GM sues FCA, alleging corruption of bargaining process with union

Andrew Cummings
November 21, 2019

There is a lawsuit brewing between to of the top auto makers.

Jones has notified the union that he would retire, his attorney, Bruce Maffeo of NY, said in an email.

One of the Big Three Detroit automakers is accusing another in a wide-reaching corruption probe involving the United Auto Workers (UAW). The move to oust the two leaders would have brought union trials for both.

In the email, Maffeo said Jones chose to step down before learning of the move to oust him.

Jones has not been charged in the case, and the UAW has said previously he was not involved in any wrongdoing. A message was left seeking comment from his attorney.

General Motors is suing Fiat Chrysler, alleging that its crosstown rival got an unfair business advantage by bribing officials of the United Auto Workers union.

The largest automaker in the USA has filed a federal racketeering lawsuit against Fiat Chrysler Automobiles over alleged corrupt behavior during the collective bargaining process, implementation and administration of the 2011 and 2015 labor negotiations.

That resulted in unfairly high labor costs for GM, putting the company at a competitive disadvantage, Craig Glidden, the automaker's general counsel, told reporters during a briefing at the company's Detroit headquarters. The union is now immersed in labor talks with FCA, the last of Detroit's "Big Three" to negotiate after workers ratified contracts with GM and Ford.

Following Fiat's total takeover of Chrysler in 2014, which gave us FCA, the lawsuit explains Marchionne turned to Williams, a longtime friend and a "merger 'wingman.'" Williams allegedly agreed to help Marchionne and FCA as the union's finances were out of control. "We intend to vigorously defend against this meritless lawsuit and pursue all legal remedies in response to it".

GM claims the conspiracy was created to put it at a cost disadvantage to FCA.

Erik Gordon, a University of MI business and law professor, said one company suing another over bribes to union officials is without precedent. GM said that probe, coupled with its own investigation, resulted in the lawsuit.

The suit targets Fiat Chrysler and former company officials who pleaded guilty and were sentenced to prison for their roles in the corruption scandal, including Al Iacobelli, who had served as vice president and lead UAW negotiator. After his indictment in August of 2017, he was suspended, and fired the following December.

The UAW said in a statement, "We are confident that the terms of those contracts were not affected" by the actions of FCA or UAW officials.

The UAW says in a statement that it's committed to make whatever changes are needed to make sure misconduct never happens again.

GM and Fiat Chrysler shares both touched session lows on the news, falling as much as 2.3 per cent and 3.3 per cent, respectively.

Glidden said GM is not suing the UAW because it believes that responsibility rests with FCA, which was the "orchestrator" of the conspiracy.

"The multi-year bribery scheme FCA led undermined the integrity of the collective bargaining process and caused GM substantial damages", Glidden said, referring to Fiat Chrysler Automobiles. The lawsuit says GM doesn't seek to reduce wages or benefits of any UAW workers.

The lawsuit, filed in Detroit federal court on Wednesday, is against the company and former FCA executives.

Joe Ashton is accused of receiving millions of dollars in kickbacks from a contractor who made watches for union members. UAW workers at Ford Motor Co F.N ratified a new contract last week, while GM workers approved a deal in late October that ended a contentious 40-day USA strike.

The lawsuit claims that among the "benefits, concessions and advantages illegally purchased by FCA" was UAW support for "World Class Manufacturing", a version of Toyota Motor Corp's 7203.T lean production strategy but adapted to the culture of Italian automaker Fiat.

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