Fiat Chrysler Pleads Guilty to Conspiracy Over Union Bribes (2)

Fiat Chrysler Automobiles US admitted in federal court that it plied labor leaders with millions of dollars in bribes over seven years as part of a widespread conspiracy that’s already led to criminal charges against more than a dozen former auto executives and union officials.

The company pleaded guilty on Monday to one count of conspiracy to violate the Labor Management Relations Act before U.S. District Judge Paul Borman in Detroit. As part of an agreement announced in January, it also will pay a $30 million fine, adopt stricter internal controls and implement an independent compliance monitor for three years as it dissolves a training center that was at the center of the corrupt scheme.

Read More: Fiat Chrysler Pays $30 Million to Settle Corruption Probe

Prosecutors said more than $3.5 million was funneled from the training center to union officials starting in 2009 in order to keep them “fat, dumb and happy,” paying for lavish gifts that included designer clothing, golf trips and other perks including an Italian-made shotgun.

“Through its participation in this conspiracy, FCA violated federal labor law and undermined the collective bargaining process and the faith of the UAW’s membership in their leaders,” Acting U.S. Attorney Saima S. Mohsin said in a statement. “By seeking a $30 million fine and three years of oversight by a court-appointed monitor, we are holding FCA accountable and sending a message to other companies that these types of crimes will not be tolerated.”

Fiat Chrysler, which merged with France’s PSA Group in January to create an auto giant called Stellantis NV, said the plea followed a deal announced this year. “FCA US LLC today entered a plea of guilty to a single count of conspiracy to violate the Labor Management Relations Act in accordance with the agreement,” it said in a statement.

General Motors Co. filed a racketeering suit in 2019 alleging the payoffs aided Fiat Chrysler in labor negotiations, costing its rivals billions of dollars in worker costs. GM claimed FCA and the union ended up reaching a deal designed in part to force a merger between the two companies that had long been pursued by former Fiat Chrysler Chief Executive Officer Sergio Marchionne before his death in 2018. That lawsuit was thrown out last year by Borman and GM is appealing. Arguments are scheduled for Thursday.

The case is U.S. v FCA LLC, 21-cr-20031, U.S. District Court, Eastern District of Michigan (Detroit).

(Updates with company comment)

--With assistance from Chester Dawson.

To contact the reporter on this story:
Chris Dolmetsch in Federal Court in Manhattan at cdolmetsch@bloomberg.net

To contact the editors responsible for this story:
David Glovin at dglovin@bloomberg.net

Steve Stroth

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