encouraged to Continue contributions to the Political Action Fund. These contributions will greatly assist in organizing efforts and obtaining new work. Current income is about half of what is necessary for effective political action.

2)The FRC recommends that the union keep in mind the impending higher costs of travel and plan accordingly considering the necessity of early booking, where possible. This includes electing the FRC one month earlier to book travel at lower rates. The use of conference calls should be considered as an alternative to frequent travel for face to face meetings. Travel expenses should be looked at for savings.

3)The FRC realizes the increasing costs of operating union halls, which are primarily funded through the JEC. With this is mind, all future negotiating on contracts must address contributions which will cover these expenses without reducing the principal of the JEC. The union has done a commendable job in the recent past in obtaining funding for this.

4)The intent of the DEC is to set aside $250,000 of the income from the sale of the San Francisco Hall for the Good & Welfare Fund and $250,000 for a Strike Fund. It is recommended that these funds be monitored by the FRC during the annual reviews.

DEC Compensation

By a vote of 5-0, the FRC has voted to increase the wages of the DEC (President, Secretary-Treasurer, and three Vice-Presidents) by 3%.


The FRC would like to extend many thanks for the following people for their support and efforts with this committee: Ann Holmes, Eric Pittman. William Doyle. Marco Cannistraro, Joe Musher, and all Headquarters Staff.

Fraternally Submitted:

Signed and dated by FRC Committee Members and Alternate

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LOSS OF JOBS ON THE HORIZON

LOSS OF JOBS ON THE HORIZON

This is brought to your attention to emphasize that less jobs equate to less contributions. Less contributions from existing inadequate contracts equate to changes in benefits as Unions struggle to maintain a sound financial footing not only in it's operating expenses but also in it's PLANS

Ship Operators Covet Subsidies as RRF Cuts Confirmed

U.S. flag ship owners and operators have been put on notice by the U.S. government that reductions to the Ready Reserve Fleet (RRF) will be significantly larger than previously thought.


Eight companies now under contract to operate ships are facing the possibility of cancellation of as much as half of the existing contracts by the end of fiscal year 2007.

A total of 10 vessels are scheduled for removal from the RRF during this fiscal year. The need to replace 300,000 square feet of capacity that will depart from the RRF roughly coincides with a request for information issued to U.S.-flag ship owners earlier this month by MARAD). U.S. military planners constantly monitor logistics requirements and the assets needed to support those missions. Programs such at the RRF, Military Sealift command (MSC), and the ships of the Maritime Security Program (MSP) make up the maritime component of those contingencies.

Any reduction in RRF numbers or capabilities will ultimately require probing the commercial market for replacement tonnage. Ship owners hope that this could translate into still more ship subsidies which would allow operators to keep ships under the U.S. Flag. The MSP program, consisting of 60 ships, each receiving a $2.6 million annual operating subsidy, allows the United States to keep private vessels with military value on retainer for emergency call-up.

TransCom has not yet disclosed which vessel types or operators might be slated for elimination, but MARAD has issued recent requests for information from U.S. commercial operators for RO-RO tonnage.

The May 3 issue of the Federal Register (Vol. 71, No. 85) also provides notice of open season for enrollment in the Voluntary Intermodal Sealift Agreement (VISA). U.S. Flag vessels not currently enrolled in the program are invited to participate, with applications due no later than May 31, 2006. VISA provides for “the phased availability of participants’ shipping services/systems to meet contingency requirements” through contractual arrangements between the government and participants. In exchange, VISA participants receive “priority consideration” for the award of DOD peacetime cargo.

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AMO ELECTIONS, TRIALS AND INFORMANTS

AMO ELECTIONS, TRIALS AND INFORMANTS

In an effort to keep concerned parties informed of on going issues that directly effect the AMO and in the end will materially effect the contentions between the MEBA and AMO we submit the following article.

From Tradewinds

By Bob Rust

Published: 31 March 2006

US federal prosecutors have revealed a key informant in their case against union leaders.

Gordon Spencer, the long-time top lobbyist for shipowners associated with the American Maritime Officers (AMO) union, has emerged as a key secret informant in a Florida federal prosecution of AMO leaders.

Four other AMO leaders, employees or former employees including president Michael McKay and treasurer Robert McKay were indicted last summer on varying sets of charges including embezzlement of union funds, rigging of union elections, illegal political contributions, mail fraud and conspiracy.

But by that time Spencer, a prominent figure in Washington maritime circles, had already agreed to plead guilty to a single misdemeanor count of making illegal campaign contributions "through conduits or strawmen", pursuant to a June 2005 plea bargain. TradeWinds previously revealed that republican congressmen Bud Shuster and Don Young were the recipients of contributions allegedly funnelled from AMO controlled accounts.

The Spencer deal, recently disclosed in documents filed by prosecutors, brings the total of guilty pleas in the case to four, all but Spencer's involving felony counts. The three remaining defendants, who maintain their innocence, are the McKay brothers and James Lynch, who formerly captained the Amos , the eponymous yacht of the American Maritime Officers Services (AMOS), an association of shipowners whose crews are organised by the AMO.

Spencer's role as prosecution witness is disclosed in prosecutors' filings in response to an unsuccessful motion by Lynch to sever his case from those of the McKays.

Another recent setback for the remaining defendants was a change of plea from not guilty on all counts to guilty on one felony count of embezzlement by Phillip Ciccarelli, the building manager at the AMO's Dania Beach, Florida headquarters.
TradeWinds reported in February that two other defendants not originally named, AMO defectors Thomas Kelly and Jerry Joseph, had pleaded guilty to single felony counts and agreed to co-operate with government prosecutors.

The long-time AMO officials left after losing a 2001 election battle against the McKays. For a time they served rival Marine Engineers' Beneficial Association (Meba) as consultants, leading to a series of lawsuits.

The McKay brothers, who have expressed confidence to the membership that they will be vindicated, continue in their leadership roles at the union but are under travel restrictions and may not sign cheques or do other financial business for the union pending their trial.

Meanwhile, the trial, expected to take three to four weeks, has been rescheduled to 11 September, reportedly because of illness of a defence lawyer. This entails that the trial will overlap the AMO's next elections, in which balloting will begin in October and a final count will be held in December. Observers expect that daily reports from the trial could have a marked effect on voting for AMO leadership candidates.

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