This Union Corruption Scandal Is Getting Awfully Messy

Matt Posky
by Matt Posky

The multimillion-dollar corruption scandal involving the United Automobile Workers and Fiat Chrysler Automobiles is starting to cross the line from hubbub to full-on fiasco. Earlier this week, three FCA employees filed a federal lawsuit against the automaker and the UAW seeking hundreds of millions of dollars in damages over allegations that union officials colluded with company executives to influence collective bargaining.

Meanwhile, a recently released plea deal with former FCA labor relations head Alphons Iacobelli implicated former UAW Vice President Norwood Jewell — the man tasked with overseeing the most recent round of contract negotiations with FCA. Iacobelli claims he and other FCA employees transferred hundreds of thousands of dollars in illegal payments to tax-exempt organizations controlled by UAW officials, including Jewell’s Making Our Children Smile Foundation.

Court documents signed by Iacobelli state he “knowingly and voluntarily joined a conspiracy in which FCA and FCA executives and FCA employees agree to pay and deliver, and willfully paid and delivered, money and things of value to officers and employees of the UAW.”

Earlier corruption allegations saw union heads and Iacobelli himself spending money, syphoned from the UAW-Chrysler National Training Center, on cars, home repair, vacations, parties, baubles, and more. While is plea deal doesn’t name Jewell specifically, it does say Iacobelli authorized salary reimbursements with a phony administration fee as a “gift to the Vice Presidents of the UAW Chrysler Department.”

The plea deal also says Iacobelli authorized salary reimbursements, along with “a fraudulent 7 percent administrative fee” as a “political gift to the Vice Presidents of the UAW Chrysler Department.” As Jewel was only one of two people who held that position during the timeframe of the investigation, General Holiefield being the other, that statement implicates him in the scandal.

Holiefield’s charity, the Leave the Light on Foundation, was another tax-exempt organization named within the plea bargain. His widow, Monica Morgan, has was charged in the initial union corruption probe. She is scheduled for a plea hearing on February 6th in U.S. District Court in Detroit. Retired UAW associate director Virdell King and Jerome Durden, a former FCA analyst who served as treasurer of Holiefield’s charity and as controller of the UAW-Chrysler training center until 2015, have both pled guilty to corruption charges and are awaiting sentencing.

As prosecutors try to uncover exactly what happened, the working assumption (helped by testimony of the accused parties) is that Fiat Chrysler employees like Iacobelli bribed union workers on the sly through various charities and gifts to influence union business decisions. This includes all collective bargaining that took place between 2011 and 2015.

UAW President Dennis Williams denies such activities could have seriously influenced the union’s bargaining process. “There’s just no truth to the allegation that the terms of the collective bargaining agreement were compromised by Iacobelli’s crimes,” Williams wrote to union members on Friday. “Iacobelli’s case is one of personal greed, plain and simple.”

That would be easier to believe if the labor relations chief was the only one to benefit from the mishandling of funds. While Iacobelli certainly had some of the more extravagant items, including a Ferrari and two limited-edition Montblanc fountain pens valued at $35,700, he was not the only person to benefit from the ill-gotten money.

Interestingly, Automotive News reports that the union has banned UAW-affiliated nonprofits from taking donations from the UAW and the joint program centers after the corruption probe began. Jewell also opted to retire in November of last year. While not suspect in itself, high-ranking UAW officials often stick it out until retirement age, or at least until they are voted out. But Jewel didn’t even complete his last term, which would have ended in July of 2018. Instead, he left his post at the end of December.

Back in the realm of class-action lawsuits, Michigan law firm Sterling Attorneys at Law filed a complaint last week with the U.S. District Court in Detroit. The three FCA employees say they represent thousands of other union workers who have been wronged. The complaint argues that UAW members “paid tens, if not hundreds of millions of dollars in Union dues for a transaction tainted by the conspiracy between FCA and the UAW.”

While the federal investigation has since branched out to include General Motors and Ford, no union or company officials have been formally charged with any crimes. Last November, both automakers also said they were fully cooperating with the investigators who subpoenaed information about their joint UAW training centers.

[Image: Fiat Chrysler Automobiles]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Lorenzo Lorenzo on Feb 01, 2018

    That's a pretty expensive pen. To keep it safe, it must have been personalized: "Stolen from Alphons Iacobelli".

  • Tele Vision Tele Vision on Feb 01, 2018

    Back in the 2000s I was a Teamster for a few years. It was mandatory to join the union upon being hired. Every few months there would be a greasy-looking guy sitting in our lunchroom. He wasn't allowed to initiate conversation but he'd smile at everyone, inviting same, which might lead to a chinwag. No one ever spoke to him. He just represented $7.00 off of every pay check to us. When I got Lead Hand ( which, in that company, was akin to lower-management but still in the union, i.e. 'Tell Us What The Union Workers Are Doing And Thinking' ) I learned more about that unions' methodology and practices as regarded that company. Pretty garbagey stuff. Our 'Shop Steward', such as he was, was both a lazy bastard and a fanatical softball player. He twice tried to initiate strikes so that he could attend softball tournaments. Unions were necessary in the early-to-mid 20th Century but are now, mostly, an unnecessary evil.

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    • Raph Raph on Feb 02, 2018

      Indeed! Forty plus years of stagnant wages and declining benefits for stake holders demonstrates there is no need for collective bargaining.

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