GM sues FCA under the RICO Act and says it has ruined job interviews for years


General Motors is suing Fiat Chrysler Automobiles and several former FCA executives over the ongoing corruption scandal that has led to 13 federal criminal charges and implicated the current and immediate past UAW presidents.

Federal lawsuit filed by GM on Wednesday in the US District Court in Detroit names FCA and former FCA leaders Al Iacobelli, Jerome Durden and Michael Brown as defendants. It also identifies former FCA chief executive Sergio Marchionne in the complaint. He died last year.

"We have stated in the complaint that Mr. Marchionne is responsible for the pregnancy, execution and sponsorship of the alleged wrongdoing," said Craig Glidden, GM's executive vice president and general manager. "We have no current intent to pursue the UAW. Our focus is on the FCA. We believe the responsibility rests well with the orchestrator of the wrongdoing … and we plan to hold the FCA accountable."

The FCA said it was baffled.

"We are surprised by this filing, both its content and the timing," it states in a statement. "We can only assume that this was meant to disrupt the proposed merger with the PSA, as well as our negotiations with the UAW. intends to vigorously defend us against this meritless lawsuit and pursue all legal action in response to it. "

Iacobelli had been Vice President of Employment in the FCA, responsible for negotiating and implementing employment relationships with UAW. Durden was a financial analyst at FCA and Brown was director of employee relations at FCA, also involved in UAW negotiations. All three have pleaded guilty.

Al Iacobelli, former Fiat Chrysler chief of staff, walks straight out of the Detroit Federal Courthouse on Tuesday 1 August 2017. (Photo: Romain Blanquart, Detroit Free Press)

The FBI claimed that Iacobelli and late UAW Vice President General Holiefield planned to keep senior union members "fat, dumb and happy." While contracts was negotiated, prosecutor prosecuted, FCA officials secretly sifted money from the company and gave them to leading union officials as an investment in "relationship building."

The top dealers did this, prosecutors said, by secretly securing FCA money through a UAW fitness center and a fake child's charity, and eventually spending it on themselves.

FCA lowers labor costs

GM's lawsuit claims that during contract negotiations in 2011 and 2015, corruption of the FCA undermined the integrity of collective bargaining with the UAW. It claims that the FCA disrupted contract implementation as soon as 2009.

GM said the corruption cost "significant" damage. In particular, the FCA was able to achieve favorable labor costs and operate "differently than its competitors," which lowered the FCA's costs, Glidden said.

Glidden said the FCA hired more temps and "in-progress" workers, both at lower entry levels, than GM did, and "it did so with the knowledge that guidelines we thought would not be in place."

Craig Glidden (Photo: General Motors) [19659010] GM said the FCA has a total labor cost advantage of $ 8 per hour because of the corruption. The average total hourly labor cost GM pays is $ 63 per hour compared to FCA's $ 55, Glidden said, citing the Center for Automotive Research data.

GM does not indicate a specific dollar amount yet as it is applying from the FCA, Glidden said.

"We are seeking substantial damages. We cannot comment further on the amount or measure the extent of the damage before the discovery," Glidden said. "We will not put any number on it today. We believe the damage we will be able to fix will be significant due to a long time."

GM said it would invest any damages it detects in the lawsuit in the United States and uses it to create jobs here.

Not focused on UAW

The lawsuit is based on the RICO and the Taft-Hartley Act. RICO stands for racketeering affected and corrupt organizations. It is a federal law designed to fight organized crime by giving private plaintiffs an opportunity to sue for damages incurred as a result of a criminal enterprise.

The Taft-Hartley Act prohibits employers from engaging in bribes, graft, conflict of interest and other prohibited transactions with unions The act is to ensure that union officials work on behalf of members.

"This lawsuit is intended to make the FCA liable for the damage its actions have caused to our company and to ensure a level playing field," Glidden said.

Glidden said GM's focus in the lawsuit is on the FCA and the former leaders.

"We support the reform effort UAW has announced," Glidden said. "Second, nothing about this lawsuit has anything to do with the recent GM shutdown, and that will not change." GM contract agreement, 46,000 UAW workers ratified October 25.

UAW said it did not believe corruption affected contracts with the FCA.

"Mr. Iacobelli worked for both the FCA and General Motors, and he is currently in jail for his crimes, which include misuse of funds from the Joint Program," UAW spokesman Brian Rothenberg said in a statement. "Regarding the collective bargaining agreements negotiated with the FCA while Iacobelli was an FCA chief, we are confident that the terms of these contracts were not affected by Iacobelli's behavior or by UAW officials involved in misuse of Joint Program funds These contracts, which were eventually ratified by our membership, were negotiated with the involvement of both local and international representatives, and the process had multiple checks and balances to ensure their integrity.

"That said, the fact that these problems can cause doubts about the contracts being regrettable. The UAW leadership is absolutely committed to making changes that are necessary to ensure that our behavior that is revealed will never happen again. "

GM claims that the FCA was" the clear sponsor of pervasive misconduct, and paid millions of dollars in dollar bribes to obtain the benefits, concessions and benefits of negotiating, executing, and managing employment agreements over time. "

GM has been caught up in the extensive scandal. A former UAW vice president and a former GM board member appear to plead guilty to charges related to the federal corruption zone.

Joseph Ashton, who faces two conspiracy charges related to wire fraud and money laundering, is scheduled for a bail hearing on December 4 for U.S. District Court Judge Bernard Friedman. [19659004] In addition, Iacobelli went to work for GM after he suddenly withdrew from the FCA before the 2015 negotiations. GM suspended him in the summer of 2017 when he was fired and fired him late that year. Ashton left the GM board at about the time Iacobelli was laid off.

More: Ex-UAW director, former GM board member Ashton expected to plead guilty next month [19659004] More: UAW to sell ex-president's lavish Up North cabin as part of ethical cleanup

More: UAW President Gary Jones to take leave when corruption investigations escalate

"The events surrounding Mr. Ashton have nothing to do do what is alleged in this complaint, "Glidden said. "As for Mr. Ashton's behavior, GM did not have knowledge of his behavior and GM will address the allegation in a timely manner."

GM wants future negotiation free of corruption, Glidden added.

GM said the timing of the lawsuit is unrelated to UAW entering the final phase of the contract talks with the FCA, which began this week. It is also not intended to derail FCA's planned merger with French-based Groupe PSA. GM relied on the federal government's investigation to bring RICO lawsuits. Glidden said he has not discussed the matter with Ford Motor Co.

"The actions of the federal government through guilty pleas show that they were covert acts," Glidden said. "We followed it, and we've done our own diligence and we think it's time to bring it forward and repair the damage."

Contact Jamie L. LaReau at 313-222-2149 or jlareau @ freepress Com . Follow her on Twitter @ jlareauan . Read more on General Motors and sign up for our car newsletter .

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