Inside the United Auto Workers’ Solidarity House headquarters, they’ve seen few things more stunning than the criminal indictments of a former Fiat Chrysler Automobiles NV labor executive and the wife of former union vice president.
The federal charges trace a tale of self-enrichment the union has spent decades fighting to prevent. That effort goes back to legendary President Walter Reuther, who insisted that monies earmarked for members be managed by outside professionals to prevent such abuses.
This outrage appears to be a glaring exception. The union’s top leadership and ranking members of the UAW legal staff learned in late January 2016 of the federal investigation into former FCA labor boss Alphons Iacobelli and Monica Morgan, wife of deceased UAW Vice President General Holiefield — nine months after Holiefield died of pancreatic cancer.
The reaction: shock, a visceral sense that “this is not who we are or what we believe in,” says a ranking UAW source describing internal reaction to the sordid case. President Dennis Williams declared himself “appalled.” He’s not alone.
In the birthplace of the modern labor movement, the UAW considered itself (and was generally seen to be) a “clean” union. It was the counterweight to the International Brotherhood of Teamsters with its longtime — if long-past —association with organized crime and record of pension abuse.
Not the UAW. Its joint programs, funded by company dollars for the benefit of members, are intended to be managed by the company to ensure against the kind of abuses allegedly committed by Iacobelli and his fellow conspirators ... and maybe more, the charges suggest.
The money at stake was not pilfered from union dues, say people familiar with the structure of the joint programs. It was FCA money, a so-called “paper budget” whose size — and spending limits — are established as part of contract bargaining.
Detroit’s automakers, not union members, separately fund their joint programs with the UAW and pay the bills. Formed after passage of the Labor-Management Cooperation Act of 1978, the programs are intended to improve communication between management and the factory floor, eliminate problems impeding competitiveness, and involve workers in decision-making.
Whatever the final dispensation of the case, the charges are likely to bolster suspicions that corrupt backscratching, fueled by cash earmarked for UAW members, is endemic in the high-stakes bargaining between the union and Detroit’s automakers.
Spending joint training money on do-little conferences or other dubious boondoggles loosely tied to the business may be more common. But using those dollars to fund lavish lifestyles, to buy a Ferrari and $37,000 Mont Blanc pens, to finance swanky home improvements and to pay off student loans? Not so much.
The Detroit auto industry isn’t immune to corruption. Nor is the UAW entirely free of greedy self-dealers cutting corners to get ahead; no big, sprawling institution is. But the scheme allegedly cooked up by Iacobelli, Morgan, Holiefield and Jerome Durden, a financial analyst in FCA corporate accounting, reaches another level entirely.
The “UAW Ethical Practices Code,” adopted in June 2010 at the 35th Constitutional Convention, is clear: “No officer or representative shall accept ‘kickbacks,’ under the table payments, valuable gifts, lavish entertainment or any personal payment of any kind, other than regular pay and benefits for work performed as an employee.”
Iacobelli, who led General Motors Co.’s contract talks with Canada’s Unifor union last year, is charged with criminal violations of the Labor Management Relations Act. He’s alleged to have made payments totaling more than $1.2 million to Holiefield and others using the bank account and credit cards of the UAW-Chrysler National Training Center on Jefferson in Detroit.
Iacobelli also is charged with diverting training center funds to buy a 2013 Ferrari 458 Spider and to lease a private jet. He is said to have spent nearly $100,000 on landscaping, a swimming pool, outdoor kitchen and outdoor spa at his Rochester Hills home. And more.
The charges will resonate on the factory floor, where there can always be found voices complaining about self-dealing union leaders disconnected from workaday reality. They will deepen public cynicism about the bargains made behind contract bargaining. They will prove metaphoric black eyes for both the UAW and FCA, evidence that neither paid enough attention.
And they will remind the union leaders who loudly lament “greed” when it serves their purposes in the theater of public bargaining that one of their own, too, can succumb to one of the Seven Deadly Sins.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.