U.S. Attorney Matthew Schneider secured a guilty plea from Stellantis, FCA at the time of his investigation, and a $30 million settlement.
This story has been updated with new information.
Stellantis subsidiary FCA US LLC pleaded guilty criminal conduct and agreed to pay a $30 million fine as part of a settlement with the U.S. Department of Justice and U.S. Department of Labor for violations of federal labor law.
The guilty plea and fine mark perhaps the final step in the long-running federal investigation into corruption at what was then Fiat Chrysler Automobiles N.V. and the United Auto Workers that has led to the arrest and conviction of 15 individuals, including two former UAW Presidents and also targeted now deceased FCA CEO Sergio Marchionne.
The investigation began more than five years and in December the UAW accepted a negotiated settlement with the Office of the U.S. Attorney for the Eastern District of Michigan that will require the union to name and pay an outside monitor to oversee the union’s spending and internal operations.
(U.S. Attorney who led UAW probe submits resignation.)
Former UAW President Gary Jones, left, and his aide, Vance Pearson, right, were involved in the corruption involving FCA and the UAW.
As part of the settlement, which still must be approved by a federal judge, Stellantis and its FCA organization will be on probation for three years for violation of federal labor law, specifically the Taft Hartley Act, which outlaws illicit corporate payments to union officials, Schneider said during a press conference. The company also agreed to hire an independent monitor to insure Stellantis/FCA obeyed the law.
Additionally, the union agreed to schedule a referendum that could force the union to fill top offices through direct elections where each UAW has a vote. Under the union’s existing constitution, top union officers are filled by delegates to a convention held every four years.
The scandal has tarnished the UAW’s reputation both with the public and its own members.
Executives from FCA, including now-deceased former FCA CEO Sergio Marchionne prior to his death in 2018, side stepped responsibility for the role of the company in the scandal even though federal investigators had confirmed the automaker’s activities were under active investigation.
Former UAW President Dennis Williams was the second of two former union presidents involved in corruption at the union.
Schneider declined to comment of the late Sergio Marchionne role in the scandal, noting that the “Justice Department does not indict or charge deceased persons.”
(UAW strikes deal with Feds to remain independent.)
However, he said the stiff fine spoke for itself, noting that unlike the charges involving UAW officials and officers, the executives from FCA involved in the scandal were working for corporate objectives.
Schneider, the outgoing U.S. attorney for the Eastern District of Michigan, said last month at a press conference in Detroit, that the case against FCA, which was preparing for its merger with PSA, was still open and unresolved.
The Department of Justice had charged Al Iacobelli, former vice president for Employee Relations at Fiat Chrysler Automobiles, who served as the lead negotiator for the collective bargaining agreements between FCA and the UAW, with conspiring to violate the Labor Management Relations Act.
Now deceased FCA CEO Sergio Marchionne was investigated as part of Schneider’s probe. He declined to comment on Marchionne’s role.
Iacobelli pleaded guilty in 2018 to charges that he delivered more than $1.5 million in illicit payments to senior UAW officials from 2009 through June 2015. The senior UAW officials included UAW Vice President General Holiefield, UAW Assistant Director Virdell King and others all of whom were responsible for the union’s relations with the FCA.
Marchionne authored a eulogy that Iacobelli read at Holiefield’s funeral in 2015, offering a lavish eulogy and tribute to the UAW vice president whom he described as a close friend. While never confirmed publicly, Marchionne also helped arrange for a lavish wedding trip to Italy for Holiefield and his new bride Monica Morgan. At the time, Holiefield was responsible for administering the UAW’s labor contract with Marchionne’s FCA.
General Motors sued FCA in 2019, claiming the illicit payments to UAW officials ultimately served to undermine GM’s competitive position. The suit also claimed that the contracts FCA negotiated with the UAW were designed to impose penalties on GM in the form of higher labor costs that cost GM $1.5 billion.
(UAW, Justice Department working on possible changes at union.)
Whether FCA actually gained a competitive advantage with their effort, he could not say, Schneider said. “That was their intent,” he added. The lawsuit was ultimately dismissed by a U.S. federal judge in Detroit, but GM has appealed the ruling.
