Auto industry corruption probe to intensify in 2019
Detroit — A federal investigation targeting auto executives and labor leaders will likely intensify in 2019, more than three years into a corruption prosecution that has secured seven convictions, reshuffled the top ranks of the auto industry and raised doubts about the sanctity of labor negotiations.
Federal agents and prosecutors continue to meet with at least four convicted United Auto Workers officials and Fiat Chrysler executives who are leading investigators to new, potential criminal targets. The briefings come as investigators have widened the criminal probe to include General Motors Co. and Ford Motor Co.
Court records and interviews help reveal new threads in the corruption scandal, which has focused on auto executives funneling illegal payments from a training center to union leaders to buy labor peace. Investigators also are questioning UAW officials' use of almost $1 million of membership dues on condominiums, liquor, food and golf in California, where Gary Jones held annual conferences before becoming president.
The investigation intensified last summer when the government labeled Fiat Chrysler and the UAW co-conspirators, an allegation that potentially exposes the automaker and the UAW to criminal charges, fines and governmental oversight.
In July, prosecutors revealed that a former labor official told federal prosecutors that former UAW President Dennis Williams while in office directed subordinates to use funds from Detroit’s automakers, funneled through training centers, to pay for union travel, meals and entertainment.
As part of a plea agreement, former UAW administrative assistant Nancy Adams Johnson told investigators Williams issued the directive to relieve pressure on the union’s budget.
Williams retired in June to the UAW Black Lake Conference Center, a 1,000-acre retreat in northern Michigan and brought along almost $100,000 worth of brand new boats. The union is building him a custom-made, lakefront home as FBI agents question union leaders' spending of membership dues and money from Detroit's automakers on personal luxuries.
The UAW is using nonunion labor to build the three-bedroom, three-and-a-half bath, 1,885-square-foot home, a money-saving move prompted by bids showing the project would have cost more than $1.3 million.
Fiat Chrysler CEO Sergio Marchionne died in July amid the investigation and The News later revealed he gave an expensive Italian watch to United Auto Workers Vice President General Holiefield and failed to disclose the gift while being questioned by federal investigators, two sources told The Detroit News.
UAW spokesman Brian Rothenberg blamed the scandal on a few former labor officials.
"The UAW is appalled at the actions of a few former officials who stole money from the Chrysler Joint Program Center for their personal benefit," Rothenberg said in a statement.
"Fortunately, the UAW has layers of checks and balances in contract negotiations, including voting by the entire membership, and we are confident the terms of our collective bargaining agreements were not impacted. We are also confident in the changes we have advanced to prevent this type of rogue individual behavior."