Auto Union Reaches Reform Deal With Feds to End Corruption Probe

DETROIT (CN) — The federal government and the United Auto Workers said Monday they have reached a settlement to reform the powerful union after corruption infected the very top of the historic organization, resulting in 15 criminal convictions.

“Today we are joining together to announce that the UAW, one of the largest and most prestigious unions in the world, now has a pathway to be free of corruption,” Eastern Michigan U.S. Attorney Matthew Schneider said at the start of a press conference in Detroit.  

Schneider was joined by UAW International President Rory Gamble, whose cooperation was lauded by Schneider as the prosecutor spoke of several former executives who “scarred the UAW” with shady dealings that “undermined the trust” of union leadership.

“President Rory Gamble has stepped forward, he has taken significant actions on his own to begin the reform within the UAW,” Schneider said.

The proposed settlement resolves a federal complaint filed simultaneously against the union Monday under the Anti-Fraud Injunction Act. It calls for an independent monitor to oversee the UAW for six years. The monitor could decide to leave early if the reform plans go well or stay longer depending on the performance of union officials, according to Schneider.

The agreement will allow UAW members to decide via secret ballot if they want to maintain the current process of electing executive board members through delegates or move to a direct election system based on the popular vote.

The union also agreed to pay back $15 million in fraudulent charges to its training center and pay $1.5 million in tax penalties related to improper administrative fees.

Despite heavy oversight for the near future, Schneider stressed that the monitor and the federal government will not get involved in the negotiation of future collective bargaining agreements between union workers and automakers.

Gamble said he was pleased with the settlement and looks forward to a new direction for the union.  

“Today’s agreement builds upon the many reforms that the UAW has initiated and put in place ourselves over the past 13 months. This civil resolution brings to a close the government’s investigation and is testament to the hard work that has been done to make the necessary structural and cultural changes,” the union president said.  

He added, “As I said upon taking office, my overriding goal is to deliver a clean, reformed and ethical union to my successor. Today’s collaborative agreement with the government ensures that we are well on our way toward achieving that goal.”

Federal agents raided union offices in August 2019 and confiscated cash collected as membership dues that was allegedly used for personal expenses including liquor, golf and a condominium in Palm Springs, California.

Former UAW President Gary Jones resigned his position and union membership in December 2019 under pressure from the governing board, which was looking to expel him and former union official Vance Pearson for their role in the corruption scheme.

Jones was charged in March and pleaded guilty three months later to embezzlement, racketeering and tax evasion charges. Pearson, a former Region 5 director, pleaded guilty in February to conspiring to embezzle union money and use a tool of interstate commerce to aid racketeering.

Last December, retired UAW Vice President Joe Ashton faced Senior U.S. District Judge Bernard Friedman in Detroit and entered guilty pleas to one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering.

Ashton, 71, of Ocean View, New Jersey, was appointed as a union representative on the board of directors for General Motors when he retired from UAW in 2014, but resigned in 2017 when an explosive Detroit News report detailed how he demanded more than $500,000 in kickbacks for lucrative contracts in which vendors would produce more than $15 million worth of union-branded trinkets and related merchandise for union workers.

A dozen other convictions have been secured in the corruption scheme, according to FBI special agent in charge Timothy Waters.

“For unions to be effective, members must trust their leadership to do what is best for the entire union and not just for themselves,” Waters said in a statement, adding he hopes “the steps announced today will create a union worthy of the hard working men and women of the UAW.”

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