Swift Justice?

The HR leader at Swift & Co. offers his account of the raids by U.S. immigration authorities on his company -- an event many see as proof that reform is needed.

Sunday, July 1, 2007
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Jack Shandley got the long-dreaded call on his cell phone at about 6 a.m., as he was driving in to work. The raids had begun.

Hundreds of federal agents, many in riot gear, were swooping down on six Swift & Co. meatpacking plants in America's heartland -- including the one near Swift's headquarters in Greeley, Colo., where Shandley, the senior vice president of human resources, was headed that morning.

It was Dec. 12, 2006, 10 months after U.S. Immigration and Customs Enforcement began investigating immigration violations and what it called "a massive identity theft scheme" involving workers at Swift. By the end of the day, nearly 1,300 Swift employees -- 10 percent of the workforce at the plants -- had been arrested.

For Shandley and the other top officials at Swift, the raids were a bitter pill to swallow. Four years earlier, the company had paid nearly $200,000 to settle a discrimination complaint by the federal government alleging Swift had gone too far to weed out illegal immigrants, giving greater scrutiny to job applicants who looked or sounded Hispanic.

Now, it seemed, Swift was getting punished because it hadn't gone far enough.

It didn't appear to matter to the feds that Swift was one of the first companies to take part in the government's Basic Pilot program, which is intended to verify job applicants' Social Security numbers. Or that Swift had pleaded with ICE for months to make the company a partner in the investigation -- only to get the cold shoulder.

That morning, none of it mattered. There was just the hard reality of the federal agents in their black nylon ICE jackets, herding white-aproned employees, bewildered and handcuffed, into waiting buses.

Shandley and other Swift officials could do little else than sit helplessly by, brimming with anger and frustration.

"You feel violated," says Shandley. "You feel exposed."

Swift wasn't charged in the raids, and the government has not suggested that the company did anything wrong. But Swift says the raids cost it as much as $50 million in lost business and other expenses, and did untold damage to its reputation.

Shandley contends that the raids -- the largest of their kind in recent years -- were a ploy by the Bush administration to show it was tough on illegal immigration. "Swift was a reputable employer that had national recognition, and we got in the bulls-eye," he says. "Swift was a headline. Swift was a message to industry."

Steering Through the Fog

In a recent interview with this magazine -- the only one he has given since the raids -- Shandley described the key role HR played at Swift during the ICE investigation. Often when there's a crisis in the corporate world, HR is on the periphery. But as Shandley says, "This was an HR-related event."

And so, at the same time the company's HR department was handling its usual duties, it was also trying to fend off the crippling raids that eventually took place.

Shandley and general counsel Don Wiseman were asked to lead Swift's efforts in dealing with the investigation. The company's leaders told them, as Shandley puts it, " 'We're going to look to you two to lead the action, and steer the company through the fog.' "

This particular fog had its origins in February 2006 in Marshalltown, Iowa, where Swift has a meatpacking plant. ICE agents were doing routine jailhouse interviews with illegal immigrants -- who had been arrested for various reasons -- when they found a "disturbing pattern," ICE officials said at a press conference after the raids.

The agents talked to a number of prisoners who said they worked at Swift, and admitted they got their jobs by assuming other people's identities.

It wasn't until the following month that Swift learned of the investigation. ICE presented the company with subpoenas for the I-9 forms for all 2,100 workers at the Marshalltown plant. The forms verify workers' identities and their eligibility to work in the United States.

From the outset, Shandley and other company officials tried to determine the scope of the ICE investigation. What were the feds looking for? Was there something the government thought Swift should have been doing? Was the company itself a target of the investigation?

Swift offered to do whatever was necessary to help the government apprehend any criminals, says Shandley.

"We said, 'You give us a list of these people; we'll hand them over to you.' "

But, says Shandley, ICE wouldn't even return the company's phone calls.

"We were completely in the dark on the scope of their investigation," says Shandley. "We requested cooperation by ICE, and we were rebuffed."

ICE would not comment on the Swift investigation for this story, saying the probe is continuing. However, an ICE spokeswoman said that, in general, the agency does not reveal details of an investigation to an employer as long as there is a possibility the company itself might be charged.

Swift did not sit back and wait to see what would happen. The company immediately hired a high-powered Washington law firm, Vinson & Elkins. "They became our forward-deployed eyes and ears," says Shandley. "We got them on board right away -- we didn't know where this thing was headed."

Desperate to prevent raids that would shut down operations, Swift and its attorneys reached out to members of Congress, and even to the White House, seeking some kind of intervention.

None came. And ICE remained stone-faced.

Anticipating a Crisis

Swift wasn't sure what the feds were looking for. But in late April, the company got a clue when ICE returned the I-9 forms for all but 665 employees. Swift resolved to find out what those 665 I-9s had in common.

Earlier in the year -- before it learned of the investigation -- Swift had hired a consulting company, Border Management Strategies of Tucson, Ariz., to review the company's procedures for making sure it didn't hire illegal immigrants. Now, Swift asked Border Management to review the 665 I-9 forms ICE had kept, to develop a profile of the kind of employee the government was targeting.

