DETROIT — Fiat Chrysler Automobiles, known as Stellantis since the company’s merger with Peugeot-maker PSA Group, will plead guilty in the federal corruption probe that has led to convictions against 15 people, including former UAW and FCA officials, and pay a $30 million fine.
The company released a statement “that it has reached an agreement with the U.S. Attorney’s Office for the Eastern District of Michigan to resolve its investigation into past misconduct of certain former FCA US employees involving the UAW-Chrysler National Training Center (NTC). The agreement, which is subject to U.S. federal court approval, includes a guilty plea to a single count of conspiracy to violate the Labor Management Relations Act and the payment of a $30 million fine.”
The company said it “also agreed to implement an independent compliance monitor for three years with respect to the dissolution of the NTC and internal controls as they relate to the trusts being implemented to replace the NTC.”
The Free Press reported last year that the NTC building on East Nine Mile Road in Warren was on the market with a $20 million price tag. However, it’s possible the building could continue in its previous role conducting joint activities training involving the automaker and the UAW. The training center for General Motors on the Detroit River, however, was sold for an undisclosed price. Joint training for GM is to be conducted elsewhere. Both training centers were implicated in the corruption scandal, which saw millions of dollars meant for worker training misdirected.
Prosecutors said FCA conspired to make illegal payments to UAW officers equivalent to $3.5 million in the form of golf, meals, parties and other things from 2009 to 2016. In a news release, U.S. Attorney Matthew Schneider said the agreement means FCA is being held accountable.
“No matter the size or importance of a company, our job in the Justice Department is to faithfully enforce federal law. This proposed guilty plea ensures that FCA will be held accountable. With a $30 million fine, three years of probation, and a court-appointed monitor, we seek to make sure similar crimes do not happen at the company again,” Schneider said.
The government said the company’s actions undermined the collective bargaining process.
The charge against FCA follows numerous developments in recent months signaling a new phase or possibly winding down of the years-long probe. Schneider is preparing to leave the office for private practice next week, and his office reached a deal with the UAW in December to end the criminal investigation into the union. As part of the deal, the UAW is to have an independent monitor and a membership vote on how top leaders will be chosen. The UAW already paid $15 million to the training centers for improper chargebacks and was to pay $1.5 million to the IRS for administrative fees.
Fifteen people, including two former UAW presidents, Gary Jones and Dennis Williams, were charged in the probe. Jones resigned his post in disgrace, and both await sentencing. Charges were not limited to union officials, however. Alphons Iacobelli, the one-time lead labor negotiator for FCA, recently had his 66-month sentence in the case reduced to 48 months because he, like others, cooperated. Iacobelli was a key early figure, who, authorities said, used training funds to pay for a Ferrari, jewel-encrusted pens and home improvements.
Iacobelli’s role in connection with the late Sergio Marchionne, the legendary former CEO of FCA, has been referenced in court filings as well, but Marchionne was never charged in the case.
When asked about that previously, Schneider simply referenced the fact that Marchionne had died.
“We don’t charge or indict people who are deceased. He’s deceased so therefore there’s really nothing else that I can say about that,” Schneider said.
FCA’s legal headaches involving the probe continue despite Wednesday’s plea announcement. A lawsuit General Motors filed against FCA, claiming the company corrupted contract bargaining in order to damage GM and force a merger that never occurred, was dismissed at the federal district court level but has been appealed. FCA called the case meritless.
Erik Gordon, a law professor at the University of Michigan’s Ross School of Business, said the $30 million fine for FCA is not significant, but that’s not the only thing to consider.
“The fine is doughnut money. Pleading guilty to a criminal charge is the bigger part of it. The company can’t be put in jail, but companies try to avoid pleading to criminal charges,” Gordon said. “The company might face more lawsuits from investors who refer to the guilty plea.”
Of course, Fiat Chrysler, or Stellantis, isn’t the first company to face a serious legal comeuppance. It’s also not the first time in recent years that FCA has been involved with the Justice Department’s Criminal Division. The company has acknowledged being in talks about an investigation into diesel emissions cheating involving approximately 100,000 2014-16 Eco-diesel Ram 1500 pickups and Jeep Grand Cherokees. An FCA manager, Emanuele Palma, has been indicted in connection with that case.
Other companies, including GM and Volkswagen, have their own stories.
The deadly defective ignition switch case involving a pre-bankruptcy GM led to a deferred prosecution agreement with the Justice Department. As part of the multibillion dollar cost to the automaker, GM settled the Justice Department’s criminal case for $900 million in a deferred prosecution agreement that ended in 2018, according to previous Free Press reporting.
In another infamous example, Volkswagen agreed, in addition to its multibillion-dollar settlement, to plead guilty to three felonies, including conspiracy, in its Dieselgate case. The company installed software designed to fool vehicle emissions testing, a case that had echoes in the FCA emissions scandal. Numerous VW executives were indicted, and two former employees were imprisoned.