One of the longest-running automotive scandals is finally coming to an end. Fiat Chrysler Automobiles (FCA), now a subsidiary of Stellantis, recently pleaded guilty to corruption charges and agreed to a settlement.
Here’s a look at the scandal and FCA’s punishment.
The case against Fiat Chrysler Automobiles
About a year ago, General Motors filed a lawsuit against Fiat Chrysler Automobiles, now Stellantis, for bribing the United Auto Workers (UAW) union. GM claimed FCA used gifts to secure labor agreements that favored FCA executives, Reuters reported. The lawsuit explained this action put GM at an unfair disadvantage.
However, a judge overseeing the case sided with FCA and called the allegations from GM “meritless.” But General Motors didn’t give up. The company went to a Federal Appeals Court and requested it reinstate the lawsuit, which it did.
Now the case is back in the limelight. That’s because, after several years of denying anything wrong happened, FCA has finally admitted to engaging in corruption. Executives agreed that the allegations of bribery were true, that they had given gifts to UAW union members.
FCA’s crimes in detail
The lawsuit alleged Fiat Chrysler Automobiles executives conspired to offer unlawful payments of over $3.5 million to UAW officials from 2009 to 2016. GM’s lawsuit prompted a lengthy investigation regarding the union and its misuse of money. One such payment went to a former UAW vice president, General Holiefield, for a $262,000 mortgage payment on his home in 2015.
Alphons Iacobelli, a former FCA vice president, authorized that bribe and many others. One was $25,000 to pay for a party for the UAW vice president and other union members. Iacobelli even reportedly allowed payments totaling $30,000 for meals at restaurants for UAW officials.
The payments directly violated the Labor Management Relations Act, Detroit News reported. Both the auto executives and the UAW officials violated labor laws.
FCA, now part of Stellantis after the two companies merged, pleaded guilty to one count of conspiracy for violating labor laws, using money earmarked for worker training.
In a plea deal, Fiat Chrysler Automobiles has agreed to pay a $30 million fine for its illegal bribes. The parties are waiting for a federal court to review and approve the agreement before proceeding.
Also, several FCA and UAW officials received prison sentences ranging from a few months to a few years for their involvement in the illegal payment scheme. Holiefield, the former union VP who received money for a mortgage payment, wasn’t charged because he passed away in 2015.
Another part of the plea deal includes closing the FCA and UAW’s training center, where some of the illegal activities took place, Crain’s Detroit Business reported. An independent person will monitor and oversee the center’s dissolution.