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GM Sues FCA Claiming Harm From Contract Talks Manipulation, Names Marchionne


General Motors Corp. said today it has filed a federal racketeering lawsuit against rival Fiat Chrysler Automobiles and former FCA executives who have already pled guilty in the ongoing federal corruption investigation. Also named in the suit is FCA’s late CEO Sergio Marchionne claiming he orchestrated a multimillion dollar conspiracy in part, as a means to force a merger with GM. Marchionne died unexpectedly July 25, 2018. 

“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,” said Craig Glidden, GM Executive Vice President and General Counsel in a statement.

The “harm” GM is claiming from what it termed “FCA’s manipulation of the collective bargaining process” during 2011 and 2015 contract negotiations “resulted in unfair labor costs and operational advantages,” the automaker’s statement said.

The lawsuit claims “more than $1.5 million in bribes were paid to UAW officials by FCA and that “These FCA Group bribes were authorized by its then CEO Sergio Marchionne (now deceased) to General Holiefield, the UAW Vice President and International Executive Board Member (now deceased) who oversaw the FCA business relationship.” 

The bribes, according to the lawsuit, were a key move by Marchionne to pressure GM into a tieup with FCA, stating, “Through a self-described “rich” FCA-UAW labor contract, (former UAW President Dennis) Williams and certain corrupt UAW leaders could seek to convince government investigators that they had obtained significant FCA concessions, while Marchionne could impose unanticipated costs on GM in order to force a merger. While GM ultimately resisted the takeover scheme, in the process Marchionne and FCA Group negotiated a 2015 CBA that, as designed, directly damaged GM as a result of the pattern of racketeering.”

FCA quickly responded with a statement expressing dismay at GM’s actions charging its competitor with trying to throw a wrench in FCA’s proposed merger with French automaker PSA Groupe, saying “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 ongoing negotiations with the UAW. We intend to vigorously defend against this meritless lawsuit and pursue all legal remedies in response to it.”

GM’s lawsuit is just the latest shoe to drop related to an ongoing investigation by the U.S. Attorney’s’ Office in the Eastern District of Michigan that so far has resulted in charges against 13 FCA and UAW officials and four former UAW, and three FCA officials pleading guilty, including former FCA Vice President and chief labor negotiator Alphons Iacobelli, who is now serving a five-and-a-half year sentence in federal prison. 

While not named in GM’s lawsuit, the UAW weighed in with its own statement saying, ”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. Mr. Iacobelli worked for both FCA and General Motors, and he is currently in prison for his crimes, which include the misuse of Joint Program funds. 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. Those contracts, which were ultimately ratified by our membership, were negotiated with the involvement of both local and international representatives and the process had multiple layers of checks and balances to ensure their integrity.” 

GM is demanding damages “including but not limited to the billions of dollars in damages GM suffered as a result of Defendants’ bribery scheme,” along with punitive damages and costs. The company said it would invest an proceeds from the case “will be invested in the U.S. to benefit GM’s employees and grow jobs.”



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