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Nov 20, 2019

GM sues Fiat Chrysler, alleges corruption undermined its deals with union

A look back at GM's history in Canada

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General Motors Co. hit Fiat Chrysler Automobiles NV with a blockbuster racketeering lawsuit, alleging that a bribery scheme that has sent United Auto Workers and Fiat Chrysler officials to jail ultimately cost GM billions of dollars by tainting union contracts as far back as 2009.

GM filed the suit in federal court Wednesday seeking to recoup unspecified damages from its rival, known as FCA, which has in the past denied being aware three former executives conspired with United Auto Workers officials to undermine labour law.

“The multi-year bribery scheme FCA led undermined the integrity of the collective bargaining process and caused GM substantial damages,” Craig Glidden, GM’s general counsel, told reporters at a briefing at the company’s Detroit headquarters.

GM and Fiat Chrysler shares both touched session lows on the news, falling as much as 2.3 per cent and 3.3 per cent, respectively.

GM alleges that former Fiat Chrysler Chief Executive Officer Sergio Marchionne, who died last year, used bribes to corrupt the collective bargaining process between the UAW and Detroit’s three automakers for several years from 2009 to 2015, Glidden said. That resulted in unfairly high labour costs for GM, which have put it at a competitive disadvantage in the marketplace, he said.

Part of the intent was to weaken GM financially and make a merger with Fiat Chrysler more likely, GM alleges.

The suit targets Fiat Chrysler and three former company officials who plead guilty and were sentenced to prison for their roles in the scandal, including Alphons Iacobelli, who had served as vice president and lead UAW negotiator.