So what is this really all about? We have a pretty good idea! We know General Motors needs cash. Therefore, GM’s "Cooperation Partner" (the UAW) pursuant a partnership contract with GM better known as the Articles of Incorporation of the "Center for Human Resources" Article II, makes the UAW obligated to help GM get cash so the company will remain competitive.
Now the question becomes, where can GM get cash? The answer lies in a term and program little known by most people; it is the "VEBA" or Voluntary Employees’ Beneficiary Association. VEBAs are IRS, CODE 501(c) None Profit trusts that are designed to allow corporations to invest money in for the purpose of providing benefits to their employees. The money for various benefits plans is raised by the tax exempt interest earned from different investments (Stocks Bonds ETC). The Employee Benefits Security Administration of the DOL has oversight of VEBAs. They are recorded annually and are made available to the public by simply calling the EBSA of the DOL in Washington, D.C. and requesting that information.
The old General Motors VEBA that was providing benefits to GM-UAW employees also covered members represented by the "IUE-CWA" "USWA" and the other three unions. Salary employees and none union hourly employees benefits are also covered by the same VEBA. When a company combines more than one benefits fund under the umbrella of one great big Master trust (or VEBA) this is known as a commingled trust. What is more, there is nothing in the law that prevents a company from using the money in the VEBA for capital expenditures. GM reported doing exactly that in the companies Proxy statement of 2001. During the year 2000, General Motors raided the VEBA for over 1 billion dollars 1) for a 500 million dollar equity purchase in Suzuki (to build a plant) and 2) for a 500 million dollar equity injection into GMAC to show a profit that year. In other words, they looted the health care trust to build a plant over seas and transfer money from our healthcare VEBA to the stockholders. All while the "Cooperation Partner" looked the other way!
In the beginning of year 2005, General Motors was telling Wall Street and the world they had 21 billion dollars in cash. Where was that money? You guessed it, "in the VEBA." In the beginning of the year General Motors decided to take 6 Billion dollars out of the VEBA to cover three consecutive quarters of one billion dollar losses. Loses that grew from poor sales, rebates, the employee discounts made available to the public and massive recalls. However, during that time nobody, neither in General Motors or their "Cooperation Partner" (the UAW) spoke of the VEBA.
Consequentially, General Motors and their "Cooperation Partner" had to come up with some kind of scheme to free up that VEBA money. Naturally, the plot was propagated in the media, newspapers
across the country and in GM and Delphi plants as "Excessive Healthcare & Legacy Cost."
In the media, the centerpiece of the negotiations was to find a way to HELP UAW members, most of who never ever heard of a VEBA or knew one existed. Who on the shop floor associates Healthcare with a VEBA?
The cleverly designed scheme provides General Motors with the right to absolve its existing VEBA and replace it with a new VEBA. Clearly, new trustees, chosen from a consortium of five industrial unions that represent GM workers, will manage the new VEBA. The member’s benefits of those five unions were and are covered in the old and new VEBA respectively. Interestingly enough, by transferring control of the new VEBA over to the unions, General Motors will only have to maintain enough money in the old VEBA to cover white-collar employees’ benefits. Why, because all the union represented workers have been thrown out of the old VEBA and placed into the new one.
Now consider this, the old VEBA has 15 billion dollars in it while the new VEBA will only have 1 billion dollars. Secondly, GM reported in the news that it cost $200 millions a year to administer the