GM Accuses FCA of Bribery, Corruption in RICO Suit

DETROIT — General Motors Co. has filed a lawsuit in the U.S. District Court in Detroit, accusing Fiat Chrysler Automobiles NV of bribery and corruption stemming from FCA’s dealings with the United Auto Workers union.

In a statement, GM executives said FCA paid millions of dollars in bribes to UAW officials in 2009, 2011, and 2005, corrupting the bargaining process to gain a competitive edge in violation of the federal Racketeer Influenced and Corrupt Organizations Act. They believe the alleged payouts resulted in larger allotments of lower-wage second tier and temporary workers, allowing FCA to control labor costs at its competitors’ expense.

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“FCA was the clear sponsor of pervasive wrongdoing, paying millions of dollars in bribes to obtain benefits, concessions, and advantages in the negotiation, implementation, and administration of labor agreements over time. … FCA’s manipulation of the collective bargaining process resulted in unfair labor costs and operational advantages, causing harm to GM,” the statement reads, in part.

“This astonishing ploy comes at a time when FCA is proving itself to be an ever more formidable competitor.”

The lawsuit coincides with an ongoing federal investigation into UAW leadership that has already resulted in charges against three former FCA executives. It also follows the end of a six-week work stoppage resulting from a UAW strike at GM plants and the commencement of negotiations over a new labor pact between the UAW and FCA.

Meanwhile, earlier this month, FCA announced a deal had been reached to merge the Italian and American manufacturer with France’s PSA Group. The combined company would outrank GM as the world’s No. 4 automaker.

Read: FCA, PSA Reach Tentative Merger Deal

“This astonishing ploy comes at a time when FCA is proving itself to be an ever more formidable competitor that continues to create significant value for all its stakeholders through the successful implementation of its long-term strategy,” Fiat Chrysler executives wrote in a release. “This includes the proposed merger with PSA, which itself completed the successful turnaround of the European businesses it acquired not long ago from General Motors.”

“FCA is confident that it will prevail in defending itself against these claims in court and will also pursue all available remedies in response to this groundless lawsuit,” they added.

Read: Bloomberg: FCA Banking Unordered Vehicles, Pressuring Dealers

Originally posted on Auto Dealer Today