GM sues Fiat Chrysler, alleging union bribes cost it billions

DETROIT: General Motors Co on Wednesday filed a racketeering lawsuit against Fiat Chrysler Automobiles NV , alleging that its rival bribed United Auto Workers (UAW) union officials over many years to corrupt the bargaining process and gain advantages, costing GM billions of dollars.
GM also alleged that Fiat Chrysler’s former chief executive, the late Sergio Marchionne, was central in the scheme.
The No. 1 US automaker said it will seek “substantial damages” from FCA that it said would be reinvested in the United States to create jobs, but did not specify an exact amount.
The lawsuit comes at a delicate time for FCA, which is working on a planned merger with French automaker PSA and is negotiating a four-year labor contract with the UAW.
“We are astonished by this filing, both its content and its timing,” FCA said in a statement. “We can only assume this was intended to disrupt our proposed merger with PSA as well as our negotiations with the UAW.”
FCA and PSA last month announced the planned 50-50 share merger to create the world’s fourth-largest automaker, seeking scale to cope with costly new technologies and slowing global demand.
GM’s general counsel, Craig Glidden, told reporters at GM’s headquarters that the lawsuit has nothing to do with the planned merger of PSA and FCA and the automaker does not intend to file suit against the UAW. PSA declined to comment.
The UAW has targeted FCA last out of Detroit’s three automakers for contract talks. UAW workers at Ford Motor Co ratified a new contract last week, while GM workers approved a deal in late October that ended a 40-day US strike.
“It (the lawsuit) can’t help but complicate the already difficult task of getting a UAW-FCA agreement in place,” said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research (CAR) in Michigan.
The UAW said in a statement, “We are confident that the terms of those contracts were not affected” by the actions of FCA or UAW officials. It said it was “regrettable” that these issues can cause doubts about the contracts.
The lawsuit also names as defendants three former FCA executives who have pleaded guilty in an ongoing federal probe into the UAW and FCA. GM said that probe, coupled with its own investigation, resulted in the lawsuit.
GM’s Glidden said a “pattern of racketeering” by FCA from 2009 to 2015 left GM paying higher wages than Fiat Chrysler, and allowed the latter to use more temporary workers and lower-paid second-tier workers than GM.
“As part of this bribery scheme, and to lock in the competitive efficacy of the purchased benefits, concessions and advantages for FCA, GM was denied similar union commitments and support,” the lawsuit states.
— Reuters