A federal judge on Tuesday sentenced Fiat Chrysler Automobiles NV to pay $30 million for conspiring to break federal labor laws by paying more than $3.5 million in bribes to United Auto Workers leaders.
FCA, now part of auto giant Stellantis NV, must pay the fine within the next 30 days after pleading guilty in March to one count of conspiracy to violate the Labor Management Relations Act. FCA is not required to pay any sort of restitution.
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The fine is part of a broader felony conviction settlement with federal authorities that includes the appointment of an as-yet-unnamed independent monitor for three years to oversee company compliance with labor laws and oversee the dissolution of a joint training center the United Auto Workers operated with Fiat Chrysler.
“The nature and circumstances of this offense are very serious,” Judge Paul Borman of the Eastern District of Michigan said during the sentencing. “The history and characteristics of the defendant relating to this charge show a prior pattern culminated in this and was resolved in this plea and sentence.”
The sentencing is part of the fallout of a years-long federal investigation into UAW corruption. The probe produced 15 convictions, including three former FCA executives. It revealed union leaders and auto executives broke federal labor laws, stole union funds and received bribes and illegal benefits from union contractors and FCA employees.
The pattern of illegal payments included paying off former UAW Vice President General Holiefield’s $262,000 mortgage, bankrolling a $25,000 booze-fueled bash for another labor leader and financing a $30,000 junket for UAW officials in Palm Springs and southern California. The payments were designed to secure concessions and advantages for Fiat Chrysler during contract negotiations, according to the government.
Calling FCA’s offense one of the largest, if not the largest, violation of the Labor Management Relations Act, Erin Shaw of the U.S. Attorney’s Office said the company’s acts have undermined the rank-and-file’s trust in the leaders and the collective bargaining process.
“We are pleased FCA has agreed to accept responsibility for its conduct and appears to be committed to making reforms,” Shaw said during the hearing. The facts of the case “make clear this was not the act of a rogue or low-level employee at FCA, and it is abundantly clear that there was a problem with the culture of this company in years past.”
Nicolas Broutin, a New York attorney, represented the automaker in the sentencing hearing, stated in brief, “The agreement was negotiated at length with the government. It includes an extensive factual statement that the company has agreed to for all the reasons put on the record at the guilty plea hearing. We believe it is an appropriate resolution and the court should accept it as it is done.”
The pre-sentencing report recommended a one-to-five year probation. FCA’s will be three years. The report also called for $18 million to $36 million for the fine.
The $30 million FCA must pay is dramatically less than the $900 million rival General Motors Co. paid to settle claims for faulty ignition switches implicated in 400 injuries and deaths. It also is a fraction of the $800 million FCA paid two years ago to settle diesel claims, or the billions Volkswagen AG paid to atone for its global diesel scandal.
The conspiracy involving Fiat Chrysler executives lasted from at least January 2009 through approximately 2016 and executives paid more than $3.5 million in illegal payments to UAW officials, according to the criminal case.
That includes former Fiat Chrysler Vice President Alphons Iacobelli approving the payment of $262,000 to pay off the mortgage on Holiefield’s home in Harrison Township. Holiefield died in 2015 before he could be charged with a crime.
Iacobelli, who is serving a four-year federal prison sentence, also authorized spending $25,000 for a party for former UAW Vice President Norwood Jewell and members of the union’s governing board. The party included “ultra-premium” liquor, more than $7,000 worth of cigars and more than $3,000 worth of wine with custom labels honoring Jewell, who also was convicted in the corruption scandal.
Iacobelli also approved spending more than $30,000 on meals for UAW officials at restaurants in Palm Springs and southern California, prosecutors said. Money to pay for the illegal benefits came from accounts funded by the automaker that were supposed to used for worker training.
The conspiracy also included Michael Brown, who helped run the UAW-Chrysler National Training Center in Warren, and former FCA financial analyst Jerome Durden, who helped control the finances at the training center.