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Federal probe into corruption by union is extended to General Motors



Supporters wave signs at an address in the Time Warner Cable Arena in Charlotte, North Carolina, on September 5, 2012 on the second day of the Democratic National Conference (DNC).

Mladin Antonov | AFP | Getty Images

DETROIT – A federal investigation into millions of dollars in training center funds by Fiat Chrysler executives and United Auto Workers executives has expanded to General Motors.

Michael Grimes, a retired senior official at the union's GM division, is charged with wire fraud and money laundering for allegedly receiving $ 2 million in backlash from UAW vendors. He was charged with criminal information, indicating guilty interference is expected.

Grime's speech at a hearing on September 4 in Ann Arbor would be an important milestone in the Department of Justice investigation of one of the United States' largest unions. He is the first person not affiliated with Fiat Chrysler who is charged as part of the multi-year probe.

However, the charges against Grimes differ from the former, which led to the conviction of eight corporate and trade union officials with Fiat Chrysler. [1

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There were also no charges that the actions were intended to affect UAW's collective bargaining with GM, as was the case with the Italian-American carmaker.

In a statement, GM called the alleged behavior of Grimes and other unions "deeply disturbing" and said it "cooperates fully" with the investigation.

"These serious allegations represent an amazing abuse of power and trust," GM said in a statement. "There is no excuse for union officials, who are entrusted with trusting responsibility to the members and the Center for Human Resources (training center), to enrich themselves at the expense of the union membership they represented – and to steal CHR funds invested by GM for training our hourly employees. "

& # 39; Undermines trust & # 39;

The charges come at an inappropriate time for the union and Big Three Detroit automakers, which are negotiating new contracts for 158,000 UAW workers. The extension of the investigation could make it more difficult to ratify the contracts, according to officials.

"This does not seem to have affected the negotiation process in the previous rounds, but it casts a shadow over this year's talks because it undermines confidence in management," said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research in Ann Arbor.

When the federal investigation was published in July 2017, it focused on a jointly controlled fitness center between the UAW and Fiat Chrysler. But it quickly expanded to probes for similar operations with GM and Ford Motor, which previously confirmed that it cooperated with the investigation. The training centers in Detroit are jointly monitored by the companies and the union, but are financed by the automakers as part of their collective bargaining agreements.

The probe has led to the conviction of five people affiliated with the UAW and three Fiat Chrysler executives, including former chief of labor, Alphons Iacobelli, who was sentenced to 5½ years in prison last year – the longest sentence in the case.

Further charges are coming?

Grimes, serving up to 20 years in prison, was one of three union officials identified by federal prosecutors as receiving bribes and kickbacks from suppliers contracted to manufacture goods, known internally as "trinkets and garbage," for the union .

Federal officials accuse in court documents not sealed Aug. 14 three union officials of taking or extorting hundreds of thousands of dollars from vendors and using training center funds for their own benefit.

Grimes & # 39; attorney, Michael P. Manley, did not respond to comment. The DOJ declined to comment on the ongoing investigation.

Former UAW Vice President Joe Ashton speaks during a GM announcement at a plant in Spring Hill, Tenn. In 2011.

GM

While the court did not document the other two union officials, Detroit News, citing sources, identified them as retired UAW Vice President Joe Ashton and one of his senior Lieutenant, Jeff Pietrzyk.

Ashton – the first UAW leader on GM's board – resigned from the board in December 2017 after allegedly being linked to the investigation. He is not charged.

GM declined to comment on the circumstances surrounding his departure. Ashton did not return a phone message with comment. Pietrzyk could not be located for comment.

& # 39; Shocking and totally shameful & # 39;

The charges against Grimes, who resigned from the union in 2018, give credence to reports that Cindy Estrada, a sitting vice president of the union who succeeded Ashton, was of interest to federal prosecutors. Grimes served as Estrada's top assistant.

Estrada, who started as vice president in 2010, has not been charged with any crimes or named in any court cases involving the corruption probe.

UAW Vice President Cindy Estrada speaks during an event at General Motors & # 39; Assembly Plant in Flint, Mich. in August 2015.

GM

A UAW spokeswoman declined to comment directly on the investigation, citing an earlier statement that Grimes "only benefited himself, not the UAW membership, and should be prosecuted for the scope of the law."

A separate statement on behalf of the federal government, which includes Estrada, called Grimes's alleged actions "shocking and utterly disgraceful." It also outlined steps taken last year in an effort to stop such corruption, including the introduction of a " rigorous three-bid process "for providers of federated and common training centers.


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