Kevin is an activist who continues to work for his community, serving on many board of directors such as the YMCA.

MISSION: 1. Persuade GE to share our huge pension fund and its $15.8 billion dollar surplus. 2. Provide a lump sum make-up for the lack of past cost-of-living increases. 3. Provide annual, automatic COLAs to assure retirees maintain their purchasing power. 4. Designate a retiree/union representative on the GE pension trust fund to assure adequate retiree representation. 5. Remain vigilant to defeat corporate sponsored legislation that would diminish or delete our pension funds or health insurance, and to advocate for legislation for the availability, protection and improvement of pensions.

CURRENT ISSUES: Our retirees will continue demonstrations for an annual COLA which GE has not contributed to our pension fund since 1987. That year our fund value was $17.2 billion; in 1997, it was worth $38.7 billion; and as of the beginning of 1999, the GE fund had soared to $43.447 billion. THE CURRENT SURPLUS ESTIMATES ARE ALMOST $16 BILLION AND GROWING! Without any cost to its Treasury, all GE retirees’ pensions could be elevated on an ongoing basis to ensure their purchasing power.

I discovered that raising money for GE’s Justice Fund does not pose any legal quandaries but it can be hard to find the qualified traffic, using a local Toronto SEO is the best way.

DONATIONS: Donations of $12, or more if you can afford it, are being sought.

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Paul R. Edwards, Chairman
56 Treetop Ave., Springfield, MA 01118-2410
Phone/Fax (413) 796-1710
E-Mail: pre-crs@map.com

John J. Guarrera, Vice-Chairman
17160 Gresham St., Northridge, CA 91325
Phone (818) 886-1462
E-Mail: john.guarrera@csun.edu

Elizabeth Thurston, Secretary-Treasurer
1218 Twenty-Eighth St. NW
Washington, D.C. 20007

Association of BellTel Retirees Inc.

C. William Jones, President
8411 Aveley Farm Rd., Easton, MD 21601
Phone (410) 770-9485 Fax (410) 770-9513
Michael S. Kucklinca, Executive Vice President
286 North St., New Hyde Park, NY 11040
Phone (516) 741-2424

Eileen T. Lawrence, Treasurer
44-30 Douglaston Parkway #4L
Douglaston, NY 11363
Phone (718) 229-6078

John Sellen, Secretary
P.O. Box 457, New Milford, NJ 07646
E-Mail: JACKCELL@aol.com
Phone (201) 261-1454 Fax (201) 261-0656

Association of Former Pan Am Employees

Richard Brooks, Former President
We are sad to report Richard Brooks, President of the Association of Former Pan Am Employees Inc., (AFPAE) passed away September 6, 2003. He leaves behind a wonderful legacy and will be missed by all who knew him.

Lenny Beaumont, Executive-Vice President
P.O. Box 430, Bethpage, NY 11714-0430
Phone/Fax in NY (516) 942-5121
Hotline (516) 724-5504
(afpae2@aol.com)

Association of US WEST Retirees (AUSWR)

Jim Norby, Chair
218-863-8116
anorbz@aol.com

Nelson Phelps, Executive Director
nbphelps@world.net.att
web site, www.uswestretiree.org

AT&T Concerned Employees Council On Retirement Protection (ACE CORP)

Bell Atlantic Employee Coalition for Retirement Security

BAECRS
P.O. Box 53487
Philadelphia, PA 19105-3487

Citizens Commission on Pension Policy

GE Retirees’ Justice Fund

Helen Quirini, Co-Chair
2917 Hamburg St., Schenectady, NY 12303
Phone (518) 355-2186
(HQuirini@aol.com)

Kevin D. Mahar, Co-Chair
33 Rockwood Rd., Lynnfield, MA 01940
Phone (781) 592-0884
(KMahar5063@aol.com)

IBM Employees Benefits Action Coalition

Janet Krueger, Spokesperson
IEBAC, P.O. Box 503, Endicott, NY 13761

The IEEE-USA

Vin O’Neil
202-785-0017 ext.319
v.oneill@ieee.org

Johns Manville Retirees Assoctiation

John Leasher, President
(303) 697-6258
johnleasher@compuserve.com

Robert Feeney, Vice-President
(303) 283-3118
RobertHF@Earthlink.net

(Ex-)Moore Retirees

Cal Jensen
(928) 680-4675
calnor@rraz.net

National Association of Prudential Retirees, Inc

Carl Rose, President
(888) 730-6090
theNAPRI@aol.com

Charles Dupree
561-844-0977
theNAPRI@aol.com

New York City Transit Police
Variable Supplement Legal Fund

Edward Ranieri, President
Phone (718) 966-6143 Fax (718) 967-6194
eer3958@aol.com

