Feds Allege FCA Executives Bribed UAW Officials to Play Nice

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Former Fiat Chrysler labor relations chief Alphons Iacobelli pleaded guilty to two of seven charges relating to his role in a plan to divert more than $4.5 million in training center funds to union and company officials on Monday. As part of a plea deal with federal authorities, Iacobelli provided information regarding confidential retirement offers and a former union vice president being groomed to support company initiatives.

In an admission that he and other FCA employees paid various senior UAW officials over $1.5 million in an effort to “obtain benefits, concessions, and advantages for FCA in the negotiation, implementation, and administration,” Iacobelli is now helping map the deepening mire that is the FCA-UAW training center scandal.

While we’ve previously covered the ludicrous union-related “misspending,” Automotive News outlined a handful of new expenditures not previously listed in court documents. Among those was a $30,000 party for a union official that included ultra-premium liquor, more than $7,000 worth of high-end cigars, and more than $3,000 in wine. The party allegedly took place at the FCA training center in Warren, Michigan.

A UAW spokesman reconfirmed that the union is “appalled at these charges” and has taken steps to “reduce the risk of any future recurrence of these activities.” However, he declined to comment on the newest allegations. Meanwhile, UAW President Dennis Williams is attempting to downplay any corruption by saying the alleged misdoings could not have impacted negotiations in any meaningful way.

As union members have the final vote on the contracts, which are bargained between dozens and sometimes hundreds of individuals, he contends that a handful of corrupted officials wouldn’t sway the majority of the UAW’s committees and members.

However, Iacobelli’s plea agreement highlights at least two specific occurrences where the alleged bribes may have influenced union business.

From Automotive News:

The first, feds say, occurred in December 2013. Iacobelli, according to the plea deal, sent an email to another “FCA executive” confirming then-UAW Vice President General Holiefield, now deceased, had been “scripted” ahead of a meeting with other members of the union’s International Executive Board.

Iacobelli, in the email, said Holiefield would “create a dialogue pursuant to our outline.” At the time, the executive board was considering the terms of a multibillion-dollar offer to purchase equity interest held by the UAW Retiree Medical Benefits Trust, or VEBA, in Chrysler Group, now known as FCA US. The transaction was completed a month later.

The second occurrence allegedly occurred in February and March of 2015. FCA, according to the plea, offered to pay confidential “one-time non-precedent setting” retirement offers to “senior UAW officials.”

An unnamed union official allegedly said in an email that his people would “process the transactions to keep them out of the plants.”

Three other individuals have been charged in connection with the case. They include Virdell King, a retired UAW associate director; Jerome Durden, a former FCA financial analyst; and Monica Morgan, Holiefield’s widow. Both Durden and King have pleaded guilty to charges and are scheduled to be sentenced later this year, whereas Morgan faces another plea hearing in February.

As Iacobelli continues to work with authorities to establish the full scope of the scandal, more defendants are likely to crop up in the months to come. He has already pointed to several unnamed individuals’ involvement in the scheme. Having already pleaded guilty to violating the Labor Management Relations Act and subscribing a false tax return, his sentencing is scheduled for May 29th. He faces a statutory maximum of eight years in prison and will be required to repay $835,000 in stolen funds. Both Fiat Chrysler and General Motors cut ties to Iacobelli prior to his admission of guilt.

“So long as such practices exist, the FBI and its federal partners will continue to aggressively root out corruption in both corporate and labor union boardrooms,” David Gelios, special agent in charge, Detroit Division of the FBI, said in an official statement.