UAW reaches settlement with federal government, ending multiyear corruption probe

The UAW will pay the IRS $1.5 million in relation to administrative fees the union received from three joint training centers operated by Detroit's Big Three automakers.

U.S. Attorney Matthew Schneider announced Monday that the United Auto Workers union has reached an agreement to resolve a multiyear federal corruption probe into the organization launched by the Justice Department.

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Under the terms of the proposed settlement, an independent monitor would be appointed that would have the authority to investigate possible fraud and corruption within the UAW and to seek discipline against the union's officers and its roughly 400,000 members before an independent ethics officer or the UAW Trial Committee.

The monitor's oversight of the union would last for six years, with possible early termination if the monitor finds that his or her work is complete and the UAW no longer needs the monitor's services or an extension if the monitor or union feels that a longer period is appropriate. Any costs associated with the monitor would be handled by the UAW, and the monitor's duties will not include any involvement in the collective bargaining process or the day-to-day administration of contracts, absent any indication of corruption or fraud.

The UAW will also conduct a binding and secret-ballot referendum of its membership, overseen by the monitor and the Department of Labor to determine whether to change the UAW’s election method from the delegate system to a direct election model, where the entire UAW membership could vote for the union's president and other members of its International Executive Board beginning in 2022.

In addition, the UAW has agreed to resolve a tax investigation by paying the Internal Revenue Service $1.5 million in relation to administrative fees the union received from three joint training centers operated by Detroit's Big Three automakers: General Motors, Ford Motor Company, and Fiat Chrysler Automobiles.

Ticker Security Last Change Change %
GM GENERAL MOTORS CO. 52.23 +0.31 +0.60%
F FORD MOTOR CO. 13.78 +0.07 +0.51%
FCAU n.a. n.a. n.a. n.a.

The UAW has already paid back more than $15 million for improperly billing Ford and Fiat Chrysler, which will be used by joint programs for the health and safety of auto workers.

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While the probe of the union has ended, Schneider said at a press conference Monday that investigators are still pursuing unspecified people. However, he noted UAW President Rory Gamble is not a target of the investigation.

“I don't have any reason to investigate Mr. Gamble,” Schneider said.

Gamble said that the settlement, while painful, takes the union another step toward “restoring the full faith and confidence of our members.”

“The UAW going forward is clean, and we are a better union for it,” Gamble said.

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Schneider's office filed a civil complaint in the United States District Court for the Eastern District of Michigan on Monday, which details fraudulent and corrupt acts uncovered by the Department of Justice's investigation, including embezzlement of over $1.5 million in dues money, kickbacks to union officials from vendors, and $3.5 million in illegal payments from executives at Fiat Chrysler who wanted to influence contract talks.

“The UAW failed to address the fraud, corruption, and illegality problem within its own ranks and necessitates injunctive relief to protect the honest membership of the organization,” the government stated in the complaint.

To date, the investigation has charged 15 former UAW officials, including former presidents Gary Jones and Dennis Williams, who both plead guilty to embezzling over $1.5 million in union funds.

Earlier this year, the union gave its endorsement for the 2020 presidential election to former vice president and current President-elect Joe Biden, whose White House victory was formalized following the vote of the Electoral College on Monday.

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The Associated Press contributed to this report