Plea deal points to widening UAW scandal

DETROIT — A plea deal released last week in the UAW-FCA scandal has laid bare what a tangled web the corruption case has become: Federal officials are questioning whether recent contract agreements are valid, union leadership is under siege from angry rank-and-file members and more charges are expected.

The plea deal was between federal officials and ex-Fiat Chrysler Automobiles labor relations chief Alphons Iacobelli, who pleaded guilty last week to two of seven charges related to his role in siphoning more than $4.5 million in training center funds to union and company officials.

For the first time since the investigation was made public in July, the feds say that the alleged actions were intended to influence union decisions and collective bargaining agreements, which were ratified in 2011 and 2015.

Federal investigators could charge more individuals at the union and FCA, many of whom were unnamed in the plea deal. Investigators, after delving into the FCA-UAW case, are also turning their attention to similar operations at Ford Motor Co. and GM.

"They've seen what happened at one company, and it looks like the same thing could have happened at the others," Peter Henning, a Wayne State University law professor and former federal prosecutor, told Automotive News.

Iacobelli, in the plea agreement, admitted he and other FCA executives paid $1.5 million to UAW officials to sway union negotiations in FCA's favor.

That disclosure will cause big headaches for UAW leadership, said Kristin Dziczek, director of industry, labor and economics at the Center for Automotive Research.

It's particularly a problem for newly appointed UAW Vice President Terry Dittes, who oversees the FCA department and faces "a herculean task of repairing the union's relations with its FCA membership," she said.

"There are many troubling accusations in the Iacobelli plea that, whether or not they are true, already seem to have damaged FCA workers' trust in the UAW," she said.

UAW members on social media have voiced concerns about the union's leadership. At least one group of workers is proposing an alternative leadership slate to the one nominated in November by UAW leadership.

UAW President Dennis Williams, in a letter to members Friday, Jan. 26, denied that the alleged activities affected the union's collective bargaining.

"There's just no truth to the allegation that the terms of the collective bargaining agreement were compromised by Iacobelli's crimes," he said.

At least two occurrences mentioned in the plea deal raise concerns about payments influencing union business.

The first, feds say, took place in December 2013. Iacobelli, according to the plea deal, sent an email to another "FCA executive" confirming that then-UAW Vice President General Holiefield, now deceased, had been "scripted" ahead of a meeting with other members of the union's International Executive Board.

At the time, the board was considering the terms of a multibillion-dollar offer to purchase equity interest held by the UAW Retiree Medical Benefits Trust, also known as a Voluntary Employees' Beneficiary Association, in Chrysler Group, now known as FCA US.

The transaction was completed a month later.

Federal investigators say the second occurrence happened in February and March of 2015. FCA, according to the plea, offered to make confidential retirement offers to "senior UAW officials."

Targeted buyouts are not uncommon, but they are typically based on job classification, department or years of seniority and not exclusively offered to hand-picked senior leaders.

UAW officials, including Williams, have contended that the alleged activities could not have affected negotiations because union members have the final vote on the contracts, which are bargained among dozens, if not hundreds, of individuals.

Williams, in the Friday letter, refuted claims of Holiefield influencing the VEBA meeting. Holiefield, according to Williams, "said nothing" at the VEBA meeting "that anyone who participated can recall."

Regarding the buyouts, Williams confirmed they existed, however said they were "immediately rejected" and "never paid to anyone."

A UAW spokesman last week reiterated that the union is "appalled at these charges" and has taken measures to "reduce the risk of any future recurrence of these activities." He declined to comment directly on the newest allegations, referring to previous statements from Williams.

Dziczek agrees it would have been difficult for such activities to corrupt the union's collective bargaining.

"Given that the UAW relies on pattern bargaining — where one deal serves as the blueprint for the agreement at the other two represented automakers — the numbers of individuals involved would be multiplied three times over," she said.

"It is difficult to fathom that the alleged conspiracy stretches that far and wide."

Iacobelli is one of four people charged in connection with the case. The others are Virdell King, a retired UAW associate director; Jerome Durden, a former FCA financial analyst; and Monica Morgan, Holiefield's widow. Durden and King pleaded guilty to charges and will be sentenced this year.

Iacobelli, 58, pleaded guilty to conspiracy to violate the Labor Management Relations Act and subscribing a false tax return.

According to the plea deal, Iacobelli admitted he and other FCA executives or employees paid "senior UAW officials" more than $1.5 million in an effort to "obtain benefits, concessions, and advantages for FCA in the negotiation, implementation, and administration" of the agreements.

The alleged payments included paying off a mortgage for $262,219, first-class airline travel, designer clothing, furniture and jewelry including a custom-made watch. Not previously detailed was a $30,000 party for a union official that included "ultra-premium liquor," more than $7,000 worth of cigars and more than $3,000 in wine with custom labels.

The federal investigation started with a training center jointly operated between the union and FCA but has expanded to similar operations with Ford and GM, where Iacobelli was employed after FCA.

Henning believes the government is going to move its attention to those operations next.

GM and Ford said in November they were cooperating with federal investigators who have subpoenaed information about their training centers with the UAW, which are funded by the automakers and overseen by joint committees.

No union or company officials with GM or Ford have been formally named or charged with any crimes.