U.S. Expands UAW-Linked Payments Probe to Ford, General Motors

By Chester Dawson and Mike Colias Features Dow Jones Newswires

General Motors Co. and Ford Motor Co. have been contacted as part of a Justice Department probe into job-training programs set up jointly with the industry's biggest autoworker union, the companies said Thursday.

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The companies said they are cooperating with the investigation by the U.S. Attorney's Office for the Eastern District of Michigan into the training centers, which are funded by the auto makers, but run by United Auto Workers officials.

The federal prosecutors' move indicates the probe is expanding after the indictment of a former Fiat Chrysler Automobiles NV executive in July. Prosecutors had been looking into alleged violations of labor and tax laws from the illicit diversion of millions of dollars at a Fiat Chrysler-funded training program.

"We are confident in the UAW-Ford National Programs Center leadership team and the policies and procedures used to govern the program operations," Ford said in a statement.

GM confirmed that prosecutors have reached out to the company, but didn't say anything other than that it was "fully cooperating."

Representatives for the U.S. Attorney's Office declined to comment, citing a policy of not speaking about continuing investigations.

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Investigators are interested in current and former UAW executives in charge of relations with GM, according to a report in the Detroit News, which first reported the issuance of subpoenas to the UAW-GM Center for Human Resources and the UAW-Ford National Programs Center.

A spokesman for the UAW had no immediate comment, but referred to its previous denials of any knowledge of the allegations before being notified by prosecutors. The union said in July it has "zero tolerance" for corruption or wrongdoing by its officials.

The UAW, which represents more than 100,000 auto workers, launched an internal investigation led by an outside counsel and has removed "a narrow universe of people" it believed to be connected to the fund diversion scheme.

The training centers were created in the mid-1980s and funded under collective bargaining agreements between the UAW and Detroit's Big Three auto makers. They are designed to provide continuing-education coursework for job training, health and safety as well as programs for tuition assistance to unionized auto workers.

Federal prosecutors allege Fiat Chrysler's center morphed into a slush fund for extravagant gifts, including travel, designer clothing, jewelry and enough cash to, in one case, pay off a union leader's mortgage.

The UAW-Chrysler National Training Center is governed by a joint board of eight members split between UAW and company executives. Fiat Chrysler has said it was unaware of the alleged misconduct and "immediately separated" Alphons Iacobelli, its former labor relations head, and another employee implicated in the scheme in June of 2015 after being informed of the probe.

Earlier this year, a federal grand jury indicted Mr. Iacobelli and Monica Morgan-Holiefield, the widow of former UAW vice president General Holiefield, on allegations they conspired between 2009 and 2014 to siphon off funds for personal use that were intended for worker training.

Mr. Iacobelli was charged with "acting in the interest of FCA" as part of a conspiracy to funnel money from the UAW-Chrysler National Training Center to Mr. Holiefield during a time when the union official was the top negotiator with the auto maker.

The federal indictment also alleges Mr. Iacobelli violated tax law in relation to $1 million diverted for his personal use on items such as a Ferrari sports car costing more than $350,000.

Mr. Iacobelli, who has declined to comment on the charges, entered a plea of not guilty, according to his lawyer. Ms. Morgan-Holiefield couldn't be reached for comment.

Write to Chester Dawson at chester.dawson@wsj.com and Mike Colias at Mike.Colias@wsj.com

(END) Dow Jones Newswires

November 02, 2017 18:59 ET (22:59 GMT)