GM General Motors Company

By Chester Dawson 

DETROIT -- The head of the union representing thousands of auto workers denied a former Fiat Chrysler Automobiles NV executive who pleaded guilty to violating labor laws unduly influenced the outcome of negotiations between the union and his company.

Dennis Williams, the president of the United Auto Workers, said in an open letter to union members Friday that collective bargaining agreements reached in 2011 and 2015 were not tainted by allegedly illegal payments made by the former executive to senior UAW officials.

"The is simply no truth to the claim that this misconduct compromised the negotiation of our collective bargaining agreement or had any impact on union funds," Mr. Williams said in the letter.

The UAW represents more than 100,000 factory workers employed by Fiat Chrysler, Ford Motor Co. and General Motors Co. It negotiates collective bargaining agreements with the three companies on a quadrennial basis.

The scandal involving the allegedly illegal payments to senior union officials comes at a time when the UAW has faced setbacks in its attempts to organize workers in several foreign-owned automotive plants in the U.S.

Mr. Williams' unusually public statement was issued just days after Alphons Iacobelli, the former head of labor relations at Fiat Chrysler, reached a deal with federal prosecutors. At a district court hearing on Monday, Mr. Iacobelli said he "knowingly and voluntarily joined an ongoing conspiracy" to authorize more than $1.5 million in illegal payments to UAW leaders.

Mr. Iacobelli's lawyer could not be reached for immediate comment on Friday.

A grand jury indicted Mr. Iacobelli in July for what the government alleged was his role to funnel money from Fiat Chrysler through a union training center to top union officials. He pleaded guilty to making those payments and filing a false tax return to hide some $840,000 siphoned from company coffers for his own use, including buying a Ferrari and building a swimming pool at his home.

Federal prosecutors allege the misconduct began in 2009, the same year Chrysler emerged from bankruptcy, and continued through 2014.

The UAW reached a four-year labor deal with the UAW in 2011.

Fiat Chrysler referred to a statement last year saying the alleged actions by the former labor executive "were neither known to nor sanctioned" by the company. CEO Sergio Marchionne echoed that position in a July email to employees.

The payments were allegedly made to several union officials, including a now-deceased UAW vice president, General Holiefield, during a time when he was the union's top negotiator for bargaining with Fiat Chrysler.

The union said previously it has removed a handful of officials it believes to have been connected to the alleged conspiracy and launched its own internal investigation into the matter led by an outside counsel.

Mr. Iacobelli left Fiat Chrysler before the start of union negotiations in 2015 and after that consulted for General Motors on labor matters. GM has said he no longer works for the company.

Prosecutors alleged Mr. Iacobelli worked with others at FCA to create a liberal spending policy for training-center credit cards to keep senior UAW officials "fat, dumb and happy."

Others netted in the investigation include retired UAW associate director Virdell King, once a fast-rising star at the union who pleaded guilty to charges related to the federal investigation will be sentenced in the coming weeks.

Mr. Williams said in the letter he was "shocked and saddened" by the revelations alleged by prosecutors. "We have initiated many reforms so they will never be repeated," he said.

The indictments of the union officials last summer came just ahead of two key votes at automotive-related plants the UAW hoped to bring under its wings. In August, workers at a Nissan Motor Co. factory in Canton, Miss., rejected a UAW campaign to organize and three months later the union lost a separate vote at a Chinese-owned automotive glass plant in Moraine, Ohio.

The UAW also failed in a 2014 bid to organize assembly line workers at a Volkswagen factory in Chattanooga, Tenn.

According to documentation filed as part of Mr. Iacobelli's plea deal, the payments from Fiat Chrysler to UAW officials included credit card purchases of electronics, furniture and jewelry, as well as a $262,219 check from UAW-Chrysler National Training Center to pay off the mortgage of Mr. Holiefield and his wife. That payment was made six months after the union leader was "scripted" to advocate on behalf of Fiat Chrysler, the court documents said.

Mr. Williams said the collective bargaining agreement reached in 2011 was not "single-handedly" controlled by Mr. Holiefield, and that "its terms were reviewed, negotiated and approved at the highest level of our union, including the UAW president," who at that time was Bob King. Mr. King served as the leader of the UAW from 2010 to 2014, when Mr. Williams took over as president.

The letter specifically rebuffs an allegation made by Mr. Iacobelli in his plea agreement that offers of $50,000 retirement packages to senior UAW officials swayed negotiations between the union and Fiat Chrysler. Mr Williams said that proposal was rejected after being reviewed by UAW counsel and no such money was ever paid.

Write to Chester Dawson at chester.dawson@wsj.com

(END) Dow Jones Newswires

January 26, 2018 20:07 ET (01:07 GMT)

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