GM General Motors Company

By Nora Naughton 

The governing board of the United Auto Workers is trying to move past an internal split over the terms of President Gary Jones's recent departure and focus on salvaging the union's reputation amid a corruption probe, contract talks and shrinking membership.

Days after securing a new four-year labor contract at General Motors Co. that many union members considered a win, the UAW found itself tarnished yet again by new allegations in a long-running criminal investigation that alleges extravagant spending of union funds including on trips, cigars and golf resorts and that has implicated some of its top members, including Mr. Jones. On Thursday, federal prosecutors claimed that a former union official close to Mr. Jones embezzled dues.

On Saturday, Mr. Jones requested -- and was granted -- a paid leave of absence following the latest allegations, people familiar with the matter said. The request for a paid leave and its timing rankled several board members who had earlier wanted him out, some of the people said.

In September, some members of the 14-person UAW board had called for Mr. Jones's removal after the Detroit News first linked his name to the federal probe, the people familiar with the matter said. They added that the board never formally voted on that effort. On Saturday, six of the 13 voting members voted against the embattled union leader's request, but Mr. Jones prevailed as he was able to cast a vote, the people said.

The board tension comes as the union pursues new labor contracts with Ford Motor Co. and Fiat Chrysler Automobiles NV after the GM deal.

One of the oldest unions in the country, the UAW once wielded significant influence in the automotive industry, with membership last peaking at 1.5 million in the late 1970s. Last year, it had fewer than 400,000 members, as U.S. auto makers have closed plants and downsized workforces.

The board, now led by interim President Rory Gamble, is working to rebuild credibility with members and regain influence. In a Tuesday letter to members, Mr. Gamble said he was angered by "recent events concerning members of our leadership" without mentioning the federal investigation.

"I am not here to pre-judge anyone," he wrote. "I am here to take this union forward."

The probe has ensnared multiple union officials, including close associates of Mr. Jones. Prosecutors say they have uncovered evidence of costly trips, designer clothing, exotic sports cars and high-end shotguns paid for out of union funds. Authorities allege some of the most extravagant spending -- including thousands of dollars spent at steak houses, golf courses and spas -- happened on trips to Palm Springs, Calif., for conferences hosted by Mr. Jones when he was a UAW official at Region 5, the union's largest regional office.

Federal prosecutors said Thursday that Edward Robinson, a former official in UAW Region 5 and one of Mr. Jones's former aides, embezzled up to $700,000 in union dues and split the money with an unnamed union official, referred to as "UAW Official A." That unnamed person is Mr. Jones, according to a person familiar with the investigation.

Mr. Jones's attorney, J. Bruce Maffeo, didn't comment on the allegation. He said Mr. Jones took a voluntary leave of absence and didn't face pressure to do so.

"Gary made the decision to request a leave of absence at this point in time in order to allow the UAW to continue its fight to improve the lives of its members and their families without distraction," Mr. Maffeo said.

Mr. Robinson's attorney didn't respond to requests for comment.

The UAW's International Executive Board is the union's 14-member governing body, though it currently has only 13 voting members. The current Region 5 director, Vance Pearson, took a leave after federal prosecutors charged him in September with embezzling union funds. Mr. Pearson plans to plead not guilty, his attorney has said.

"This is still going to be a cloud hanging over the union until something gets resolved with Gary Jones's case," said Kristin Dziczek, an economist and labor expert at the Center for Automotive Research in Ann Arbor, Mich.

The faction of the board that had pushed for Mr. Jones to step down in recent months is ultimately satisfied that he decided to move aside, people familiar with the matter said. Since Mr. Jones hasn't been charged with a crime, board members at this time aren't looking to make further changes to the union's leadership or structure, the people said.

Still, some board members believe that Mr. Jones waited too long to step aside and wielded too much influence over how his departure was handled and how it was communicated to members, according to the people.

Previous UAW leaders, including Mr. Jones, already enacted changes in response to the federal probe, which became public in 2017. Changes included independent audits, formalized credit-card policies and more vetting for vendors used by the union.

Mr. Jones, who has led the UAW since June 2018, was coming off a victory in labor talks after workers ratified a new four-year contract with GM that delivered substantial gains for workers. Similar gains will carry over to workers at Ford if a tentative agreement is ratified this month by members. The UAW will then turn its attention to Fiat Chrysler, using the agreements at GM and Ford as a template.

The win came after a challenging summer for Mr. Jones, who is 62. FBI agents in August executed search warrants at the homes and offices of several current and former UAW officials, including Mr. Jones's home in Michigan. Days before the UAW's contracts with the Detroit auto makers were set to expire in September, Mr. Jones's former assistant, Mr. Pearson, was charged. These charges spurred the September UAW board meeting in which Mr. Jones was encouraged to step down, people familiar with the meeting said.

(END) Dow Jones Newswires

November 05, 2019 17:04 ET (22:04 GMT)

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