UAW President Gary Jones resigns; GM sues FCA for union bribes

Fallout from Federal investigation that has indicted 13 and started in 2017 continues

United Auto Worker President Gary Jones has resigned in the wake of the union's International Executive Board's action Wednesday to remove him, according to The Detroit News.

Jones' lawyer, Bruce Maffeo, told The News that the UAW's leader's decision "was reached before learning of the internal charges filed earlier today." Jones was under fire within the union for the “submission of false, misleading and inaccurate expense records.” Jones has been on a leave of absence since the Federal Bureau of Investigation raided his home in August.


UAW leadership also sought the removal of Region 5 Director Vance Pearson who heads the 17-state union region from Missouri to California and has been the center of a federal probe and has been charged with embezzling union money, wire fraud and money laundering. Pearson succeeded Jones as the head of the region.

Thirteen individuals have been indicted on corruption charges in the federal investigation, which has been ongoing since July of 2017. It began with the indictment of Fiat Chrysler’s former labor relations chief, Alphons Iacobelli, who was charged with using $1 million originally allocated to train UAW members. Instead, Iacobellie bought himself a Ferrari, a swimming pool and other expensive items with the funds. He was sentenced to 66 months in prison in August of 2018, but not before making a plea deal, which widened the investigation and led to more arrests.

Iacobelli left FCA in 2016 to join GM's labor relations department. He was suspended after his indictment and fired in December of 2017.

The government's investigation led to General Motors' unprecedented lawsuit filed today, with GM alleging its Motown rival Fiat Chrysler received an unfair business advantage by bribing officials of the UAW.

"FCA was the clear sponsor of pervasive wrongdoing, paying millions of dollars in bribes to obtain concessions" from the union, GM General Counsel Craig Glidden said. "FCA's manipulation of the collective bargaining process resulted in unfair labor costs and operational advantages for it, causing harm to GM."


GM's lawsuit charges that Fiat Chrysler tainted the negotiations for union contracts in 2009, 2011 and 2015 in order to gain advantages over General Motors.

In a statement, Fiat Chrysler called the lawsuit "meritless" and accused GM of attempting to disrupt its proposed merger with French automaker PSA Peugeot as well as ongoing contract talks with the UAW.

"This astonishing ploy comes at a time when FCA is proving itself to be an ever more formidable competitor that continues to create significant value for all its stakeholders through the successful implementation of its long-term strategy," FCA said in a statement issued from London later Wednesday, "This includes the proposed merger with PSA, which itself completed the successful turnaround of the European businesses it acquired not long ago from General Motors."

Ticker Security Last Change Change %
GM GENERAL MOTORS CO. 43.21 -0.89 -2.02%
F FORD MOTOR CO. 12.16 +0.05 +0.41%
FCAU n.a. n.a. n.a. n.a.

GM's lawsuit named three former FCA executives as co-defendants, including the jailed Iacobelli.

The Center for Auto Research, an industry think tank, calculated earlier this year that Fiat Chrysler's total labor costs including wages and benefits were about $55 per hour, giving it an $8-per-hour benefit over GM and a $6 advantage over Ford. GM's Glidden said,  "We were denied benefits that FCA received under their collective bargaining agreements and were damaged as a result."


The Associated Press contributed to this story