GM sues Fiat Chrysler for bribing labour union

General Motors (GM) has filed a lawsuit against Fiat Chrysler (FCA), claiming the rival's bribery of officials from the United Auto Workers (UAW) union caused it serious financial damage.

GM alleges FCA instigated a “multi-year pattern of corruption” to “undermine the integrity of the collective bargaining process and cause GM substantial damages".

According to GM's suit, Fiat – specifically late CEO Sergio Marchionne – illegally funnelled millions of dollars to senior UAW officials in charge of the union's relationship with Chrysler.

This process, it said, began when Fiat was attempting to gain a controlling stake in Chrysler during its government-run bankruptcy proceedings in 2009.

Some of this money went into bribes concealed as payments for fake goods and services, and liberal credit card expense policies, as well as illegal gifts, such as expensive watches, an Italian wedding, and payments towards a leader's home loan.

The General says these bribes ensured FCA gained "benefits, concessions, and advantages in the negotiation, implementation, and administration of labour agreements over time".

This, it's said, not only directly benefited Fiat Chrysler, but hurt GM through the union's process of pattern bargaining, which means a deal negotiated between the UAW and one automaker is used as the basis of its negotiations with other automakers.

For the suit, GM is relying primarily evidence uncovered during a federal investigation into corruption at the UAW, where a number of former FCA executives have already pled guilty to bribing union officials.

Despite GM's explosive allegations of fraud, its lawsuit only names specific UAW officials and FCA as the defendants. The filing even states on the first page it is "categorically not against the nearly 50,000 hard-working men and women" who are members of the UAW.

The timing of the suit comes at a precarious time for FCA. It is currently negotiating a new labour agreement with the UAW after GM and Ford concluded their deals.

It is also working on the first legally binding details of a merger with the PSA Group, which runs Peugeot, Citroen, DS, Opel and Vauxhall.

Should this merger of equals go ahead, the new automaker will be headed up by PSA CEO Carlos Tavares, but both sides will have equal board and shareholder representation.

"We are astonished by this filing, both its content and its timing. We can only assume this was intended to disrupt our proposed merger with PSA as well as our ongoing negotiations with the UAW," FCA said in a statement.

"We intend to vigorously defend against this meritless lawsuit and pursue all legal remedies in response to it."

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