Daniel Rivutuso, Vice President
djrivitu@suffolk.lib.ny.us

Southern New England Telephone Retirees Association, Inc, (SRA)

Hugh A. Baird
habaird@snet.net

Bill Murty, Director of Government Relations
(860) 675-0560
BDMurty@aol.com

Textron Systems Retirees’ Assoc., (TSRA)

Edward Josephson
603-778-1495
josephson@mediaone.net

World Bank Group, Staff Organization

Personal Finance

Morallina George, Chair
202-473-6964
mgeorge@worldbank.org

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The Committee monitors developments affecting retirement savings and other employment-benefits programs for engineers; develops position statements on issues of special concern; informs and educates IEEE members; and advocates members’ interests in official communications with policy makers, other organizations, and the public.

In recent years, the Committee has been successful in promoting the introduction of Federal legislation to improve the portability of pension benefits and expand eligibility to make tax-favored contributions to Individual Retirement Accounts (IRAs), enhancing member understanding of retirement savings issues, and increasing inter-society cooperation on benefits issues. For the latest news on pensions issues and information to help you plan your own retirement, check out the Committee’s Retirement Security Resource Page.

PRIORITIES: Enacting federal legislation to improve the portability of health and pension benefits when workers change jobs; expanding individual opportunities to save for retirement; and increasing member awareness of important employment benefits issues.

Contact:
EEBC Chairman Michael Garretson: m.garretson@ieee.org
EEBC Vice Chair James V. Leonard: j.leonard@ieee.org
IEEE-USA Staff Contact Vin O’Neill: v.oneill@ieee.org

WEBSITE: http://www.ieeeusa.org/

R. Brooks

MISSION: Restore lost pension benefits for 23,000 former Pan Am employees who lost 34 percent of their benefits when the Pension Benefit Guaranty Corp. (PBGC) terminated all Pan Am World Airways pension plans in 1991. AFPAE intends to bring about changes in the ERISA law to guarantee the same rights and benefits to the one million pensioners who have had their plans terminated by the PBGC as those enjoyed by participants in other defined-benefits plans.

We are raising funds for our Legal Defense Fund, having received over $100,000 primarily from our members, $120,000 from the Transport Workers Union, and $20,000 from the International Brotherhood of Teamsters.

We have initiated two lawsuits against PBGC, one already partially successful and precedent setting, and both ongoing. We intend to raise another $300,000 to continue and prevail in regaining benefits taken from our retirees by PBGC.

REPRESENTING: 45,000 former Pan Am employees and surviving spouses and helping other pensioners, who have also been harmed by PBGC’s termination policies, regain their full pension benefits.

CURRENT ISSUES: The PBGC refuses to issue critical IDL documents determining benefits due retirees. The IDL take on average ten years for issuance, with no right of appeal until the documents are issued! In spite of the PBGC’s own rules, retirees were charged significant interest on pension payments that the agency itself improperly calculated! The agency deducts 10 percent of pensions monthly for alleged overpayments and does not inform the retiree or stop recoupment once the full amount is repaid.

DUES: $15 yearly and a request for $125 donation to the

VIA FACSIMILE

Senator Charles Grassley 135 Hart Senate Office Building Washington, DC 20050

Re: Hearings Regarding PBGC Practices Held on September 21, 2000

Dear Senator Grassley:

I write this letter on behalf of the Association of Former Pan Am Employees, Inc. (”AFPAE”). Please place the following comments on the record with respect to the Hearings held on September 21, 2000 before the Select Committee on Aging and the Committee on Small Business (collectively, the “Committee”). Primarily, the Hearing focused upon: 1) PBGC contracting practices; 2) internet security; 3) the length of time required for the PBGC to is sue Initial Determination Letters (”IDL’s”); and 4) other aspects of the PBGC’s “customer service” operations. While AFPAE welcomes the Hearings and applauds the Committee for the diligent oversight role it has played concerning PBGC activities, we strongly suggest that much more needs to be done to control the excesses of this agency who we believe has lost its focus. Through its public statements and lobbying efforts, PBGC has succeeded in “lowering the bar” by which its performance is measured so that any improvement in participant service is widely heralded as a major achievement.

