cloudy.png
Monday May 25th, 2020 12:28PM

GM accuses Fiat Chrysler of bribing UAW to get lower costs

By The Associated Press
Related Articles
  Contact Editor

DETROIT (AP) — 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 unprecedented lawsuit, filed Wednesday in U.S. District Court in Detroit, alleges that FCA was involved in racketeering by paying millions in bribes to get concessions and gain advantages in three labor agreements with the union.

Details of the racketeering have been exposed in a federal probe of corruption at the union that has resulted in multiple arrests starting in 2017.

Also on Wednesday, the union’s Executive Board filed paperwork to oust President Gary Jones and Regional Director Vance Pearson, both of whom have been implicated in the widening federal probe.

GM’s lawsuit alleges that Fiat Chrysler corrupted the bargaining process with the UAW in the 2009, 2011 and 2015 union contracts to gain advantages over General Motors.

“FCA was the clear sponsor of pervasive wrongdoing, paying millions of dollars in bribes to obtain concessions” from the union, GM General Counsel Craig Glidden said. “FCA’s manipulation of the collective bargaining process resulted in unfair labor costs and operational advantages for it, causing harm to GM.”

In a statement, Fiat Chrysler called the lawsuit “meritless” and said it would defend itself vigorously. It also accused GM of trying to disrupt its proposed merger with French automaker PSA Peugeot as well as ongoing contract talks with the UAW.

“We are astonished by this filing, both its content and its timing,” Fiat Chrysler said. “We intend to vigorously defend against this meritless lawsuit and pursue all legal remedies in response to it.”

Glidden alleged that Fiat Chrysler CEO Sergio Marchionne, who died last year, was a “central figure” in the conspiracy, which was designed to put GM at a cost disadvantage to FCA.

Erik Gordon, a University of Michigan business and law professor, said one company suing another over bribes to union officials is without precedent. While GM’s allegations are believable given what federal prosecutors have already uncovered, it will have the burden of convincing a jury that the scheme actually happened, Gordon said.

In addition to Fiat Chrysler, GM’s lawsuit names former FCA labor relations chief Alphons Iacobelli, and former FCA officials Jerome Durden and Michael Brown as defendants. All have pleaded guilty in the federal corruption probe, which has alleged that Fiat Chrysler bribed UAW officials to keep them “fat, dumb and happy.”

Authorities have said that payments were made through a training center jointly run by the company and the UAW. Durden handled the training center’s finances, and Brown helped run the center.

After leaving Fiat Chrysler, Iacobelli went to GM’s labor relations department in 2016. He was suspended after his indictment and fired in December of 2017.

In a separate statement, the UAW said it had multiple safeguards in place to ensure the integrity of its contracts negotiated with Fiat Chrysler, including reviews by local and international union officials.

“We are confident that the terms of those contracts were not affected by Iacobelli’s misconduct, nor that of any UAW officials involved in the misuse of joint program funds at FCA,” the statement said.

The UAW says it’s committed to make whatever changes are needed to make sure misconduct never happens again.

Glidden told reporters that in the three UAW contracts, FCA was able to reduce its labor costs because the union allowed it to hire more temporary and lower-paid workers than GM.

In 2007, the union agreed that new hires would be paid less than longtime workers, setting up a “second-tier” of employees who were paid less. FCA has more second-tier workers than either of its Detroit competitors.

The Center for Auto Research, an industry think tank, calculated earlier this year that Fiat Chrysler’s total labor costs including wages and benefits were about $55 per hour, giving it an $8 per hour benefit over GM and a $6 advantage over Ford.

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

“We were denied benefits that FCA received under their collective bargaining agreements and were damaged as a result,” he said.

Glidden said GM is seeking substantial damages in the case, but he could not give a specific amount. The lawsuit says GM doesn’t seek to reduce wages or benefits of any UAW workers.

Hours after the lawsuit was filed, the UAW’s executive board signed paperwork seeking to boot Jones and Pearson from the union. Both men are on paid leaves as their cases are prosecuted.

The papers say that Jones and Pearson directed submission of bogus expense records and concealed where the money went, violating ethics procedures and federal labor laws.

Pearson has been charged with embezzling thousands of dollars to pay for expensive cigars and wines, golf greens fees, clothing and to rent a lavish villa in California. Jones has not been charged but federal authorities raided his suburban Detroit home in August.

A panel of delegates to the last international convention will hold trials for both men, who have 15 days to prepare their defense under the union’s constitution.

Last week, a retired union vice president and former GM board member became the 13th person to be charged in the federal probe of the union and auto companies.

Joe Ashton is accused of receiving millions of dollars in kickbacks from a contractor who made watches for union members. The 58,000 watches, purchased through the GM-UAW joint training center, are still in storage five years later.

Ashton was charged with conspiracy to commit wire fraud and conspiring to commit money laundering. A guilty plea is expected on Dec. 4, according to a court filing Wednesday.

Glidden said GM had no knowledge of the scheme that allegedly involved Ashton, and the lawsuit had nothing to do with that case.

“In the fullness of time, GM will address that conduct,” he said.

Last month, the union settled with GM after a 40-day strike, and Ford workers reached an agreement shortly after. Intense talks with Fiat Chrysler began Monday, with the possibility of another strike possible due in part to union members’ distrust of UAW leadership.

