Fiat Chrysler to plead guilty, pay $30 million to resolve U.S. criminal labor probe

9:00 pm Wednesday, January 27th, 2021

By David Shepardson

WASHINGTON (Reuters) – Fiat Chrysler said on Wednesday it will plead guilty to charges it conspired with company executives to make illegal, lavish gifts to United Auto Workers (UAW) leaders and undermined workers’ confidence in collective bargaining.

The Italian-American automaker, which is now part of Stellantis NV, said it reached an agreement with U.S. prosecutors to plead guilty to one count of conspiracy to violate the Labor Management Relations Act and pay a $30 million fine. Fiat Chrysler also agreed to three years of probation and oversight by an independent compliance monitor to ensure it follows federal labor laws.

The Justice Department said Fiat Chrysler conspired to make more than $3.5 million in illegal payments to then-UAW officers from 2009 through 2016.

The documents cited payments made by Fiat Chrysler’s then-lead labor negotiator, Alphons Iacobelli, to UAW officials through a joint UAW-Fiat Chrysler training center. Jacobelli, who has left the company, pleaded guilty and his prison sentence was reduced earlier this month to four years for his “significant cooperation” with the investigation.

Timothy Waters, head of the FBI’s Michigan office, said Fiat Chrysler “provided money and other items of value in an attempt to create an atmosphere more favorable for negotiating with the UAW.”

U.S. Attorney Matthew Schneider in Detroit declined to say at a news briefing what role, if any, the late Fiat Chrysler chief executive Sergio Marchionne may have played in the conspiracy, saying the U.S. government “does not indict or charge deceased people.”

Last month, the UAW agreed to independent oversight to resolve the corruption investigation that ensnared two former UAW presidents.

The UAW paid back over $15 million for improperly billing Ford Motor Co and Fiat Chrysler for employing members who did not work at the training centers operated by the union and the companies.

Schneider said Ford remains under investigation. Ford said on Wednesday, “as always, we would cooperate with any inquiries.”

Schneider’s office charged 15 former UAW officials as part of its investigation, and former presidents Gary Jones and Dennis Williams both pleaded guilty to embezzling union funds.

Several UAW officers, including the two former UAW presidents, admitted embezzling millions of dollars in total for personal benefit, using funds to purchase expensive liquor and cigars and to pay for golf outings and related equipment, and expensive hotel stays.

The UAW represents about 400,000 U.S. workers, including workers at Detroit’s Big Three automakers and in other fields. At its peak in 1979, the union had a membership of some 1.5 million.

The investigation led rival automaker General Motors to sue Fiat Chrysler last year, accusing company executives of bribing UAW officials to secure labor agreements that put GM at a disadvantage.

A federal judge in July dismissed GM’s lawsuit that Fiat Chrysler called “meritless.”

GM, which asked a federal appeals court to reinstate the lawsuit, said on Wednesday Fiat Chrysler “finally admits – after years of denials – that it engaged in a longstanding pattern of corruption.”

(This story corrects surname to Iacobelli, not Jacobelli, in paragraph four)

(Reporting by David Shepardson in Washington; Editing by Mark Potter and Matthew Lewis)