What many had in common was that the workers possessed recently issued Social Security cards or state ID cards from regions of the country where the employees had no work history.

During the summer, the investigation took an ominous turn for Swift. ICE presented subpoenas for the I-9s for the remainder of the company's domestic workforce -- 13,000 employees.

"We asked, 'Why? What are they after?' " Shandley recalls. "No one could answer that question for us. You didn't know where to put the water on the fire."

Swift was now moving into full crisis-management mode -- an all-too-familiar state of affairs for the company. In just the previous few years, Swift had dealt with a devastating fire at a meatpacking plant in Kansas and a voluntary recall of possibly E. coli-tainted beef. And the company had contended with major disruptions in the American meatpacking industry following an outbreak of mad cow disease -- not related to Swift -- in Canada and the United States.

"The team was experienced with crisis," says Shandley. "We were well-oiled."

The first task at hand -- and no easy one -- was to get the government copies of the 13,000 I-9s under tight deadlines.

"I made a conscious decision not to ask for an extension," says Shandley. "We wanted to show the government we had nothing to hide. We made their job as easy as we could, once we knew what they wanted."

Swift has about 140 HR staffers in the United States, and "the whole force was pressed into service," says Shandley.

As it became clear that ICE wasn't going to work with Swift, Shandley and other officials started planning for the worst-case scenario: simultaneous raids that would shut down the company's meatpacking plants.

Among the many contingencies they planned for: How would production be affected, and for how long? What outsourcing arrangements should be made in advance so customers would still get their orders? How should Swift executives or lower-level employees respond to warrants for their arrest?

"There was no rule book," says Shandley. "You couldn't go on the Internet and say, 'What did this company or that company do?' "

The fear of arrest was always there, particularly among Shandley's senior HR staff. Shandley emphasized to them that the company had done nothing wrong and that, unless the employees had something to hide, the company would defend them "to the hilt."

To help calm the anxiety, Shandley made himself available to his staff day and night. "We didn't point fingers," he says. "We kept it positive; we didn't look for scapegoats; we didn't accuse anyone. We were going to sink or swim together."

Managing the Stress

Meanwhile, Shandley stayed in close touch with other top Swift officials, giving regular updates to the company's board of directors.

Shandley and Wiseman, the general counsel, reported to CEO Sam Rovit. "Having a very strong working relationship with the CEO was critical, and through him we had direct access to the board," says Shandley.

Shandley made high-level decisions on such matters as "who's going to meet with the government, who should sign a letter, do we need another expert law firm, do we need to spend more money on systems. Many times I was acting as a business manager."

Through it all, Shandley had to make sure his HR operation was running smoothly and that morale stayed high. He added staff where it was needed, upgraded resources and gave people time off.

"We worked to manage the stress levels and keep communications open, so people never felt they were in the dark."

Open communication was key, says Shandley. Members of the senior HR staff in Greeley were tasked with keeping Shandley and other Swift officials "constantly informed of whatever was evolving." And if a plant's HR director received important information, it would be quickly shared throughout the department through conference calls, e-mails and other means.

In addition, the HR directors did not always need to go up the HR chain of command to reach top executives outside the department. For example, if a television reporter showed up at one of the plants, the HR director could pick up the phone to call Sean McHugh, the vice president for investor relations, public relations and communications, without having to first get approval from an HR executive.

"Our corporate culture is not a hierarchical culture," says Shandley. He believes that had Swift been chain-of-command oriented, it wouldn't have been able to handle the ongoing crises nearly as effectively as it did.

By the fall, Swift -- using the profile Border Management had created -- had identified employees it thought ICE might be looking at for possibly using false documents or identities to get hired. Swift hoped to interview and remove any employees where that was the case, and thus perhaps head off the raids.

McHugh wouldn't give the exact number of suspect workers Swift identified, but noted that ICE had kept about a third of the I-9 forms from the Marshalltown plant, and, using that ratio, "One could estimate that as many as approximately 5,000 employees could be of interest to ICE officials across the Swift system," he says.

After first telling Swift officials that such interviews could be considered an obstruction of justice, ICE turned around and gave Swift the go-ahead in October, says McHugh. Swift never got any explanation for the switch.

"It was conflicting guidance without accompanying rationale," says McHugh.

Over the next month, the company interviewed the first 400 suspect employees from various plants. About 95 percent admitted during the first five minutes of the interview that they weren't who they said they were, according to McHugh. They all subsequently quit or were fired.

Swift would have continued the interviews, but on Nov. 17, ICE ordered the company to stop, again threatening charges of obstruction of justice, says McHugh. ICE gave no rationale, but clearly it was worried Swift was hampering its investigation.

Says Shandley, "We were getting mixed signals."

After the raids, Department of Homeland Security Secretary Michael Chertoff -- whose agency oversees ICE -- complained that Swift didn't tell ICE it was interviewing its workers, and that the government had lost track of those who quit or were fired. Swift immediately showed the media a letter from ICE stating that Swift could conduct on its own action against any employees determined to be not authorized to work in the United States.