  • Associated Categories: Associated Press (AP), AP National News, AP Online National News, Top General short headlines, AP Business, AP Business - Corporate News, AP Business - Economy
© Copyright 2020 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Lights out in California again with high wildfire danger
Pacific Gas & Electric Co. began shutting off power to 375,000 Californians Wednesday in an effort to prevent its power lines from starting more wildfires
3:16PM ( 3 minutes ago )
GM accuses Fiat Chrysler of bribing UAW to get lower costs
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
3:13PM ( 7 minutes ago )
AP source: FBI has asked for interview with whistleblower
The FBI has requested an interview with the whistleblower whose complaint fueled the impeachment inquiry into President Donald Trump and Ukraine
3:12PM ( 7 minutes ago )
Associated Press (AP)
The Latest: Jordan debates ‘2 plus 2’ math with Sondland
Republican Rep. Jim Jordan disputes a claim by Ambassador Gordan Sondland that he added “two plus two” to conclude that the Trump administration was holding up a White House meeting with Ukraine’s new president for a political investigation of Democrats
2:49PM ( 31 minutes ago )
Royal scandal: Prince Andrew to step back from public duties
Britain's Prince Andrew is stepping back from public duties with the queen's permission because of his association with a notorious sex offender
2:48PM ( 31 minutes ago )
Attorney: Navy retaliating against SEAL helped by Trump
Attorney: Navy trying to boot convicted SEAL after Trump restores his rank, calls move retaliation
2:25PM ( 55 minutes ago )
AP National News
The Latest: Perry denies knowing of Trump push on Ukraine
The Energy Department is denying that Energy Secretary Rick Perry knew that President Donald Trump had been pushing for a political investigation in Ukraine
1:33PM ( 1 hour ago )
Last campus protesters hold out as Hong Kong schools reopen
Hong Kong schools have reopened after a 6-day shutdown but students were facing transit disruptions as the last protesters remained holed up on a university campus
1:30PM ( 1 hour ago )
Ex-Baltimore Mayor Catherine Pugh faces fraud, tax charges
The disgraced former mayor of Baltimore who resigned amid investigations into deals to sell her self-published children's books has been charged with fraud and tax evasion.
12:59PM ( 2 hours ago )
AP Online National News
Bloomberg spending $15M-$20M to register half million voters
Bloomberg spending $15M-$20M to register a half million swing-state voters
2:47PM ( 33 minutes ago )
Many in Venezuela’s 2nd city turn to prayer, not politics
Venezuela’s poorest in the once-thriving oil city of Maracaibo struggle to get through each day, unable or unwilling to join the call by opposition leaders to protest against President Nicolás Maduro
2:31PM ( 48 minutes ago )
Stocks slide on Wall Street over new trade war concerns
Stocks moved broadly lower in afternoon trading on Wall Street Wednesday as investors turned anxious about the possibility that the U.S. and China may not reach a trade deal before next year
2:10PM ( 1 hour ago )
AP Business
Ex-Baltimore mayor charged in ‘Healthy Holly’ book scandal
The disgraced former mayor of Baltimore who resigned amid investigations into deals to sell her self-published children's books has been charged with fraud and tax evasion.
1:29PM ( 1 hour ago )
GM sues FCA over union bribes
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
12:41PM ( 2 hours ago )
Disney Plus blames past hacks for user accounts sold online
Disney Plus says it doesn’t have a security breach, but some users of the new streaming service have been shut out after hackers tried to break into their accounts
12:34PM ( 2 hours ago )
AP Business - Corporate News
Stocks slip on Wall Street over new trade war concerns
U.S. stocks fell in afternoon trading Wednesday after a resolution by the U.S. Senate added a potential new hurdle to the push for a U.S.-China trade deal
12:22PM ( 2 hours ago )
Zimbabwe police fire tear gas at opposition supporters
Zimbabwe police fire tear gas at opposition supporters ahead of leader’s speech
8:22AM ( 6 hours ago )
World shares retreat on jitters over US bill on Hong Kong
Global shares retreat on poor Japan trade data, jitters over China trade, Hong Kong
7:38AM ( 7 hours ago )
AP Business - Economy
Lights out in California again with high wildfire danger
Pacific Gas & Electric Co. began shutting off power to 375,000 Californians Wednesday in an effort to prevent its power lines from starting more wildfires
3:16PM ( 4 minutes ago )
AP source: FBI has asked for interview with whistleblower
The FBI has requested an interview with the whistleblower whose complaint fueled the impeachment inquiry into President Donald Trump and Ukraine
3:12PM ( 7 minutes ago )
Buttigieg looks to prove his staying power in Atlanta debate
Mayor Pete Buttigieg tops Iowa presidential caucus polls, and now he’ll face the scrutiny that comes with his climb as Democrats gather in Atlanta for their fifth 2020 primary debate
3:06PM ( 14 minutes ago )
Netanyahu challenger fails to form coalition
Israel faces likely 3rd election amid standoff between Prime Minister Netanyahu, chief challenger Gantz
2:59PM ( 21 minutes ago )
Key European party’s new leader blasts autocrats in group
The future president of the largest party in the European Parliament has launched a scathing attack against autocratic and populist leaders within the group’s ranks
2:53PM ( 27 minutes ago )