The horrendous experience of tens of thousands of former Pan Am employees, at the hands of PBGC, has hardened AFPAE’s resolve to insure that PBGC is held to the same standards of participant service and protection of participant rights expected and demanded of officials responsible for the operation of private pension plans. PBGC’s operations need to be addressed at several levels, including, but not limited to 1) its attitude towards the participants whose pensions it was formed to protect; 2) protection of the legal rights of those participants; and 3) clear and timely disclosure of the information to participants.

The Committee is, no doubt, aware of many of the considerations that served as the underlying rationale for the basic tenants of the Employee Retirement Security Act of 1974 (”ERISA”). As some of these considerations directly bear on PBGC’s conduct, they are worthy of repetition. Prior to the passage of ERISA, many officials responsible for the operation and administration of pension plans engaged in acts of self-dealing, including failure to exercise diligence in selecting investments and lending substantial portions of plan assets to employer/sponsor of the plan. It was also common for employers to interpret the plan so as to deny benefits to employees and to terminate employees immediately prior to becoming eligible to receive benefits. Finally, many employers avoided paying benefits by simply not telling employees about the plan or the level of benefits to which participants were entitled.

As you know, ERISA effectuated a sea change in the private pension landscape, primarily by changing the legal standards by which the conduct of plan officials is governed. Although ERISA prohibited many specific acts of self-dealing, more importantly, it clearly re-defined the standard by which the conduct of plan officials is measured. Under ERISA, every pension plan must appoint at least two fiduciaries to oversee its operation and administration – one to be responsible for plan investments, usually referred to as the Trustee, and the other to be responsible for the administration, usually referred to as the Administrator. Both fiduciaries are held to the highest possible legal standard and are required to act solely in the interest of the participants in the plan. Fiduciaries were required to follow the terms of the plan, except in situations where following the plan would violate ERISA.

In addition, ERISA imposed numerous reporting and disclosure requirements upon the individuals responsible for the operation and administration of the plan. Participants are now automatically entitled a copy of a “layman’s” description of the plan, known as a “summary plan description,” and are entitled to a copy of the plan document upon request. Participants are also entitled to a statement of the benefits to which they are entitled with thirty days of request. ERISA imposes a penalty of $100 per day, in the discretion of the court, for failure to comply with a participant request. ERISA also requires all plans to establish a claims denial procedure and communicate that procedure to participants. Under Department of Labor regulations, an Administrator must respond to a claim for benefits within 90 days, or the claim is considered denied. In addition, the Administrator is required to provide a detailed explanation of the reason for the denial. Similarly, an Administrator must respond to a participant appeal within 90 days, or the participant’s claim is considered denied, and he or she may seek redress in state or federal court.

AFPAE strongly believes that PBGC is in the business of administering private pension plans and, accordingly, its conduct must be measured against the fiduciary standard established by ERISA. While, some aspects of PBGC’s conduct are the subjects of a lawsuit against PBGC, the courts are a notoriously inefficient forum for resolving such grievances. Regardless of the outcome of any litigation, AFPAE strongly believes that plan participants are entitled to a greater level of legal protection from arbitrary PBGC action from Congress. The need for such action is explained in more detail in the remaining portion of this letter.

In addition to creating the participant rights outlined herein, ERISA created the PBGC for the purpose of insuring payment of pensions to participants in situations where pension plans were unable to pay pensions due the financial difficulties of their sponsoring employers. Virtually, the entire pension insurance scheme is financed through annual premiums paid by employer-sponsors of the pension plans covered by the PBGC insurance program. The law permits, but does not require, PBGC to become trustee of the plan, as any other person or organization may be appointed. However, in its twenty five-year existence, PBGC has never sought appointment or even acquiesced in the appointment of any other party as the trustee of any terminated pension plan. Once appointed a trustee of a terminated pension plan, PBGC will take possession of all of the assets of the plan and all of the participant records. In many cases, the plan in question may be underfunded by only a small percentage of its assets. In some cases, the assets of the plan may consist of the participant’s own contributions. The point is that these funds are not tax dollars derived from government revenue but funds contributed by an employer for the purpose of paying retirement benefits to participants. Under ERISA and the underlying law of trusts, participants have a beneficial interest in those funds. Most participants believe, and expect, that they have certain legal rights concerning those funds. AFPAE is not aware of a single participant who has ever been informed that all of the rights guaranteed by ERISA can be erased, if the plan, which his employer sponsors, is under-funded by a very small amount.

