The head of the UAW reasserted this week that the union’s leaders did not know about the conduct that spawned a federal probe into payoffs and other shenanigans involving training center money until the government informed the union.
But federal prosecutors may now be suggesting a broader conspiracy involving both the union and Fiat Chrysler Automobiles to influence the contract bargaining process, according to a former federal prosecutor.
“It’s not just the training center any more. I think that the Justice Department is making the point that it wasn’t just lining their pockets, but that this went much deeper, that this affected the union contracts. I don’t know that they have made that claim before,” said Peter Henning, a Wayne State University law professor and former federal prosecutor.
During a speech as part of the union’s 37th Constitutional Convention in Detroit, union President Dennis Williams said the scandal was limited to specific individuals.
“To be clear, those who misallocated or misused training center funds betrayed our trust. The UAW has zero tolerance for corruption or wrongdoing, at any level of the organization. Now, our leadership team had no knowledge of the misconduct — which involved former union members and former auto executives — until it was brought to our attention by the government,” according to a copy of Williams’ comments provided by the union.
Like the union, Fiat Chrysler has stressed that the case involved “bad actors” and did not represent widespread wrongdoing or affect the bargaining process. The case involves the alleged misuse of $4.5 million in funds that were supposed to train Fiat Chrysler workers but that the government instead says were used to pay for trips, cigars, a mortgage, jewelry, a Ferrari and more involving union and FCA officials.
Henning said the government appears to be broadening its case based on language in a plea agreement late last month involving former Fiat Chrysler director of employee relations Michael Brown.
Brown admitted to trying to conceal prohibited payments and faces as much as 18 months in prison. He’s one of seven people who have been charged or implicated in the case to date, including former UAW Vice President General Holiefield, who died in 2015; his widow, Monica Morgan; retired UAW Associate Director Virdell King; and former FCA Vice President Alphons Iacobelli.
The plea agreement says that “from in or before 2009 through 2015, FCA executives conspired with one another, with FCA, with officials at the UAW, and with the UAW, to violate the Labor Management Relations Act.”
Brown “knew that the purpose of the conspiracy to provide prohibited payments to UAW officials was to grease the skids in order to obtain benefits advantages and concessions in the negotiations, implementation, and administration of the collective bargaining agreements between FCA and the UAW,” according to the plea agreement.
Henning, who has focused on white-collar crime during his career, said the Justice Department appears to be sending a message that the case goes beyond individual corruption into something systemic.
Previous filings had been more focused on individual corruption, he said, noting that this seems to be sending a message to those involved that now is the time to cooperate, rather than after they are charged.
“This reflects the government’s view that Fiat Chrysler Automobiles and the UAW were in bed together. It’s not just a couple people conspiring in the back room any more. What the government seems to be saying is that this went to the heart of the agreement between FCA and the UAW so that it’s not just a one-off situation but instead high-level corruption,” Hennings said.
Fiat Chrysler Automobiles declined additional comment Wednesday, instead referring back to comments last year by CEO Sergio Marchionne, who said in a letter to employees that he joined Williams in expressing his disgust at the alleged conduct.
“I also join Dennis in confirming that this conduct had nothing whatsoever to do with the collective bargaining process, but rather involved two bad actors who apparently saw an opportunity to misappropriate funds entrusted to their control and who, unfortunately, co-opted other individuals to carry out or conceal their activities over a period of several years,” according to Marchionne’s comments, which came before Brown was added to the list of those charged.
The company previously said it and the union “were the victims of malfeasance by certain of their respective employees that held roles at the National Training Center (NTC), an independent legal entity. These egregious acts were neither known to nor sanctioned by FCA US.”