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Fiat Chrysler pleads guilty to paying off Detroit union officials

DETROIT — Fiat Chrysler pleaded guilty to conspiracy Monday, admitting that it paid off leaders of the United Auto Workers to try to win concessions in negotiations covering thousands of factory workers. FCA's conviction follows a series of guilty pleas from UAW officials who were showered with more than $3.5 million in cash and items of value from a jointly run training center over an eight-year period. FCA stands for Fiat Chrysler Automobiles, which now is part of Stellantis, a company created by the merger of Fiat Chrysler and PSA Peugeot. “FCA violated federal labor law and undermined the collective bargaining process and the faith of the UAWÂ’s membership in their leaders,” said acting U.S. Attorney Saima Mohsin. The head of FCA labor relations, Al Iacobelli, executed the scheme with five UAW officials and a spouse, especially General Holiefield, who was a union vice president. He eliminated a $262,000 home mortgage in 2014 with training center money. Union officials used credit cards for spending sprees. “Your honor, we plead guilty,” FCA general counsel Chris Pardi told U.S. District Judge Paul Borman. Iacobelli was sentenced to 5 1/2 years in prison in 2018, but the sentence was recently reduced by 18 months due to his cooperation. Holiefield died in 2015; his wife pleaded guilty to a tax crime three years later. Holiefield's successor, Norwood Jewell, was sentenced to 15 months in prison. His plea deal listed $60,000 in meals and golf paid with training center credit cards. FCA will pay a $30 million fine to the government. An independent monitor will be appointed to oversee the end of the training center as well as handle other tasks. The government's investigation became public in 2017, but agents soon were uncovering other corruption at the UAW. Union dues were used to pay for golf, booze and vacation villas in California, and contractors were giving kickbacks for union business. Eleven officials have been convicted, including former presidents Gary Jones and Dennis Williams. They are awaiting their sentences in Detroit federal court. Related Video: This content is hosted by a third party. To view it, please update your privacy preferences. Manage Settings. Earnings/Financials Government/Legal UAW/Unions Chrysler Fiat

UAW may be key to forced FCA merger with GM

Sergio Marchionne doesn't give up on a business deal easily. While outwardly not much has recently been said about FCA's attempted merger with General Motors, Marchionne might be hoping to garner a powerful, new ally that could help break things wide open. The United Auto Workers retiree health care trust is the single largest shareholder of GM with 8.7 percent of the stock, and having its support would certainly improve FCA's position in getting a deal done. "Whatever happens in terms of consolidation, it would never be done without the consent and support of the UAW," Marchionne said when FCA recently began contract talks with the UAW, The Detroit News reports. The boss is also allegedly on good terms with the union president Dennis Williams. Still, using the organization for a hostile takeover could be very difficult because of the way its votes are structured. Other activist investors might already be on board, though. Marchionne believes that consolidation in the industry is vital because automakers are investing to create the same technologies. A GM/FCA merger still has many roadblocks, though, including the fact that Marchionne's company is smaller than GM. From a regulatory perspective, the size of the merged company could raise serious anti-trust concerns among regulators, according to The Detroit News. There's also the concern for lost jobs from redundant work with the two combined businesses. Even if the UAW angle doesn't work out, there are contingency plans afoot for other merger targets. According to The Detroit News speaking to anonymous insiders, FCA bigwigs have a meeting in London on Thursday to take a close look at other options. In addition to GM, they are investigating possible deals with Volkswagen and the Renault-Nissan Alliance. In the past, PSA Peugeot Citroen and multiple Asian automakers have also been brought up as partners, and UBS has reportedly been providing financial advice on what to do.

FCA-Renault merger faces tall odds delivering on cost-cutting promises

FRANKFURT/DETROIT — Fiat Chrysler Automobiles and Renault promise huge savings from a mega-merger, but such combinations face tall odds because of the industry's long product cycles and problems translating deal blueprints into real world success, industry veterans told Reuters. BMW's 1994 purchase of Rover, and Daimler's 1998 merger with Chrysler both made sense on paper. The companies promised to hike profits by combining vehicle platforms and engine families. Both combinations proved unworkable in reality, and were unwound. Renault and Nissan, which have been in an alliance since 1999 designed to share vehicle components, have only managed to use common vehicle platforms in 35% of Nissan's products despite an original target of 70%, according to Morgan Stanley. FCA and Renault have raised the stakes for themselves by ruling out plant closures. That increases the pressure to achieve more than $5 billion in promised annual savings from pooling procurement and research investments. The two companies have yet to fill in many of the blanks in the merger plan put forward by Fiat Chrysler. Renault's board is expected to act soon to accept the proposal, but that would lead only to a memorandum of understanding to pursue detailed operational and financial plans. A final deal and the legal combination of the two companies could take months to complete if all goes well. Pressure to cut automotive pollution is driving the latest round of consolidation. Automakers are looking at multibillion-dollar bills to develop electric and hybrid cars and cleaner internal combustion engines. Fiat Chrysler and Renault are betting they can design common electric vehicle systems, then sell more of them through their respective brands and dealer networks, cutting the cost per car. Developing all-new electric vehicles can bring more opportunities to share costs from the outset, industry experts said. "With the emergence of connected, autonomous, electric and shared vehicles, carmakers face immediate investments, so new opportunities for sharing costs have emerged," said Elmar Kades, managing director at Alix Partners. However, most electric vehicles lose money. This is a challenge for city car brands in Europe in particular. Both Renault and Fiat rely heavily on this segment for sales.