GM-FCA feud exposed new chapter in scandal

General Motors hasn't had any success convincing a judge that it was harmed by the millions of dollars flowing from Fiat Chrysler Automobiles into some top-ranking UAW officials' pockets over nearly a decade, but the feud between the crosstown rivals opened a new dimension to the corruption scandal that has sullied the union.

GM claims that the bribery scheme went all the way to the top of FCA — to CEO Sergio Marchionne. Marchionne died in 2018, before GM went public with its allegations.

"Sergio was not shy about trying to create some drama at the bargaining table," said Art Wheaton, a professor of labor at Cornell University. "He ruffled quite a few different feathers over his career. I think the lawsuit for GM and Fiat Chrysler is somewhat related to some of the antics or strategies or tactics that Sergio was known to have used in the past."

GM in November 2019 filed a federal racketeering lawsuit against FCA and three former FCA executives who had pleaded guilty in the federal corruption probe involving the UAW. In July, a federal judge dismissed the case with prejudice. GM has since appealed and filed state lawsuits related to the allegations in the federal case.

In the federal lawsuit, GM said that FCA engaged in a "multiyear pattern of corruption ... to undermine the integrity of the collective bargaining process and cause GM substantial damages." Among the examples it cited: in 2010 Marchionne gave the UAW's top negotiator with Chrysler, General Holiefield, an expensive Italian watch but declared it to be worth less than $50. GM says FCA later paid for Holiefield's wedding in Italy.

Holiefield died in 2015, but his widow is among the 15 people who have been convicted in the scandal.

GM sought damages "not limited to" the billions of dollars it claimed to have suffered as a result of FCA's scheme.

The complaint argued that Marchionne orchestrated the bribing of UAW officials. GM says FCA corrupted the negotiation, implementation and administration of the 2011 and 2015 bargaining agreements and the implementation of the 2009 contract.

After GM rejected a merger offer with FCA in the spring of 2015, Marchionne arranged a negotiation of the collective bargaining agreement that was "designed, through the power of pattern bargaining, to cost GM billions" and force a merger of the companies, GM said in its complaint. At the ceremony to formally kick off the 2015 talks, Marchionne and the UAW's then-president, Dennis Williams, embraced in a notorious hug before — unbeknownst until investigators revealed it last year — Williams and other bargaining officials attended an $8,494 steak dinner paid for by FCA that evening.

GM also claims Marchionne designed the bribes to win the support of UAW officials who had the power to block any proposed merger under the automakers' labor contracts.

Alphons Iacobelli, vice president of employee relations at FCA and a defendant in GM's suit, would have played a crucial role in the 2015 labor negotiations, but he abruptly stepped down before negotiations began. Marchionne assumed Iacobelli's place at the bargaining table.
GM hired Iacobelli as executive director of labor relations in January 2016. He was fired in 2017, after the Justice Department charged him with violating the National Labor Relations Act and tax laws. After he was hired by GM, Iacobelli funneled information to FCA, GM said in a state lawsuit.

Iacobelli in 2012 told the UAW-Chrysler National Training Center to embrace "liberal" credit card and expense policies to facilitate bribes. UAW leaders used the credit cards for a long list of indulgences, such as $1,259 for luggage, $2,182 for a shotgun, $2,130 for tickets to Walt Disney World, more than $1,000 for Christian Louboutin shoes and thousands of dollars for electronics and other personal items, GM and U.S. Department of Justice said.
Iacobelli is now a federal inmate at a prison in Morgantown, W.Va. He's scheduled for release Sept. 8, 2023.

GM also named former UAW Vice President Joe Ashton as a defendant in a state lawsuit, but excluded him and all other UAW officials from the allegations in federal court. Ashton sat on GM's board from 2014 until he was implicated in the corruption probe, and GM claims he was a "paid mole" inside its boardroom.

Ashton was sentenced to 30 months in prison last month by a federal judge for wire fraud and money laundering.

Despite the rampant corruption that was happening within the top ranks of the union, GM's lawsuits don't hold up, Wheaton said.

"Do I think games were played? Yes. Do I think that [FCA and the UAW] could have done things differently or better? Yes," he said. But because GM worked with Ashton and Iacobelli and excluded the UAW as a defendant in its complaint in federal court, "there were some issues in terms of proving their case."