General Motors filed racketeering lawsuit against Fiat Chrysler, claiming company bribed UAW officials for contracts

“While a full accounting of the damage inflicted on GM is unknowable at this time without discovering additional details of the scheme, GM estimates that it has incurred massive monetary damage in the form of higher costs that it seeks in relief,” the complaint said. “This damage is a direct, substantial, and foreseeable consequence of this bribery scheme orchestrated by [Fiat Chrysler parent group] FCA Group and the many acts of racketeering that fueled the scheme.”

GM claims that the bribes were part of a ploy to give Fiat Chrysler a competitive edge against General Motors and potentially force a merger.

The bribes were authorized by the company’s then-CEO Sergio Marchionne, in violation of the Taft-Hartley act, the 1947 laws that regulate labor management, and laws against wire and mail fraud, the lawsuit alleges.

The attention-grabbing legal move comes on the heels a the huge strike, during which 46,000 UAW workers shut down production at General Motors for nearly six weeks after the workers’ four year contract expired. The UAW and GM signed a new contract in October that included pay improvements for workers, promises the company would bring full-time workers on permanently and mandatory raises each year.

The complaint also builds off evidence gathered in an ongoing federal corruption probe that has touched leadership at both Fiat Chrysler and the UAW. Three former Fiat Chrysler officials, including Alphons Iacobelli, the company’s former vice president of employee relations, and a handful of former UAW officials have pleaded guilty to charges related to the investigation.

Along with the lawsuit, Gary Jones, the UAW’s president, resigned on Wednesday, his lawyer, J. Bruce Maffeo said. Jones had stepped down to take leave earlier this month amid the investigation; federal agents raided his home in August. He has not been charged with any wrongdoing.

“While I don’t know what my lord and Savior Jesus Christ has in store for me, I will look to him for guidance and support in the days and months to come,” Jones said in a statement. His resignation was first reported by the Detroit News.

Acting UAW president Rory Gamble announced a series of ethics reforms in the weeks after Jones’s leave was announced, vowing to make the union’s operations more transparent and ethical.

“The UAW is focused on continuing to implement ethics reforms and greater financial controls to make sure the misconduct which has been uncovered will never happen again,” the union said in a statement distributed Wednesday by spokesman Brian Rothenberg.

“Mr. Iacobelli worked for both [Fiat Chrysler] and General Motors, and he is currently in prison for his crimes, which include the misuse of Joint Program funds,” the statement said. “As to the collective bargaining agreements negotiated with FCA while Iacobelli was an FCA manager, we are confident that the terms of those contracts were not affected by Iacobelli’s misconduct, nor that of any UAW officials involved in the misuse of Joint Program funds at FCA. Those contracts, which were ultimately ratified by our membership, were negotiated with the involvement of both local and international representatives and the process had multiple layers of checks and balances to ensure their integrity.”

Fiat Chrysler did not respond to an immediate request for comment. The company has a tentative agreement to merge with Peugeot maker PSA Group, which would make the company the fourth-largest automaker in the world.

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