GM sues Fiat Chrysler, alleging bribery of union officials cost it billions of dollars

 GM sues Fiat Chrysler, alleging bribery of union officials cost it billions of dollars

By Nick Carey

DETROIT (Reuters) - General Motors Co on Wednesday filed a racketeering lawsuit against Fiat Chrysler Automobiles NV , alleging that its rival engaged in bribery over many years to corrupt the bargaining process with the United Auto Workers (UAW) union and gain wage and work practices advantages, costing GM billions of dollars.

GM said it will seek "substantial damages" from FCA, but did not specify an amount.

"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."

The lawsuit comes at a delicate time for FCA, which is working on a planned merger with French automaker PSA and is currently negotiating a four-year contract 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.

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.

PSA could not immediately be reached for comment.

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 General Counsel Craig Glidden said a "pattern of racketeering" by FCA from 2009 to 2015 left GM paying higher wages than FCA, and allowed FCA 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.

The suit also claims that after a failed bid to take over GM in 2015, FCA corrupted the collective bargaining process by structuring terms through bribed UAW officials that "forced unanticipated costs on GM."

GM alleges that FCA, under the leadership of former chief executive Sergio Marchionne, used bribes to UAW officials to corrupt the collective bargaining process from 2009 through 2015. Marchionne died in 2018.

"Marchionne was a central figure in the conceiving, executing and sponsoring of the fraudulent activity," Glidden said.

When GM rejected a merger bid from FCA, the lawsuit alleges Marchionne conspired to negotiate a new four-year contract "designed, through the power of pattern bargaining, to cost GM billions."

GM's Glidden said 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.

"Our sole focus is FCA," Glidden told reporters at GM's headquarters.

The UAW has been the focus of a spreading federal corruption probe that recently led its president to seek a leave of absence.

Last week, the UAW's acting president unveiled a series of reforms designed to prevent further scandals.

Glidden said the automaker supports those reform efforts.

(Reporting by Nick Carey in Detroit, additional reporting by Ben Klayman in Detroit and Gilles Guillaume in Paris; Editing by Matthew Lewis)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date: Nov 21, 2019 00:09:05 IST



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