Fiat Chrysler Reaches Settlement With Feds Over Union Corruption -- 2nd Update

By Nora Naughton 

The Justice Department said it has reached a settlement with Fiat Chrysler Automobiles NV's U.S. division in the government's long-running investigation into union corruption among top labor leaders in Detroit.

The U.S. subsidiary, known as FCA US and now part of Stellantis NV, the newly formed car company that absorbed Fiat Chrysler in a merger earlier this month, agreed to plead guilty to a criminal charge of conspiring to violate U.S. labor law and pay a $30 million fine, according to statements released Wednesday by the company and the U.S. attorney's office in Detroit.

FCA US also agreed to an independent compliance monitor for three years to oversee the closing of a worker training center that had been a focus in federal investigation and other internal controls related to that facility, the company said. The plea agreement is subject to court approval.

The settlement concludes the government's investigation into FCA US for misconduct uncovered at the training center, an entity jointly operated with the United Auto Workers union.

The step is also the latest in the multiyear probe that in recent months led to a separate civil settlement with the UAW and 15 convictions, including two former union presidents and a former Fiat Chrysler executive who ran the company's labor relations department.

Fiat Chrysler had long maintained that the wrongdoing unearthed by investigators in recent years was perpetrated by "rogue individuals" acting in their own interest and not at the direction or to the benefit of the company.

Earlier this month, the Italian-American auto maker combined with France's PSA Group in a merger valued at more than $50 billion.

Fiat Chrysler, previously led by the late Sergio Marchionne, emerged early on as a focal point in a federal investigation that first became public in 2017 with the indictment of its former top bargainer.

Since then, prosecutors say they have uncovered evidence of a broader conspiracy at the auto maker to illegally steer money set aside for worker training to UAW leaders. Union officials in turn used the money to enrich themselves, spending it on expensive meals, trips and luxury goods, prosecutors say.

In charging documents released Wednesday, federal authorities accused FCA US of conspiring to violate U.S. labor law by funneling $3.5 million in payments and items of value to UAW officers and employees.

The scheme, dating back to 2009, the year Chrysler Group emerged from bankruptcy, was executed by executives in an effort to buy "labor peace" and corrupt the bargaining process, the government said in earlier court filings.

In December, the Justice Department reached a settlement with the UAW that subjects the roughly 400,000-member union to a six-year period of oversight by a court-appointed monitor and requires the UAW to pay $1.5 million to resolve outstanding tax issues.

The UAW has publicly condemned former leaders charged in the investigation and more recently has pointed to changes enacted under the current leadership to prevent corruption.

Wednesday's settlement brings to a close yet another high-profile legal challenge for FCA US, which in recent years paid fines for allegedly misreporting monthly sales reports and allegations it used illegal software to cheat on government emissions tests.

In recent years, the U.S. division was a defendant in a separate, civil racketeering lawsuit brought last fall by rival General Motors Co., alleging it bribed UAW officials to gain an advantage in labor negotiations. The lawsuit cited the long-running federal probe, and in it, GM said the bribes were authorized by Mr. Marchionne directly.

Fiat Chrysler fought the lawsuit, calling it "meritless" and accused GM of trying to interfere with its merger plans with Peugeot-maker PSA Group. A federal judge dismissed the lawsuit last year.

Write to Nora Naughton at [e-mail]

(END) Dow Jones Newswires

January 27, 2021 12:20 ET (17:20 GMT)

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