Commentary

'This Is an Ugly Story': Guilty Pleas Keep Stacking Up in Union Cabal Scandal

By Stan Greer | January 23, 2020 | 3:01pm EST
United Auto Workers members and supporters strike. (Photo credit: JEFF KOWALSKYAFP/AFP via Getty Images)
United Auto Workers members and supporters strike. (Photo credit: JEFF KOWALSKY/AFP via Getty Images)

In the summer of 2017, the first federal indictments were unsealed related to an alleged criminal conspiracy against rank-and-file employees entered into by the United Auto Workers (UAW) union hierarchy, Fiat Chrysler Automobiles (FCA) management, and many individual crooked union bosses and corporate executives.

Prosecutors charged that, starting back in 2009, then-FCA head of labor relations Al Iacobelli, then-UAW Vice President General Holiefield (now deceased), and other co-conspirators had begun using corporate-provided worker training center funds as their personal piggy bank, funneling millions of dollars into their pockets.

Now it’s two-and-a-half years later. The number of indictments and guilty pleas in the UAW/FCA scandal keeps rising. The total amount of worker training money and worker-paid union dues and fees allegedly pilfered keeps rising. And the charges that top UAW bosses were willing to sell out workers on compensation and job-security matters in order to line their own pockets have become much more detailed and damning.

In December, former Vice President Joe Ashton admitted to committing wire fraud and money laundering, becoming the seventh UAW kingpin to enter a guilty plea related to the UAW/FCA probe. That same month, The Detroit News reported that, according to its own analysis of federal criminal documents, “UAW officials and auto executives are accused of misappropriating nearly $34 million” since 2009. Two other high-ranking UAW officials are already under indictment and facing trial.



 

And a pending federal civil suit filed by another UAW-impaired auto company – General Motors (GM) – against FCA alleges that taxpayers as well as workers are the victims.

According to the detailed exposé by journalists Daniel Howes and Robert Snell published in the News on December 18, FCA executives, “armed with $12.5 billion in taxpayer funds” courtesy of a massive bailout the Obama Administration and its allies in Congress had recently finalized, “started funneling bribes and illegal payments to UAW officials within days of the automaker emerging from bankruptcy in June 2009 . . . .”

The GM civil suit charges that, in exchange for the taxpayer-subsidized FCA bribes, top UAW bosses like Holiefield and then-President Dennis Williams agreed to forge a secret “side letter” deal authorizing FCA to hire thousands of new employees at half the prevailing wage rate for senior workers, and furnish them with substantially less-generous benefits, in contravention of the published union contract. The civil suit further alleges that, because GM executives did not use training-center money to bribe UAW kingpins, they were not a party to the crooked sweetheart deal.

From 2009 through 2017, according to Howes and Snell, Iacobelli and FCA “made more than $9 million in illegal payments . . . to cover salaries and benefits of union officials assigned to the training center.” A large number of these officials apparently did no work whatsoever for the training center. Over these same years, FCA funneled an additional $2.9 million “into the UAW’s bank account, ostensibly to cover administrative costs.”

From 2013 through 2015, top UAW bosses allegedly actively supported in backroom discussions then-FCA CEO Sergio Marchionne’s (now deceased) bid to pressure GM into a merger, even though a merger between the two companies would almost certainly have led to multiple plant closures and additional devastating job losses for the union’s rank-and-file autoworkers. In exchange for the bribes he was receiving, Williams also allegedly manipulated the UAW’s “pattern bargaining” with GM, FCA and Ford in 2015 to turn up the pressure on GM to acquiesce to the merger.

As University of Michigan business professor Erik Gordon told Howes and Snell, “This is an ugly story,” of which only the bare details can be related here. The story would be uglier still were it not for Right to Work laws currently on the books in states like Michigan, Indiana and Kentucky.

Thanks to their state Right to Work laws, autoworkers and other workers in those three states and 24 others are free to protest suspected or confirmed Big Labor corruption by resigning from the union and cutting off all their dues payments, without risking unemployment.

Unfortunately, a growing number of federal politicians, including all the leading candidates for the 2020 Democrat presidential nomination, have gone on record in favor of eliminating all 27 Right to Work laws. Without these laws acting as a significant, though far from perfect, check on union officials who are inclined to abuse their monopoly power, the scourge of Big Labor corruption would inevitably grow even more virulent.

Stan Greer is the National Institute for Labor Relations Research’s senior research associate.



 

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