Fiat Chrysler Agrees to Pay $30M to End Federal Corruption Probe

The automaker pleaded guilty to bribing top union officials to get sweetheart deals on labor costs.

A Fiat logo is pictured on a car in Bayonne, southwestern France. (AP Photo/Bob Edme, File)

(CN) — Federal prosecutors announced a plea agreement with auto giant Fiat Chrysler Automobiles on Wednesday, concluding their investigation into the company’s multimillion-dollar kickback scheme with auto union executives with a hefty $30 million payment.

Eastern Michigan U.S. Attorney Matthew Schneider announced the agreement in a Wednesday morning press conference. The company agreed to plead guilty to one count of conspiracy to violate the Labor Management Relations Act in connection with a lengthy campaign of bribery of United Auto Workers officials.

FCA gave out over $3.5 million in illegal payments to high-powered union officials between 2009 and 2016, Schneider said, along with lavish parties and meals and gifts of clothing and other luxury goods. It even conspired, he said, to pay off one UAW vice president’s $262,000 home mortgage.

The automaker’s goal was to undercut its competitors on labor costs by getting sweetheart deals from UAW, according to prosecutors.   

“These crimes have… undermined the workers’ trust in the integrity of the collective bargaining process,” Schneider said. “I’m pleased to announce that FCA has agreed to accept responsibility for its conduct.”

The agreement, if approved by a federal judge, would also put a compliance monitor in place to keep an eye on the company’s conduct for three years.

FCA is the first corporate entity to face charges in the sprawling corruption investigation. The probe has also led to the convictions of 15 people, including three FCA executives, two past UAW presidents and an ex-GM board member and UAW leader.

Asked why he pursued charges against FCA and not the UAW, Schneider explained that the union leaders had been working against and even stealing from the union, whereas Fiat executives were attempting to benefit the company with their bribes.

“In most cases, the charges related to the UAW involved individual officials seeking to satisfy their own greed,” Schneider said. “FCA’s crimes were different. FCA’s executives were acting in the interests of FCA…. That’s why a criminal resolution for FCA is appropriate.”

The UAW has not escaped without penalty, however. A December deal with prosecutors ended an investigation into the union, but required the UAW to hire an independent monitor and a membership vote on the method for choosing top leaders. The union has also paid $15 million back to training centers which were used to improperly funnel money, and was ordered to pay out $1.5 million to the IRS, according to the Detroit Free Press.

Schneider took a moment in the press conference to acknowledge FCA’s size and importance to Michigan’s economy, but added that “no matter what the size or importance of a company, our job as a Justice Department is to make sure they are held accountable under federal law.”

He noted that an investigation into Ford Motor Company is ongoing, but that “this investigation is concluded as it relates to the Taft-Hartley Act and FCA.”

FCA is under a new management structure after a Jan. 4 merger with French automaker Groupe PSA formed a new parent company, Stellantis. Former FCA President Sergio Marchionne, who led the company during the period when bribes were paid, died in 2018. The company’s chief labor negotiator, Alphons Iacobelli, recently had a 66-month prison sentence reduced to 48 months for cooperating in the case. Former union presidents Gary Jones and Dennis Williams have yet to be sentenced.

The corruption scandal has also spawned several civil suits against FCA. Two of the largest such suits have already been dismissed. One suit, brought by competitor General Motors, was quashed in July after a federal judge found that alleged RICO and Taft-Hartley Act violations didn’t directly harm GM. An appeal in that case is pending. Another dismissal of a class action suit by workers who alleged the kickbacks encouraged age discrimination was affirmed by the Sixth Circuit in 2019.

Requests for comment to both FCA and the UAW were not returned. A statement from FCA provided little additional information on the topic.

“FCA US LLC (FCA US) today announces that it has reached an agreement with the U.S. Attorney’s Office for the Eastern District of Michigan to resolve its investigation into past misconduct of certain former FCA US employees involving the UAW-Chrysler National Training Center (NTC),” the company said, referencing a joint project between the union and the company which was used to funnel money.

It added, “The agreement, which is subject to U.S. federal court approval, includes a guilty plea to a single count of conspiracy to violate the Labor Management Relations Act and the payment of a $30 million fine. FCA US has also agreed to implement an independent compliance monitor for three years with respect to the dissolution of the NTC and internal controls as they relate to the trusts being implemented to replace the NTC.”

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