14 February 2021.

General Motors Co (GM) filed a racketeering lawsuit against Fiat Chrysler Automobiles NV (FCA), alleging that its rival bribed United Auto Workers (UAW) union officials over many years to corrupt the bargaining process to gain advantages. This corruption resulted in loss of billions of dollars to GM.

GM blamed that Chrysler’s former chief executive, the late Sergio Marchionne authorised the payment of bribe in order to weaken a competitor with a view to force a merger. GM alleges that Marchionne, who died last year, and three former company officials corrupted the collective bargaining process between the UAW and Detroit’s three automakers for several years from 2009 to 2015. That resulted in unfairly high labor costs for GM, making it to lose competitive advantage.

Former UAW President Dennis Williams in 2015, chose Fiat Chrysler as the union’s negotiation target despite it being the smallest and least-profitable of the Detroit automakers. This was done at the request of Marchionne to inflict higher costs on GM and force it to accept the then-CEO’s proposal to merge with FCA, GM’s complaint alleges.

UAW has been mired in corruption over many years. Two of UAW past presidents, Gary Jones and Denis Williams, and their underlings have been involved in theft of $1.5million Union funds and bribery. This led to the conviction of 15 union or Fiat Chrysler executives. A UAW vice president and other executives received $2 million in kickbacks involving contracts with worker-training centres. The union said it already paid back over $15 million to the training centres.

Alphons Iacobelli, former FCA US labour relations chief, was also convicted in the case, for among other things buying jewelry, designer clothes, furniture, electronics and other luxuries for FCA UAW members, and paying off the mortgage of former UAW vice president General Holiefield, who died in 2015.

UAW reached a settlement with the authorities. Under this settlement a federal court would appoint an independent monitor with powers to investigate possible misconduct and discipline UAW officials. This oversight may last 6 years.

Source: Reuters, IndustryWeek and Bankok Post.