During the Hearings, PBGC took great pains to point out that it has fulfilled its “primary” mission to insure uninterrupted payment of pension benefits to participants and retirees. AFPAE strongly believes that PBGC sets a very low threshold for itself and that Congress should demand much more of an agency entrusted with billions of dollars of employer and participant pension contributions.

At minimum, participants should be entitled to same legal rights as participants in private pension plans. There is no policy justification to strip participants of their legal rights because PBGC has become trustee of an under-funded pension plan. If anything, participants are entitled to greater rights and a greater level of certainty about the security at a time when their pensions and, in many cases, their livelihoods are in jeopardy.

AFPAE urges the Committee to look beyond the array of confusing statistics amassed by PBGC, as part of its continuing effort obfuscate its woeful lack of performance. We urge the Committee to address PBGC’s performance from the perspective of the typical plan participant who has no yet retired and who does not believe his pension has been correctly calculated. To this participant, PBGC’s supposed improvement from a seven year delay to a five year delay in the time he must wait to receive an initial determination letter is meaningless. In many cases, this participant has also lost his or her job and is middle aged and cannot find another comparable position. His or her entire financial future depends on the amount of his pension. This typical participant cannot wait for seven years, or even five years, to know the final amount of his pension. He or she must decide whether to retire early, to look for a more stressful higher paying job or to dip into personal savings. This participant cannot rely upon estimates or vague promises of better customer service from self-important bureaucrats.

If the same individual was a victim of a hurricane or natural disaster or was due benefits from the Social Security Administration, Congress would not tolerate delays of anywhere close to this magnitude. Yet the loss of one’s job and possible loss of all or part of one’s pension is no less of a tragedy. In some cases, the financial loss is greater because participants do not have a job to waiting after the end of a short clean up period. There is no justification for victims of a pension disaster to be treated in a less responsive and timely manner that the victims of natural disasters. PBGC’s tired and oft repeated excuse for its tardiness is that: 1) the poor condition of the records of many bankrupt companies; and 2) its statutory mandate to perform certain valuations before it can issue individual determination letters. AFPAE flatly rejects these excuses as specious and self-serving. They are not supported by the PBGC’s own Inspector General’s report dated March 2, 1999 which criticized redundancies and built-in duplication of efforts in PBGC procedures. AFPAE believes that Congress should insist on even better performance than suggested in the Inspector General 217;s report. The calculations required are actuarial computations, which, even in the case of a large complicated plan, such as the Pan Am Plan, can reasonably be completed in one to two years. Any competent actuarial firm could perform these calculations on a short time table and there is no reason why PBGC cannot contract out this work to a reputable actuarial firm. AFPAE urges the Committee to verify its assertions by seeking independent estimates of the time and cost of making participant IDL calculations by contracting such work to a reputable actuarial firm.

Furthermore, AFPAE believes that Congress needs to direct further attention to the timeliness of IDL’s from the perspective of the participant rights guaranteed under ERISA and communicated to participants. The average participant does not understand the intricacies of Title IV of ERISA or whether the PBGC or some other party has become trustee of his plan. However, most participants understand and believe that the pension promised to him or her is in fulfillment of the employer’s part of the bargain of employment. The funds he or she earned guaranteed a pension by reporting for work, when expected, during the last 10, 20, 30 or even 40 years. He or she views the pension as a contractual entitlement and not a government benefit to be taken away at the whim of a bureaucrat. Few understand that the premiums paid by his or her employer for PBGC insurance may not cover his or her entire pension, which was promised by the employer.

However, many employees have read the Summary Plan Description provided by their employers. They understand that they have a right to receive a statement of their pension benefits within 30 days. They understand that they have a right to receive a copy of the plan document upon request. They understand that they are entitled to a prompt review of their claim for additional benefits. If they dispute their estimated pension, they are entitled to a prompt and fair review of their claim as well as a timely resolution of their claim and a full and complete explanation of the reasons for the denial of their claim. They are entitled to a fair chance to prove any disputed claim. Participants are accorded none of these rights by the PBGC.

