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GM sues Fiat Chrysler alleging bribery scheme in union negotiations

Key Points
  • General Motors accused Fiat Chrysler in a lawsuit filed Wednesday of undermining its collective bargaining negotiations with the United Autoworkers Union.
  • GM said the alleged bribery scheme was authorized at the highest levels of Fiat Chrysler, including the company's late CEO, Sergio Marchionne.
  • Earlier this month, federal prosecutors charged retired UAW Vice President and former GM board member Joseph Ashton with fraud and money laundering, as part of its corruption probe into the union.
Mary Barra, chief executive officer of General Motors Co. (GM), left, and Sergio Marchionne, chief executive officer of Fiat Chrysler Automobiles NV, center, listen during a news conference outside the White House after a meeting with U.S. President Donald Trump, not pictured, in Washington, D.C.
Andrew Harrer | Bloomberg | Getty Images

General Motors filed a federal racketeering lawsuit against Fiat Chrysler and its former executives on Wednesday, accusing the automaker of bribing United Auto Workers officials to receive more favorable terms in labor negotiations.

"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," Craig Glidden, GM's general counsel, said in a statement.

GM said that Fiat Chrysler "corrupted" collective bargaining agreements between GM and UAW in 2009, 2011 and 2015 by paying millions in dollars in bribes.

"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 company said in a statement.

GM said the alleged bribery scheme was authorized at the highest levels of Fiat Chrysler, including the company's late CEO Sergio Marchionne. The automaker is seeking damages to recoup losses resulting from what it claims was a "systematic and near decade-long conspiracy" to undermine GM's negotiations with UAW officials.

Fiat Chrysler called the lawsuit "meritless" and said it plans to vigorously defend itself.

"We are astonished by this filing, both its content and its timing. We can only assume this was intended to disrupt our proposed merger with PSA as well as our negotiations with the UAW," the Italian-American automaker said in a statement. The company last month announced a tentative agreement to merge with Peugeot maker PSA Group, creating the fourth-largest automaker in the world.

GM's general counsel told reporters on a conference call Wednesday that the lawsuit has no bearing on the ongoing merger discussions between Fiat Chrysler and PSA Group. Glidden also said that the lawsuit won't affect existing collective bargaining agreements, and that there are no current allegations against Fiat Chrysler CEO Michael Manley.

Shares of GM slipped 3% following the news, while Fiat Chrysler shares dropped nearly 4% during midday trading.

Former CEO of Fiat Chrysler Automobiles, Sergio Marchionne.
Getty Images

UAW members approved a labor deal with GM in late October, ending the longest strike for the union against any Detroit automaker in decades.

Earlier this month, Federal prosecutors charged retired UAW Vice President and former GM board member Joseph Ashton with fraud and money laundering, as part of their corruption probe into the union. Prosecutors say Ashton received hundreds of thousands of dollars in kickbacks and using his position to illegally benefit himself and others.

So far, the probe has led to charges against 13 people, including seven convictions of people affiliated with the union and three Fiat Chrysler executives.

GM specifically named the three former Fiat Chrysler executives who were convicted by U.S. prosecutors: Alphons Iacobelli, Jerome Durden and Michael Brown. Iacobelli was sentenced last year to a 5½-year prison term.

"The UAW is focused on continuing to implement ethics reforms and greater financial controls to make sure the misconduct which has been uncovered will never happen again," the UAW said in a statement. "Mr. Iacobelli worked for both FCA and General Motors, and he is currently in prison for his crimes."

Last week, acting UAW President Rory Gamble announced a string of anti-corruption reforms, including the creation of an independent "ethics officer" position amid the ongoing investigation.

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GM files lawsuit against Fiat Chrysler, alleging corrupt bargaining with UAW