Autos

Ex-GM board member, union leader pleads guilty to accepting kickbacks

Key Points
  • Former GM board member Joe Ashton, a retired UAW leader, pleaded guilty Wednesday to criminal charges as part of an ongoing federal corruption probe into the union.
  • Ashton admitted to demanding and accepting hundreds of thousands of dollars in kickbacks from union vendors and improperly using his position to illegally benefit himself and others.
  • Ashton is one of 13 people charged as part of the federal corruption probe, including 10 officials affiliated with the union and three Fiat Chrysler executives.
Former UAW Vice President Joe Ashton speaks during a GM announcement at a plant in Spring Hill, Tenn. in 2011.
GM

DETROIT – Former General Motors board member Joe Ashton, a retired United Auto Workers leader, pleaded guilty on Wednesday to criminal charges as part of an ongoing federal corruption probe into the union.

The guilty plea was part of a deal with U.S. prosecutors that includes Ashton forfeiting $250,000 that he admitted to illegally receiving in bribes and kickbacks from a vendor of the union.

Ashton, who resigned from the GM board in December 2017 after being linked to the corruption, pleaded guilty to charges of fraud and money laundering conspiracies. Money laundering is punishable by up to 10 years in prison, while the fraud charge could be up to 20 years. However, federal prosecutors suggested his sentence be between 30 and 37 months as part of the plea deal.

Ashton, 71, is one of 13 people charged as part of the federal corruption probe, including 10 officials affiliated with the union and three Fiat Chrysler executives. Ashton is the eleventh to be convicted thus far, including two union officials who admitted to assisting him in the schemes.

Ashton declined to comment to CNBC as he walked out of the federal courtroom in Detroit. His attorney, Jerome Ballarotto, said Ashton is remorseful for his actions.

"He has asked me to apologize to all the members of the UAW, workers at General Motors," said Ballarotto, a former assistant U.S. attorney in New Jersey. "Joe Ashton has spent literally 50 years working for the workers of the UAW and General Motors.

"I've done this for a long time ... sometimes you just find good people just make really bad decisions and they do bad things."

During Ashton's scheduled sentencing in March, Ballarotto said he and his client will provide a better explanation as to why Ashton took the money. Ballarotto also said he plans to file a motion for Ashton's sentencing to be under 30 months.

It's unclear whether Ashton is cooperating with federal prosecutors as part of the ongoing investigation. There is no cooperation agreement as part of the plea deal.

The charges centered on Ashton's position overseeing a jointly operated training center with GM known as the Center for Human Resources, which the company recently announced plans to dissolve as part of its new labor agreement with the union. Ashton oversaw the facility from 2010-2014, when he retired from the union.

Gary Jones, the newly-elected President of the United Auto Workers (UAW), addresses the 37th UAW Constitutional Convention June14, 2018 at Cobo Center in Detroit, Michigan.
Bill Pugliano | Getty Images

A scheme identified by federal prosecutors involved a nearly $4 million contract with the training facility for commemorative watches. According to prosecutors, Ashton demanded $250,000 from the vendor, which he had instructed to create a new company to produce the watches, which were never distributed to members.

GM, in a statement, called Ashton's actions "outrageous." The company reiterated that it "was not aware of his illegal activity until it was recently revealed by the government's investigation." Nor was the company aware that "he allegedly continued to benefit from this conduct" while a member of the board, it said.

The UAW, in a statement, condemned Ashton's actions: "The crimes that Joe Ashton has plead guilty to are against everything we stand for as a union, demonstrate his self-interest, and signify his lack of respect for the oath he took to protect the sacred dues money of our UAW brothers and sisters."

Ashton's guilty plea came days after the UAW announced "stringent changes to the UAW's financial procedures and processes." They included a new external auditing firm and additional internal auditors, among other measures.

The auditing changes are in addition to reform actions announced by acting UAW President Rory Gamble in November. Gamble has been acting president of the union since UAW President Gary Jones took a leave of absence on Nov. 3, days after being implicated in the multiyear investigation. Jones resigned from his position and the union last month. He has not been charged by federal prosecutors.

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