General Motors (GM) has filed a federal lawsuit against Fiat Chrysler alleging that the automaker has bribed the United Autoworkers Union (UAW) officials for years to get a better labor deal from the Union, costing GM billion dollars.
Just after hours of the filed lawsuit, Union President, Gary Jones stepped down from his position. The lawsuit comes at a delicate time for Fiat Chrysler, as the automaker is working on a merger with French automaker, PSA.
Fiat Chrysler believes that a lawsuit is intended to “disrupt” its merger with PSA and its ongoing negotiations with UAW. Last month, GM struck a four-year deal with the UAW; however, the whole deal cost them $2.9 billion in losses as the union went on a six-week strike.
UAW contradicts Fiat Chrysler’s statement of disruption saying that it is “regrettable” to think that lawsuit can cause any doubts about the contracts. While GM also said that the racketeering suit has nothing to do with the merger.
The lawsuit claims that Fiat Chrysler’s former executives bribed millions of dollars over the course of a decade to get a better deal that led GM to pay higher wages and allowed the former to hire temporary workers, resulting in lower wages.
With the filed lawsuit, former executives and UAW officials have already pleaded guilty. The suit also cites that bribery was also to win the support of the workers and pressurize GM to merge with Fiat Chrysler in 2015.
Sergio Marchionne, former CEO of Fiat Chrysler who died in 2018, had publicly announced that the company wanted to merge with GM. However, GM’s chief executive Mary T. Barra turned down the offer.
The lawsuit also says that under the Federal Racketeer Influenced and Corrupt Organizations Act (RICO), Fiat Chrysler would be liable to pay three times the actual damages, plus interest, punitive damages, and attorneys’ fees.
On the other hand, UAW has always been the center of the corruption scandal that involved its executives. Last week, the acting President, Rory Gamble, said that the UAW will propose some reforms to prevent further corruption probes.