GM Hits Fiat Chrysler with Bombshell Corruption Lawsuit

GM says Fiat Chrysler has been in cahoots with the UAW for years, and it's cost them billions.

Earlier in the week, Fiat Chrysler became the last among the Detroit 3 to sit down at the bargaining table with the United Autoworkers Union. And while it’s easy to predict at least some drama, a new twist revealed Wednesday will provide a backdrop for the talks that NBC News is calling “explosive.”

That’s because rival automaker General Motors has just filed a federal racketeering lawsuit, alleging a decade-long conspiracy between FCA and the UAW. And the mastermind behind it, according to the suit, is former – and now deceased – Fiat Chrysler CEO, Sergio Marchionne.

GM contends that FCA corrupted bargaining agreements between 2009 and 2015, meaning GM wound up on the hook for labor costs it otherwise wouldn’t have. GM also alleges that the union was directed to deny the same benefits to GM that it was allowing for FCA, a claim they support by pointing to the $8-per-hour difference in labor costs between the two automakers, perhaps because FCA was quietly permitted by the union to hire more temporary workers at lower wages.

The suit said 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." GM contends this scheme saddled it with billions in costs and a significant disadvantage – and while it won’t yet put a number on the damages it intends to pursue, GM’s general counsel Craig Glidden says it is likely to be “substantial.”

FCA responded harshly to the lawsuit, suggesting its content and timing were “intended to disrupt (its) proposed merger with PSA as well as (its) negotiations with the UAW.” That said, FCA’s cozy relationship with the UAW has come to light in recent years, as an ongoing corruption probe into the union has revealed several executives complicit in a bribery scheme intended to divert funds to union officials in the name of “relationship building.”

In perhaps the most explosive of all the claims is the part of the lawsuit where GM alleges that Sergio Marchionne was scheming to take over GM by merger, and he would enable favorable terms by having the union in his pocket – a pursuit he allegedly laid the groundwork for by authorizing UAW bribery.

For its part, GM denies the lawsuit was timed to either disrupt union talks or to derail FCA’s proposed merger.

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