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"Unprecedented in Scope"

In late November, Swift got another signal from ICE -- and this one was unmistakable. ICE informed the company that within a few days, it would simultaneously shut down six of Swift's seven U.S. plants in order to question each employee.

Swift quickly went to federal court, asking for an injunction to halt the raids. The company proposed an alternative -- that ICE interview the employees in phases, over 10 weeks to four months, to minimize the economic damage to the company.

In early December, however, a federal judge in Amarillo, Texas, refused to issue an injunction. She agreed with ICE's contention that a phased approach would scare away the criminals the government was trying to catch.

Now, the raids were imminent. ICE told the company, " 'We're coming with or without your cooperation,' " says Shandley.

Shandley got his team in place, and put together a schedule that had human resource senior managers at each plant coming in as early as 3 a.m. each day, to notify headquarters once the raids started.

Asked what he did when he got the call while driving to work on Dec. 12, Shandley says, "I sped up."

Shandley and other top company officials met in a crisis room at Swift headquarters, and monitored the raids through open phone lines to the six plants, and by watching news coverage on CNN and other channels on a large plasma television screen. There wasn't much the executives could do, other than give support to their teams at the plants.

"Executives at our level, you're used to making decisions and fixing things, and for a few hours, you were powerless," says Shandley. "It's like a ship without a rudder in a storm. You just have to ride it out."

The raids shut down the plants for six hours. And though 1,297 employees were arrested and taken away, Swift quickly got production up and running again.

"We weren't going to let them beat us," says Shandley.

But the raids were damaging. Swift lost another 1,700 or so workers, as spouses and other relatives of those arrested quit their jobs to help their family members facing jail or deportation.

Of those arrested, 274 were charged with identity theft and the remainder were accused of being in the country illegally, according to ICE.

The next challenge for Swift was rebuilding its decimated workforce. Part of the blow was softened because the company, anticipating mass arrests, had already overstaffed the plants by as much as 20 percent.

But hundreds of workers still had to be hired, and Shandley put together a recruiting team that did extensive advertising, offered hiring and referral bonuses and relocation benefits, and reached beyond the usual 20-mile radius of its plants in the search for new workers. Some of the plants regained full strength by March, though others took several months longer.

This past April, Shandley testified before a U.S. House of Representatives subcommittee on immigration, urging the government to give employers better tools to detect identity theft. In particular, he noted that an employer checking the Basic Pilot database can't learn whether a job applicant's Social Security number is being used by more than one person. (See accompanying story, next page, for more on Basic Pilot.)

At the post-raid press conference, Chertoff said there were no charges against Swift "at this time," but that the case was still under investigation.

Shandley, in his House testimony, criticized Homeland Security and ICE for continuing to "unfairly insinuate that the company is somehow guilty in some unspecified way by parrying all inquiries with the reply of, 'There's an ongoing investigation.' " He called on ICE to publicly admit that Swift had not violated any immigration laws.

One impact of the federal investigation was that Swift, with the help of Border Management, tightened its hiring procedures. Well before the raids, the HR staff began taking a closer look at job applications -- "connecting the dots," as Shandley calls it, to determine whether an applicant's story holds water.

For example, the prefix of a Social Security number indicates the region of the country where it was issued. Does that match where the applicant has lived and worked? Interviewers also started making sure applications were filled out in detail, and in the presence of a Swift employee.

Shandley says the federal discrimination complaint that the company settled in 2002 arose from an "overzealous" employee at one of its plants.

After that, Swift was somewhat gun-shy about asking applicants too many questions, he adds.

But faced with the federal investigation, Swift decided it could do more. And as long as it applied such scrutiny to every employee, says Shandley, it can avoid accusations of discrimination.

Several immigration lawyers interviewed, as well as Angelo Amador, the director of immigration policy for the U.S. Chamber of Commerce, caution that Swift's rigorous approach still carries risks.

"I would suggest that employers are very careful in the questions they ask," says Amador.

Shandley says he believes a number of important lessons can be drawn from the company's experience.

From Day 1, he says, Swift did everything it could to cooperate with the government. And that won points with Congress and the media, he maintains.

In addition, he says, Swift was able to function smoothly through the ongoing crisis because its managers worked so well together. "You have to trust your team and you have to trust each other. If you don't trust them you should remove them -- you're relying on them to make hourly, minute-by-minute decisions."

Equally important was having a contingency plan -- in writing -- so everyone knew what to do.

"Don't wait for a crisis to happen," says Shandley. "Create your own worst-case scenario and practice it. In our case, the worst case did happen."

Another reason Swift made it through the crisis, says Shandley, was that it was flexible, and could change as the conditions changed.

"The subpoenas were unprecedented in scope," he says. "The raids were unprecedented in scope. The request for the injunction was also unprecedented. It was all new. We were writing the rules of the game as we went along."

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