Published: Thu, November 21, 2019
Markets | By Otis Pena

GM sues Fiat Chrysler, alleging union bribes cost it billions

GM sues Fiat Chrysler, alleging union bribes cost it billions

GM is planning to take any damages it is awarded through this lawsuit and use the money to help create jobs for its American workforce. That resulted in unfairly high labour costs for GM, which have put it at a competitive disadvantage in the marketplace, he said.

Fiat-Chrysler has not yet publicly responded to the lawsuit.

"The multi-year bribery scheme FCA led undermined the integrity of the collective bargaining process and caused GM substantial damages", Glidden said, referring to Fiat Chrysler Automobiles.

"Marchionne authorized these bribes, and additional things of value to UAW officials, so that FCA could more effectively compete and thrive against GM and, as detailed below, ultimately attempt to force a merger with GM", the lawsuit reads.

The lawsuit comes at a precarious time for Fiat Chrysler, not only is it in aforementioned merger talks - it is also in the midst of negotiating a four-year contract with the UAW.

FCA said late on Wednesday that it would defend itself vigorously against the lawsuit.

"We are astonished by this filing, both its content and its timing", Fiat Chrysler said. The attempted merger with PSA has no bearing on GM's complaint, he said.

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Federal prosecutors have said Fiat Chrysler executives provided gifts aimed at keeping union officials "fat, dumb and happy" as part of a widening probe that dates back at least two years.

Among those named in the lawsuit, according to the Free Press, were former FCA executives Al Iacobelli, Jerome Durden, and Michael Brown. As to the collective bargaining agreements negotiated with FCA while Iacobelli was an FCA manager, 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 UAW said in a statement it's "focused on continuing to implement ethics reforms and greater financial controls to make sure the misconduct [that] has been uncovered will never happen again". Those contracts, which were ultimately ratified by our membership, were negotiated with the involvement of both local and worldwide representatives and the process had multiple layers of checks and balances to ensure their integrity.

The union is now immersed in labor talks with FCA, the last of Detroit's "Big Three" to negotiate after workers ratified contracts with GM and Ford.

GM and Fiat Chrysler shares both touched session lows on the news, falling as much as 2.3 per cent and 3.3 per cent, respectively.

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

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.

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