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| G.M. Racketeering Lawsuit Accuses Fiat Chrysler of Bribery and Corruption | |
| (about 1 hour later) | |
| General Motors on Wednesday accused its rival Fiat Chrysler in a federal lawsuit of manipulating contract negotiations with the autoworkers union to hurt G.M. | General Motors on Wednesday accused its rival Fiat Chrysler in a federal lawsuit of manipulating contract negotiations with the autoworkers union to hurt G.M. |
| In a complaint filed with the United States District Court in Detroit, G.M. claimed that Fiat Chrysler bribed United Auto Workers officials to gain competitive advantages in contract negotiations conducted in 2011 and 2015. | |
| Three former Fiat Chrysler officials have previously pleaded guilty to a number of charges related to their use of money that had been set aside for a training center that the company ran with the union. Several U.A.W. officials have also pleaded guilty to various charges. | |
| G.M.’s lawsuit asserts that the effort to manipulate union talks was authorized by Fiat Chrysler’s chief executive at the time, Sergio Marchionne, who died in 2018, and was carried out by its former head of labor relations, Alphons Iacobelli, who pleaded guilty and is now serving a five-and-a-half year sentence in prison. The suit also contends that executives used bribes to secure union support for Fiat Chrysler’s highly public effort to pressure G.M. into a merger in 2015. | |
| “The lawsuit exposes a multiyear pattern of wrongdoing by former F.C.A. executives revealed through the continuing criminal investigation by the U.S.,” G.M. said in a statement. The company did not sue the union, which recently reached a new agreement with G.M. after a 40-day strike and is in the middle of negotiating a new contract with Fiat Chrysler. | “The lawsuit exposes a multiyear pattern of wrongdoing by former F.C.A. executives revealed through the continuing criminal investigation by the U.S.,” G.M. said in a statement. The company did not sue the union, which recently reached a new agreement with G.M. after a 40-day strike and is in the middle of negotiating a new contract with Fiat Chrysler. |
| In a statement, Fiat Chrysler said it was “astonished” by the lawsuit. “We can only assume this was intended to disrupt our proposed merger with PSA as well as our negotiations with the U.A.W.,” the company said, referring to its deal with the maker of Peugeot and Citroën cars. “We intend to vigorously defend against this meritless lawsuit and pursue all legal remedies in response to it.” | In a statement, Fiat Chrysler said it was “astonished” by the lawsuit. “We can only assume this was intended to disrupt our proposed merger with PSA as well as our negotiations with the U.A.W.,” the company said, referring to its deal with the maker of Peugeot and Citroën cars. “We intend to vigorously defend against this meritless lawsuit and pursue all legal remedies in response to it.” |
| In the suit, G.M. claimed Fiat Chrysler gained competitive advantages through the union’s agreement to support its long-term business plan and a major overhaul of its manufacturing system. The lawsuit also says that the union agreements allowed Fiat Chrysler to hire more temporary workers at entry-level wages than G.M. | In the suit, G.M. claimed Fiat Chrysler gained competitive advantages through the union’s agreement to support its long-term business plan and a major overhaul of its manufacturing system. The lawsuit also says that the union agreements allowed Fiat Chrysler to hire more temporary workers at entry-level wages than G.M. |
| G.M. said it was seeking billions of dollars in damages but did not specify an amount. The company said it would reinvest the money into its operations in the United States. | |
| The autoworkers union said in a statement that it was “confident” that the terms of its contracts with Fiat Chrysler were not affected by “Iacobelli’s misconduct nor that of any U.A.W. officials involved in the misuse of Joint Program funds at F.C.A.” | |
| “Those contracts, which were ultimately ratified by our membership, were negotiated with the involvement of both local and international representatives and the process had multiple layers of checks and balances to ensure their integrity,” the U.A.W. said. | |
| Separately, the union said on Wednesday that its board was seeking to remove its president, Gary Jones, and another official, Vance Pearson, for the “submission of false, misleading and inaccurate expense records.” Mr. Jones went on a leave of absence this month after the Federal Bureau of Investigation raided his home in August. | |
| G.M. has battled Fiat and Mr. Marchionne in court before. | |
| The two companies were partners in the early 2000s, when Mr. Marchionne was Fiat’s chief executive. Fiat had the right to force G.M. to acquire Fiat through what is known as a put option. Mr. Marchionne sought to force G.M. to pay Fiat not to exercise the option, which G.M. contested in court. In the end, G.M. paid Fiat $2 billion to settle the matter. | The two companies were partners in the early 2000s, when Mr. Marchionne was Fiat’s chief executive. Fiat had the right to force G.M. to acquire Fiat through what is known as a put option. Mr. Marchionne sought to force G.M. to pay Fiat not to exercise the option, which G.M. contested in court. In the end, G.M. paid Fiat $2 billion to settle the matter. |
| Shares of G.M. and Fiat Chrysler were down about 3 percent and 4 percent at 3:30 p.m. on Wednesday. | |
| This is a developing story and will be updated. | This is a developing story and will be updated. |