From the participant perspective, the PBGC simply waives a magic wand over the pension plan, to make all of rights granted to participants under ERISA disappear. It simply takes possession of all the plan’s assets and declares them government funds. It takes possession of all the plan’s records and deems them government property. Instead of the level playing field guaranteed by ERISA, the participant must enforce his contractual rights before a government agency that does not respect them. Instead of a right, under ERISA, to receive documents, under PBGC regulations, the participant must make a freedom of information request for “government agency records” and in some cases is required to pay PBGC to search for his or her own pension records. AFPAE believes that this requirement is inconsistent with ERISA’s fundamental participant protection scheme. Instead of a right to receive a timely, accurate pension calculation, participants have a right to receive an estimate of their pension with no assurance that the amount is accurate. In addition, participants have no way of ascertaining whether the amount is accurate.

Those participants who do contest the amount of their pensions have no legal right to appeal PBGC’s determination because it is not a final government agency decision. PBGC would have the committee believe that a comparatively few number of pension estimates are wrong and those few employees who challenge the amount of the PBGC estimate are simply malcontents. Nothing could be further from the truth. For example, most of AFPAE’s members are hardworking mechanics, flight attendants or ground service personnel who were promised a pension by Pan Am commensurate with their 20 to 40 years of service. When they found out that PBGC intended to pay less than half the benefits promised by Pan Am, they simply wanted their day in court. These individuals were told they would have wait for five to ten years in order to even begin the judicial process. The PBGC process stands in stark contrast to ERISA’s guarantee of a full and fair review of any claim within 90 days. Participants are never told that their right to a prompt final decision on any claim disappears whenever PBGC becomes trustee of a Plan. AFPAE believes that, as a matter of Congressional policy, no participant should ever have to wait for more than one year to receive an appealable decision on any claim for benefits. These delays would never be tolerated from any other government agency. AFPAE also believes that the PBGC’s appeals process deserves much more intense scrutiny from Congress and the Committee. After waiting for as long as 10 years to receive an IDL from PBGC, the participant is given 45 days to appeal the determination. Those who do not do so, within 45 days, will lose all rights even if their appeal has merit.

Again, PBGC stands in stark contrast to the level of participant rights guaranteed by ERISA – which imposes no specific statute of limitations on participant claims. In any event, the courts have held that the statute of limitations does not begin to run until the participant’s claim is denied. Thus, a participant in a private plan has legal right to bring a claim, for additional benefits, whenever he or she discovers he or she has been underpaid.

When questioned by AFPAE and others, PBGC responds by encouraging participants who believe their pensions were incorrectly calculated to call PBGC’s customer service center, with a promise that “errors” would be corrected notwithstanding the fact that the statute of limitations has expired. Vague promises of a friendly and helpful customer service personnel cannot service as the foundation for this country’s pension policy. AFPAE strongly believes that participants in this country are entitled to a legal right to appeal any determination made by PBGC. Subjecting participants and retirees to unreasonably short period of time would not be tolerated from the Social Security Administration or any other government agency.

Incredibly, PBGC has even suggested that its 45-day appeal deadline is meant for the protection of the participants. Under this tortured line of reasoning, PBGC argues that the 45-day period provides an outer time limit for the appeal process so that parties can fix a time for further appeals. AFPAE strongly suggests that PBGC examine its own determination letter process before establishing unreasonably short timetables for participant appeals.

It is clear to AFPAE and others that the PBGC appeals process is designed to discourage participant appeals and to minimize the amount of pensions paid by PBGC. Under ERISA, a plan administrator is required to produce a calculation of the participant’s benefit and establish that such calculation is correct. Under its own regulations, PBGC assumes no such obligation. Participants must prove that they are entitled to the higher pension by producing salary records and other documents. Most do not understand the manner in which their pension was calculated and would not be able to determine whether it was calculated correctly. PBGC makes no effort to explain its calculations and generally provides participants with a one or two page set of calculations in support of its IDL. These calculations are generally replete with jargon and are incomprehensible to even experienced pension professionals. After waiting for ten years to receive an IDL, very few participants are equipped to successfully appeal an incorrect determination. AFPAE strongly believes that, as a matter of Congressional policy, every plan participant should have a legal right to receive a timely and understandable calculation of his or her pension benefits and the PBGC should be required to maintain and provide underlying records to support its calculations.

