GM's bombshell lawsuit against FCA alleges years of corruption and includes claims about a failed 2015 merger

Sergio Marchionne CEO Fiat ChryslerSergio Marchionne, CEO of Fiat Chrysler, speaks at the North American International Auto Show in Detroit, Michigan January 11, 2016.REUTERS/Rebecca Cook

LOS ANGELES - General Motors filed a bombshell lawsuit against Fiat Chrysler Automobiles in US district court in Detroit on Wednesday.

In the lawsuit, GM alleged that "FCA was the clear sponsor of pervasive wrongdoing, paying millions of dollars in bribes to obtain benefits, concessions, and advantages in the negotiation, implementation, and administration of labor agreements over time," the company said in a statement.

The company added: "FCA corrupted the implementation of the 2009 collective bargaining agreement. It also corrupted the negotiation, implementation, and administration of the 2011 and 2015 agreements."

The federal racketeering lawsuit goes to the top of FCA leadership from 2009-15. Specifically, Craig Glidden, GM Executive Vice President and General Counsel, said on a conference call with reporters after the lawsuit was announced that late FCA CEO Sergio Marchionne was "central to a bribery conspiracy" that involved the United Auto Workers and former FCA executives who have pled guilty in a federal criminal investigation.

In a statement, FCA said, "We are astonished by this filing, both its content and its timing."

"We can only assume this was intended to disrupt our proposed merger with PSA as well as our ongoing negotiations with the UAW. We intend to vigorously defend against this meritless lawsuit and pursue all legal remedies in response to it."

Alleged corruption of collective bargaining an an attempt to influence a GM-FCA merger

mary barraBill Pugliano/Getty

Marchionne, who died suddenly in 2018, was the architect of a merger between Fiat and Chrysler that rescued the Detroit carmaker after it was bailed out and went bankrupt during the financial crisis. Marchionne engineered a 2014 IPO of FCA, which now has a $23 billion market capitalization. A 2015 spinoff of Ferrari and a separate IPO now has the Italian supercar legend valued at $32 billion.

Glidden said that FCA's current CEO, Mike Manley, was not named in the lawsuit.

But he also said that the "conspiracy was hatched in 2009 and continued for a substantial time" and that Marchionne was a central figure.

GM is seeking damages that could rise into the billions, as it said FCA alleged corruption of the collective bargaining process "left it paying higher wages than FCA, and allowed FCA to use more temporary workers and lower-paid second-tier workers than GM," Reuters reported.

"Something's wrong when a foreign company can come to US and say it will abide by law, but then systematically violate those laws," Glidden said.

No attempt to affect FCA-PSA merger

Mike ManleyFCA

FCA is in the process of merging with France's PSA Group, which is successful would create the world's fourth-largest automaker. Glidden said that the timing of the lawsuit had nothing to do with the deal, nor with the recently concluded strike against GM by the UAW. Glidden also said that GM was focusing only on FCA and was not suing the UAW.

But he added that GM is alleging that FCA's actions were an attempt to influence a failed 2015 merger with GM, infamously lobbied for my Marchionne but rejected by GM CEO Mary Barra and GM's board.

"The scheme was integrated with attempt to force a merger," Glidden said. "At that time. we also know Mr. Marchionne [was] aware of criminal conduct."

"We believe that the conduct at issue is stunning," he said.
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