(a) Section 502(a) of the Act prohibits the placing of bonds
required therein through any agent or broker or with any surety company
in which any labor organization or any officer, agent, shop steward, or
other representative of a labor organization has any direct or indirect
interest. The purpose of this provision, as shown by its legislative
history, is to insure against the existence of any ``financial or other
influential'' interests which would affect the objectivity of the action
of agents, brokers, or surety companies in bonding the personnel
specified in the section. \11\ It appears, therefore, that it was the
intent of Congress to prevent the placing of bonds through agents or
brokers, and with surety companies, in which any labor organization or
any officer, agent, shop steward, or other representative of a labor
organization holds more than a nominal interest.
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\11\ Daily Cong. Rec. 9114, Senate, June 8, 1959; Record of Hearings
before a Joint Subcommittee of the Committee on Education and Labor,
House of Representatives, 86th Congress, 1st Session, on H.R. 3540, H.R.
3302, H.R. 4473 and H.R. 4474, p. 1607.
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(b) Since the statute provides that either a direct or indirect
interest by a labor organization or by the specified persons may
disqualify an agent, broker, or surety company from having
a bond placed through or with it, the disqualification would be
effective if a labor organization or any of the specified persons are in
a position to influence or control the activities or operations of such
brokers, agents, or surety companies, by virtue of interests held either
directly by them or by relatives or third parties which they own or
control. The question of whether the relationship between the labor
organization or the specified persons on the one hand, and another party
or parties holding an interest in a broker, agent, or surety company on
the other hand, is so close as to put the former in a position to
influence or control the activities or operations of such broker, agent,
or surety company through the latter, presents a question of fact which
must necessarily be determined in each case in the light of all the
pertinent circumstances.
(c) It is also to be noted that the statute does not appear to
restrict the disqualification to cases in which a direct or indirect
interest is held by a labor organization as a whole, or by a substantial
number of officers, agents, shop stewards, or other representatives of a
labor organization, but provides for the disqualification also in cases
where any one officer, agent, shop steward, or other representative of a
labor organization holds such an interest.
[28 FR 14394, Dec. 27, 1963, as amended at 63 FR 33780, June 19, 1998]