On a more fundamental level, AFPAE believes that a pervasive change in the PBGC’s attitude and culture must be implemented if the PBGC is to fulfill its fundamental mission of protection of participant pensions. AFPAE believes that current PBGC leadership is still imbued with the notion that it is fundamentally an “insurance” operation. For many years, the PBGC operated at a deficit and was criticized (sometimes unfairly) over the size of the potential bail out that the taxpayers would have to fund if the PBGC were to fail. AFPAE believes that the PBGC adopted an insurance company mentality as a result of this criticism and that this culture still pervades the PBGC attitudes and policies.

The primary objective of a commercial insurance company is to make a profit by taking in more in premiums that it pays out in benefits. However, PBGC is not a profit making enterprise and was formed to serve much broader social and policy goals. It cannot, and should not, be operated with the overriding goal of protecting its current surplus. In AFPAE’s view, the PBGC has lost sight of the fact that was formed to insure the payment of pensions to individuals who have, in many cases, lost their jobs as well as their pensions. As a matter of Congressional policy, the PBGC’s policies, regulations and procedures should be protective of participant rights. As demonstrated above, PBGC’s policies are anything but participant friendly. Too often PBGC will “reinterpret” the language of a plan to disturb long established administrative practices and plan interpretations – always to the detriment of the participants.

One example of how PBGC’s “insurance company” culture has hurt participants, is the manner in which it mishandled the legal entitlement of surviving spouses to receive a “survivorship pension”. Under ERISA, unless the spouse consents to the participant’s choice of another form of benefit, the spouse must be paid a survivorship pension. In direct violation of ERISA, PBGC intentionally decided not to verify whether spousal consents had been executed and simply assumed that participants who elected an alternate form of benefits had obtained spousal consent. It instructed its personnel not to verify that a spousal consent form had been signed, unless a surviving spouse specifically requested payment of a survivorship pension. Because only a small fraction of surviving spouses knew enough to request a survivorship pension, hundreds, if not thousands of them lost were not paid their legally entitled survivorship pensions by PBGC.

AFPAE urges Congress and the Committee to undertake a comprehensive examination of the effect that PBGC regulations, policies and procedures have upon participants and to require that the PBGC make substantial changes in those policies. AFPAE recognizes that Congress cannot easily change the culture and attitudes of an entrenched government agency. However, AFPAE strongly believes that this country’s retirees deserve better. Congress and the Committee should not be sidetracked by the PBGC’s mountain of glowing statistics concerning the performance of its customer service centers. A promptly returned phone call is meaningless to a participant whose benefit is incorrectly calculated and who cannot appeal the calculation for another 5 to 10 years.

A participant’s legal right to be heard cannot depend on the current quality of service at the PBGC service center. The PBGC needs to appreciate that participants fulfilled their end of the contractual bargain with their employer. Their employer paid premiums into the pension insurance program so that their pensions would be protected as part of that bargain. Their legal right to receive that pension should be guaranteed in the same manner as it if the employer’s plan was still solvent.

AFPAE has proposed legislation that would produce a fundamental change in the manner in which PBGC operates and urges the Committee to consider this legislation in connection with a comprehensive investigation of the PBGC’s policies and practices. The key aspects of this legislation would address some of the most flagrant PBGC abuses. It would require a court to appoint the trustee of a terminated plan based upon whether the trustee would act in the interest of the plan participants. An independent trustee would be more receptive participant concerns and more willing to follow less restrictive plan interpretations. Every trustee would be required to produce initial determination letters no later than one year after the date of plan termination, except in extraordinary circumstances. Participants would be guaranteed timely information and a “level playing field” in which to bring their grievances. Unions and participant committees would be given formal input into the termination process. Most importantly, the legislation would create a participant ombudsman to assist participants with questions, concerns and help them resolve disputed issues with the PBGC and the Trustee.

