By Ben Foldy, Nora Naughton and Christina Rogers
Federal investigators probing corruption at the United Auto
Workers union have also been looking at General Motors Co.'s
dealings with UAW officials, reflecting a newer front in the
yearslong criminal investigation.
Agents have interviewed both current and former GM employees
within the company's labor relations department and raised
questions about interactions between GM's top bargainers and their
counterparts at the UAW, say people with knowledge of the
inquiry.
Investigators have also subpoenaed records from the company's
now-closing employee training center, an entity GM had jointly
operated with the UAW for decades, according to a training center
email sent to staff in February and people familiar with the
matter.
The investigators have requested documents related to financial
transactions, charitable donations, vendor contracts and travel
spending, according to some of the people and the email, which was
reviewed by The Wall Street Journal.
The subpoenas cover documents spanning from 2005 to July of
2019, the email specifies.
The Detroit-based training center, also known as the GM-UAW
Center for Human Resources, is being shut down this year, after the
company and union agreed to unwind it during contract talks last
fall.
The center is a focus of the GM inquiry, with investigators
looking at certain practices, such as payments the center made for
travel and credit-card spending for UAW officials and allegations
that relatives of union leaders were given preference for staff
jobs, say people close to the investigation.
Federal authorities are trying to determine whether GM, in its
dealings with UAW, violated U.S. labor law barring companies from
providing union officials with items of value, some of these people
say.
GM in a statement said the federal investigation "has made it
clear that the [training center] and the people it served were
victimized by corrupt former union officials" and said it has been
cooperating with the government for nearly three years.
The UAW said in a statement it is cooperating with investigators
and reiterated its recent efforts to reform, including stronger
financial controls and the hiring of an ethics officer.
The training center, which included both GM executives and UAW
leaders on its executive board, was also at the heart of a kickback
scheme that resulted in several guilty pleas over allegations UAW
officials shook down vendors in return for contracts.
Matthew Schneider, U.S. Attorney for the Eastern District of
Michigan, in an interview with The Wall Street Journal in December,
said: "Our primary focus is on any unlawful activities or
wrongdoing, whether that's by a corporate entity, a union or by
individuals."
Federal investigators' interest in GM, details of which haven't
been previously reported, is part of a sprawling investigation that
has penetrated the UAW's top ranks and has led to 13 convictions
for offenses ranging from bribery and money laundering to
embezzlement of union dues. The investigation involves the Justice
Department, Labor Department and the Internal Revenue Service.
Prosecutors earlier this year charged the union's former
president, Gary Jones, with a scheme to embezzle more than $1
million in worker dues. Mr. Jones declined to comment through his
attorney.
The federal probe, first made public in 2017, had initially
focused on misuse of funds for a similar employee-training center
operated jointly by the UAW and rival Fiat Chrysler Automobiles
NV.
Federal prosecutors say they uncovered evidence Fiat Chrysler
tried to buy "labor peace" by spending the training center's funds
on union leaders in a scheme to keep labor leaders "fat, dumb and
happy."
That leg of the investigation has led to convictions of Fiat
Chrysler's former head of labor relations, as well as several UAW
officials. Fiat Chrysler has said the misconduct was limited to a
small group of people acting in their own interest.
Last fall, GM cited the investigation as a basis for filing its
own civil racketeering lawsuit against Fiat Chrysler, alleging its
crosstown rival gained a labor-cost advantage by bribing UAW
officials for more favorable contract terms during bargaining.
GM's lawsuit accuses Fiat Chrylser of using the alleged scheme,
and its relationship with top UAW officials, to weaken GM's
position and press a merger of the two companies.
Fiat Chrysler has fought the lawsuit, which it called
meritless.
Both GM and Fiat Chrysler established their training centers in
the 1980s as nonprofits with a mission to train UAW factory workers
for more technology-intensive jobs. Ford Motor Co. also created its
own similar training center.
The centers were largely funded by the companies with each
center amassing tens of millions of dollars in contributions in
recent years through a formula determined by the collective
bargaining agreements, tax documents show. UAW officials and
company executives sat on the centers' governing boards and
operated the facility jointly.
GM's training center has long been the best-funded of the
Detroit car companies', receiving an average of about $50 million
annually over the past decade, according to recent tax
documents.
Fiat Chrysler, like GM, is disbanding its training facilities, a
decision agreed to during labor talks late last year. Ford's
center, known as the UAW-Ford National Programs Center, remains in
operation.
The decision to shutter Fiat Chrysler and GM's training centers
are part of a larger effort to restructure joint programs with the
companies to allow for more transparency and stronger financial
controls, a UAW spokesman said.
Last year, federal prosecutors charged former UAW vice president
Joe Ashton and two aides with a kickback scheme involving the GM
training center's vendors. Prosecutors say Mr. Ashton and the aides
demanded kickbacks in return for steering more than $10 million
worth of contracts for providing backpacks, jackets and watches
intended for GM workers.
Mr. Ashton, also a former GM board member, pleaded guilty to
charges of conspiracy to commit fraud and money laundering late
last year.
Investigators are probing whether GM employees were aware of the
kickback scheme, and to what extent training-center staff raised
questions internally about certain vendor contracts, some of the
people close to the investigation said.
(END) Dow Jones Newswires
April 29, 2020 11:15 ET (15:15 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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