Ladies and gentlemen, settle down and prepare to witness a very entertaining spectacle. On November 20, 2019, General Motors filed a RICO lawsuit against Fiat Chrysler Automobiles, claiming that FCA bribed United Auto Workers (UAW) officials over years. The short explanation of it all: General Motors alleges that FCA corrupted union labor talks over the past decade and has cost GM billions of dollars in the process. According to the Detroit Free Press, the lawsuit claimed 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.” This led to lower labor costs and gave FCA an unfair advantage

It’s already been a drama, with UAW President Gary Jones resigning the same day after charges were made within the union of “submission of false, misleading and inaccurate expense records”, among other high-profile incidents of fraud, such as UAW Region 5 Director Vance Pearson, who has been under a federal probe for embezzling union money, wire fraud, and money laundering; and former FCA and GM Labor Relations fraudster Alphons Iacobelli, who copped a plea deal in August 2018 and has been both trying to wear down his five-and-a half year prison term and, seemingly, has been coercing older acquaintances and entities to admit to wrongdoings of the past. With Iacobelli singing cheery tunes to investigators and FCA on the cusp of a merger with PSA, the timing seems more than a little coincidental, doesn’t it?

General Motors’ statement:

General Motors Co. (NYSE: GM) today announced the filing of a federal racketeering lawsuit against FCA (FCA US LLC and Fiat Chrysler Automobiles NV) and former FCA executives who have pled guilty in an ongoing federal corruption probe. The lawsuit exposes a multi-year pattern of corruption that FCA used to undermine the integrity of the collective bargaining process and cause GM substantial damages.

At the core of this lawsuit are clear admissions of wrongdoing made by former FCA executives revealed through the continuing criminal investigation by the U.S. Attorney’s Office in the Eastern District of Michigan.

“This lawsuit is intended to hold FCA accountable for the harm its actions have caused our company and to ensure a level playing field going forward,” said Craig Glidden, GM Executive Vice President and General Counsel.

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.

FCA corrupted the implementation of the 2009 collective bargaining agreement. It also corrupted the negotiation, implementation, and administration of the 2011 and 2015 agreements.

FCA’s manipulation of the collective bargaining process resulted in unfair labor costs and operational advantages, causing harm to GM.

With this lawsuit, GM is seeking to reinforce that bargaining must be free from fraud and corruption. All damages recovered will be invested in the U.S. to benefit GM’s employees and grow jobs.

Fiat Chrysler’s statement:

Fiat Chrysler Automobiles (“FCA” NYSE: FCAU /MTA: FCA) confirms that it will defend itself vigorously against the lawsuit filed yesterday by General Motors. FCA believes General Motors’ claims are nothing more than a meritless attempt to divert attention from that company’s own challenges.

This astonishing ploy comes at a time when FCA is proving itself to be an ever more formidable competitor that continues to create significant value for all its stakeholders through the successful implementation of its long-term strategy. This includes the proposed merger with PSA, which itself completed the successful turnaround of the European businesses it acquired not long ago from General Motors.

FCA will deal with this extraordinary attempt at distraction through the appropriate channels and will stay focused on continuing to deliver record results while realizing an exciting vision for the future of the industry. FCA is confident that it will prevail in defending itself against these claims in court and will also pursue all available remedies in response to this groundless lawsuit.