General Motors files federal racketeering lawsuit against Fiat Chrysler Automobiles
What started as a Detroit newspaper investigation into United Auto Workers officials’ misuse of funds earmarked for training center has spiraled into criminal indictments of union reps and company executives for embezzlement and kickbacks. Last week saw the firing of an allegedly corrupt UAW president and his aide by the union’s executive council. If that wasn’t enough, General Motors has also filed a federal racketeering RICO lawsuit against Fiat Chrysler Automobiles and former FCA executives who have already pleaded guilty in the ongoing federal investigation.
The lawsuit alleges that corrupt practices by FCA undermined the collective bargaining process, resulting in substantial damages to GM over the past decade.
“This lawsuit is intended to hold FCA accountable for the harm its actions have caused our company and to ensure a level playing field going forward,” says Craig Glidden, GM Executive Vice President and General Counsel.
In a statement about the lawsuit, GM alleges “FCA was the clear sponsor of pervasive wrongdoing, paying millions of dollars in bribes to obtain benefits, concessions, and advantages in the negotiation, implementation, and administration of labor agreements over time.”
The largest domestic automaker claims that the corruption goes back at least a decade, having affected the implementation of the 2009 collective bargaining agreement between the union and FCA. The suit alleges FCA misdeeds also corrupted the negotiations, implementation, and administration of the agreements in 2011 and 2015. That “manipulation” of the collective bargaining process at FCA is alleged to have ended up costing GM more for labor costs, giving FCA an unfair advantage.
If you’re wondering why GM has not included the UAW in the lawsuit, remember that the labor union still represents the vast bulk of GM employees and that the UAW Retiree Medical Benefits Trust is still the largest single holder of GM stock, owning more than 100 million shares.