General Motors sues Fiat Chrysler over bribery schemes

General Motors (GM) sued its rival Fiat Chrysler Automobiles (Fiat Chrysler) on 20th November 2019, asserting that it bribed United Auto Workers (UAW) officials in contract negotiations to get a leg up on General Motors over the course of a decade.

The lawsuit references guilty pleas by former FCA officials, who bribed former UAW officials, in a long-running case involving a UAW employee training program that has tarnished the union’s image.

Three former Fiat Chrysler executives and several UAW officials have already pleaded guilty in cases that revealed a culture of exchange of favors. Corporate and union leaders siphoned off millions of dollars — some of which was meant for a training center — to pay for Rolex watches and lavish personal travel and meals.

GM’s General Counsel, Craig Glidden, said that a “pattern of racketeering” by Fiat Chrysler 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.

In its lawsuit, GM has claimed that the corruption went far beyond embezzlement and personal enrichment. The company argues that the illegal activity was approved by Sergio Marchionne – the former Chief Executive of Fiat Chrysler, and helped Fiat Chrysler win union acceptance of cost concessions that were denied to GM in labor contracts in 2011 and 2015. The suit further states that as part of this bribery scheme, and to lock in the competitive efficacy of the purchased benefits, concessions and advantages for Fiat Chrysler, GM was denied similar union commitments and support.

The suit also contended that Fiat Chrysler executives bribed union leaders to win support for Fiat Chrysler’s highly public effort to pressure GM into a merger in 2015.

According to the law suit, “In those pleas, the co-conspirators admit to a dizzying number of racketeering acts, including millions in illegal payments [that] were made in an effort to obtain benefits, concessions, and advantages for FCA in the negotiation, implementation, and administration of the collective bargaining agreements between FCA and the UAW. That is exactly why they were made. These acts were designed to and did pervert the collective bargaining process to the direct injury of GM.”

GM is reportedly seeking billions of dollars in damages.