UAW-GM deal would dissolve training center involved in federal corruption probe

Key Points
  • A tentative agreement between the United Auto Workers and General Motors would dissolve the UAW-GM Center for Human Resources.
  • The training center and ones like it at Ford and Fiat Chrysler have been at the center of an ongoing federal probe into union corruption.
  • Ford and Fiat Chrysler declined to comment directly on if they plan to attempt to close their jointly operated training centers with the union.
FBI agents finish loading materials into a truck out of the home of United Auto Workers President Gary Jones on Wednesday, Aug. 28, 2019.
Michael Wayland / CNBC

DETROIT – A tentative agreement between the United Auto Workers and General Motors that was reached this week would dissolve a jointly-operated training facility that has been at the center of an ongoing federal probe into union corruption.

If GM's union members ratify the deal, training programs and other services currently handled by the UAW-GM Center for Human Resources would be transferred to a new "Executive Board-Joint Activities" comprised of an equal number of GM- and UAW-appointed members, according to the tentative contract that was released Friday.

Financial assets of the UAW-GM Center for Human Resources, a nonprofit organization, would be reorganized as two tax-exempt Taft-Hartley Trust Fund organizations and the center's physical location, a large pristine building in Detroit, would be sold. All employees of the center would be assigned elsewhere, or terminated, according to the deal.

As of 2017, the UAW-GM Center for Human Resources had total assets of $78.8 million, down from more than $100 million in 2014. It operates training and tuition assistance, among other programs. Those functions would continue under the Joint Activities board.

The deal also would ban using funds from the trusts for "promotional products and novelty items," which are currently known internally as "trinkets and trash," and have been used by officials for bribery schemes and embezzlement, according to federal prosecutors.

GM, UAW tentative deal will close three plants and senior employees receive bonus
GM, UAW tentative deal will close three plants, senior employees receive bonus

GM did not immediately respond for comment. The union declined to comment on the potential end of the training center.

A spokeswoman for Fiat Chrysler declined to comment on the potential of the company seeking to close its jointly-operated training center with the union. Ford Motor, in a statement, said it's "premature to speculate on how the UAW-GM tentative agreement would affect" the Dearborn, Michigan-based automaker.

"Our focus remains on reaching a fair agreement with the UAW that allows the company to be more competitive so we can continue to preserve and protect good-paying manufacturing jobs and maintain our track record of investing in our U.S. plants," Ford said.

The proposal, if ratified by GM members, will be used as a template by the union for negotiations with Ford and Fiat Chrysler.

The training centers have been a focal point of the U.S. Department of Justice's ongoing investigation into union corruption that has led to charges against 11 people, including nine convictions and the arrest of a current member of the union's top governing board.

Jeffery Pietrzyk, an administrative assistant for the UAW-GM training center, is the most recent person charged in the scandal. The former top aide of retired UAW Vice President Joe Ashton, a former member of the GM board of directors, is expected to plead guilty next week to charges involving bribery and kickback schemes that defrauded union workers.

Pietrzyk's attorney, Robert C. Singer, confirmed to CNBC on Friday that his client is expected to plead guilty.

The four-year federal investigation started with a jointly-operated training center between the UAW and Fiat Chrysler but quickly expanded to include probes into operations with GM and Ford as well.

The investigation has led to the conviction of six people affiliated with the union, including a former vice president with the union's Fiat Chrysler department, and three Fiat Chrysler executives. No one from the union's Ford department has been charged and neither have any executives with GM or Ford.

The UAW's 48,000 members with GM are expected to vote on the proposed deal, which was announced Wednesday, by Oct. 25.