Lawsuits and corruption charges have been flying around the auto industry like debris in a tornado. Most recently, American automaker GM filed a lawsuit against Fiat Chrysler, accusing the European manufacturer of bribing leaders in the UAW to get favorable labor costs. This has lead to a strong denial from Fiat Chrysler, who is currently in the middle of a merger with fellow European manufacturing giant PSA. The stock for both GM and Fiat Chrysler dropped Wednesday due to the suits, GM by about 3%, Fiat Chrysler by about 3.7%.
Why did GM do this?
So if it was Fiat Chrysler that was allegedly engaging in bribery with the UAW, why is GM getting involved? Well, if you’ve been watching the news, you might remember that GM recently reached an agreement with the UAW after huge worker strikes in Detroit. The deal was difficult to create, and it’s likely that sacrifices were made on both sides for the workers to get back to work. The strike also cost GM upwards of $2 billion.
The crime of which GM is accusing Fiat Chrysler is bribery, or rather, bribing higher-ups in the UAW to reach a more beneficial agreement for the manufacturer. If this is true, Fiat Chrysler would be able to produce American-made cars significantly cheaper than other manufacturers, GM included, making competition unfair.
What’s the Basis?
In the lawsuit, GM accuses five Fiat Chrysler executives of corruption, three of which have already been convicted by a federal anti-corruption probe.
Also charged with white-collar crimes was UAW Regional Director Vance Pearson, who, along with as-of-yet uncharged UAW President Gary Jones, has been caught embezzling large amounts of funds from the Union.
Fiat Chrysler strongly denies any claims of wrongdoing during their ongoing negotiations with the UAW, and the UAW remains committed to implementing new anti-corruption reforms.