The federal investigation into corruption involving officials from the United Auto Workers and Detroit’s automakers has zeroed in on another ex-UAW official.
Michael Grimes, who retired from the UAW in 2018, was identified in “information” unsealed in U.S. District Court in Detroit. He has been charged with wire fraud conspiracy and money laundering for allegedly receiving $1.99 million in kickbacks.
Grimes, according to the information conspired with another as yet unidentified union official to collect kickbacks running into the hundreds of thousands of dollars off contracts for items such as watches, jackets and backpacks that were paid for with funds from the training funds controlled jointly by the UAW and GM.
“Mike Grimes benefited only himself, not the UAW membership, and should be fully prosecuted to the extent of the law,” the UAW said in a statement.
No GM official was named in the court documents and GM has said it is cooperating with the federal investigation, which has already led to the conviction of eight officials from Fiat Chrysler Automobiles N.V. and the UAW.
A total of eight FCA and UAW officials have now pleaded guilty to violations of federal labor law and embezzlement.
Al Iacobelli, former FCA vice president of labor relations, who was employed by GM for a time after he separated from FCA, pleaded guilty to embezzling nearly $1 million from joint funds and using the training funds to influence UAW officials on the administration of UAW contracts.
FCA itself also potentially faces hefty fines for its role in scandal, according to sources familiar with the case.
Last week, Norwood Jewell, a former UAW vice president and a member of the union’s executive board, was sentenced to 15 months in prison for taking money for violating the Taft Hartley Act, which forbids union officials from taking anything of value from employers such as FCA or GM.
Jewell, the highest-ranking union official to ever receive a prison sentence, is expected to turn himself in to federal authorities in January.
With Jewell on his way to prison, the case against Grimes is expected to make the UAW’s efforts to negotiate new contracts with Detroit’s automakers more complicated.
Up until last year, Grimes was a top assistant to Cynthia Estrada, the UAW vice president responsible for negotiations with FCA.
Grimes was Estrada’s assistant while she was the head of the union’s GM Department. Gary Jones, the UAW’s new president, moved Estrada from GM to the union’s FCA department earlier this summer.
The shift put her in charge of the union’s troubled FCA department at a difficult time. While she has not been implicated in the case against Grimes, the legal difficulties of her top aide coupled with the FCA department’s sordid recent history uncovered by federal investigators could make it extremely difficult for the union to designate FCA as the target company in this year’s negotiations.
Instead the union is instead likely to target GM or Ford before the current contracts expire Sept. 14. The conventional wisdom is that the union will pick Ford because it is considered the softer target. Talks at GM are complicated by plant closings, which has more underutilized capacity than its rivals, according to an analysis by LMC.
Federal investigators also known to have reviewed the handling of the joint company-union funds at Ford. The joint funds, the so-called nickel funds set up in the 1980s, are established under contractual provisions that divert five cents per hour for each hour worked by union members for training and education.