As a final matter, AFPAE urges the Committee to further examine the PBGC’s contracting practices particularly those practices involving Bennie Hagans and Myrna Cooks. AFPAE commends the Committee for its diligent investigation of the apparent impropriety committed by Hagans with respect to an award of the 40 million dollar Pan Am contract to her wholly owned start-up venture. However, the Pan Am contract is not the only contract awarded to IMRG, at the urging of Bennie Hagans. Annexed hereto is list of such contracts. We urge the Committee to request the Comptroller General to investigate whether any of these contracts were improperly awarded. Moreover, it is no coincidence that PBGC’s dissatisfaction with the prior Pan Am contractor, Office Specialists, coincided with Myrna Cooks’ departure from that contractor to form IMRG. As the Office Specialist representative responsible for the Pan Am account, logic would dictate that PBGC would hold Cooks responsible for Office Specialist’s under performance. To the contrary, Cooks was rewarded by PBGC at Hagan’s urging. We urge the Committee investigate whether any contracts were awarded to Office Specialists as a result of the special relationship between Hagans and Cooks.

AFPAE is engaged in litigation with Office Specialists as part of a so-called “false claims” suit in connection with the contract awarded by PBGC. One of AFPAE’s allegations is that Office Specialists falsely billed PBGC under the Pan Am contract for employees who performed services on other plans and billed for services at rates which exceeded the mark-up provided in the contract. At the Hearings, Bonnie McHenry’s testimony raised the possibility that similar fraudulent acts were committed by IMRG. In particular, Bonnie McHenry testified that her salary was reduced after her salary was incorporated into IMRG’s contract proposal. She also testified that the Pan Am Contract was understaffed and many positions bid under the contract were not filled. AFPAE urges the Committee to initiate an investigation to determine whether PBGC was defrauded by IMRG.

One of the most disturbing aspects of the PBGCR 17;s conduct was the manner in which the PBGC has reacted to allegations of fraud, overbilling, waste and favoritism. In light of PBGC’s parsimonious attitude towards participants, one would expect it to carefully supervise and control the manner in which it spends tens of millions of dollars of participant and employer funds. Surprisingly, PBGC takes a completely opposite approach and fervently defends Hagan’s conduct, regardless of the cost to the Agency, both in terms of reputation and dollars.

Some of the lengths that the PBGC and its executive director, David Strauss, have gone to defend Hagans’ conduct defy any reasonable explanation. For example, at the Hearings, Strauss excused IMRG’s poor performance because of the tight job market. In doing so, Strauss simply ignored the fact that IMRG reduced the salaries of many individuals, including Bonnie McHenry.

It also ignores the fact that PBGC moved the field service operation for Pan Am to Atlanta from Rosedale, NY in 1997. In doing so, PBGC virtually abandoned several experienced employees who formerly worked in the Pan Am employee benefits department. Here too, experienced employees were offered positions in a far away city and at reduced salaries. Strauss’ testimony concerning his defense of Hagans’ conduct in regard to the award of the initial contract to IMRG similarly defies explanation. Yet Strauss offered no explanation for the 34 phone calls made concerning “personnel matters” during the time in which Cooks was bidding on a PBGC contract or the un-refuted testimony of Cook’s loan officer. While AFPAE strongly believes that all individuals are entitled to the presumption of innocence, these legal protections apply only to accusations of criminal conduct. An individual’s conduct as a government official must be above reproach and free from even the appearance of impropriety. Yet, Strauss has announced no disciplinary action against Hagans of any kind. Nor has he demanded explanations from Hagans regarding the evasive answers he provided to officials from the Office of Special Investigations, of the Comptroller General.

However, by far the most serious aspect of Strauss’ behavior is his apparent attempt to derail the investigation of Hagans’ conduct by privately and publicly stating that the allegations against Hagans were motivated solely by racism. Yet, when testifying under oath before the Committee, Strauss declined to repeat these allegations. AFPAE believes that Strauss’ omission of the charge of racism from his testimony before the Committee raises serious questions as to whether Strauss raised this charge with a reporter from the New York Times and various federal investigators solely for the purpose of throwing off investigators engaged in various federal investigations. AFPAE strongly urges the Committee to thoroughly investigate whether Strauss attempted to impede the investigation into Hagans’ conduct by falsely labeling his accusers as racists.

AFPAE thanks the members of the Committee for an opportunity to make present its views an its officials are available for further questions. Respectfully submitted,

Richard Brooks President, AFPAE