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UAW meets with feds to avert racketeering takeover, oversight

Robert Snell Kalea Hall
The Detroit News

Detroit — Federal prosecutors and leaders of the United Auto Workers started negotiating a deal Tuesday to avert a government takeover that likely would subject one of the nation's most powerful labor unions to prolonged oversight aimed at rooting out corruption.

According to a joint statement released by the union and government, high-level talks between U.S. Attorney Mathew Schneider and UAW President Rory Gamble touched on several reforms, including one that would let rank-and-file members directly elect new leaders as well as the appointment of an independent monitor to eliminate corruption.

The details emerged Tuesday after the two leaders met in private three years into a federal corruption prosecution that has led to the convictions of 14 people, including former UAW President Gary Jones. Gamble was photographed being driven into the prosecutor's underground garage in downtown Detroit on Tuesday, his face covered in a protective mask during the COVID-19 pandemic.

UAW President Rory Gamble gives a thumbs up after meeting with U.S. Attorney Matthew Schneider at offices in Detroit, Michigan on June 30, 2020.

Legal experts viewed the meeting as a last-ditch attempt to reform the UAW and to avoid having the Justice Department seize control of the union through a civil racketeering lawsuit, typically a tool used to battle organized crime. Schneider has complained for months about the union's lack of cooperation, faulted Gamble's attempts to reform the union and said his patience had "pretty much run out."

"Up until now the UAW has stonewalled. Their approach has been the less the feds know about us, the better off we are," said Erik Gordon, a University of Michigan business professor. "But one person after another has been convicted and started talking, and now the feds have made it clear as day that they think the UAW is totally corrupt and uncooperative."

A deal would spare the UAW the stigma of the Justice Department seizing control of the union through a civil racketeering lawsuit, a stigma that could harm future efforts to attract new members.

UAW President Rory Gamble and Matthew Schneider

Schneider and Gamble discussed democratic elections and the concept of appointing an independent monitor to oversee reforms, both sides announced after the approximately two-hour meeting. Both sides pledged to hold additional meetings in the coming weeks.

“The Justice Department seeks genuine and sincere reform of the UAW so as to provide the best possible representation for its members,” Schneider said in a statement. “I look forward to working toward a mutually agreeable resolution that will protect the interests of the UAW’s members and their families.” 

In a statement, Gamble said: "As we turn the page to a stronger, better and cleaner union, we continue to make critical decisions that will protect the sacred dues money of our members. I look forward to continued discussions in the near future that advance toward closing one dark chapter and opening new brighter chapters for members of the UAW."

A deal would mark a significant breakthrough in a years-long federal corruption investigation that has revealed multiple generations of labor leaders stealing from rank-and-file members while living affluent lifestyles financed with bribes, kickbacks and embezzled union money. Throughout, the scandal has revealed deep distrust between union leaders who have blamed wrongdoing on a "few bad apples" and a Justice Department team that has amassed double-digit convictions while labeling the UAW as conspirators in a vast criminal scheme.

The goal is to avoid the government filing a civil racketeering lawsuit that would strip UAW leaders of control. Schneider has threatened to file a racketeering lawsuit, a powerful legal tool used to reform the International Brotherhood of Teamsters 30 years ago.

“Anytime you get the receivership and it goes under the protection of the federal government, now you don’t have as much leverage and now they can impose any changes they want, so if the UAW can give enough to avoid being taken over by the feds that would be a good solution,” said Art Wheaton, a labor expert at Cornell University.

It makes sense to Wheaton for both the UAW and the federal government to come to an agreement to avert a takeover because of how much, time, effort and money both sides would end up investing if the takeover did occur.

“Lawyers aren’t free,” he said. “This is a massive public dollar investment trying to take them over. What does the federal government gain by taking over a 400,000-member organization that is in way different industries all over the place … can they manage that? Do they have the bandwidth and expertise to try and organize this in a different way?”

Wheaton sees an agreement between the two as the best choice “up to and including if they have to make a whole bunch of people resign or step down or change the leadership. All of those things are options on the table, and I really think they have the right international president in place that can deal with some of these issues."

The negotiations are playing against the backdrop of senior UAW officials pleading guilty to embezzlement and racketeering crimes and agreeing to cooperate with federal investigators. That includes Jones, who pleaded guilty in early June.

UAW president Dennis Williams speaks at the UAW 37th Constitutional Convention at Cobo Center in Detroit on June 11, 2018.

Former President Dennis Williams, meanwhile, remains under investigation. Williams helped embezzle more than $1 million spent on personal luxuries and illegally used money from Detroit automakers to renovate the union’s northern Michigan resort, where the union built him a $1.3 million lakefront home, according to prosecutors.

Williams has not been charged with wrongdoing. A source familiar with the investigation, however, said Williams’ legal team has been negotiating a potential deal for the retired UAW president to plead guilty to unspecified crimes.

The UAW revealed Monday that Williams had reimbursed the UAW $55,000 in "travel expenses that were not appropriate." Legal sources told The News that the payment is an indication Williams is close to finalizing a plea deal with federal prosecutors.

"The plea negotiations are probably pretty far advanced," said Peter Henning, a Wayne State University law professor and former federal prosecutor. "When you have a problem, that’s how you negotiate your way out of it."

Gamble's agreement to meet with investigators carries risks considering federal agents are probing ties between Gamble and one of the union's highest-paid vendors as well as whether labor leaders received bribes. Gamble has denied wrongdoing.

UAW President Rory Gamble under federal investigation

Some autoworkers believe that to really rid the union of corruption a complete change in how international officers are elected should take place. Instead of delegates selecting international officers, they'd like to see direct elections — a change reminiscent of the Teamsters following its federal takeover. 

Direct elections "make the international accountable" and the current delegate electing process leaves the membership with "no control," said Chris Budnick, a UAW Local 862 member at Ford Motor Co.'s Kentucky Truck plant. Budnick and other UAW members formed a movement last year to push for a special convention to institute direct elections. 

"I hope that they do come up with some type of agreement for direct elections," he said. "Not that they are going to ... Rory Gamble is 110% against it, so is the entire international. I don't really see that happening, and I'd like to see that happen."

Wheaton said "there are opportunities to make the UAW a more democratic union" and direct elections "would be a very good thing to discuss and explore. I think it’s absolutely something that should be brought up for a vote at the international convention."

In 1989, a judge named three monitors to oversee the Teamsters following a federal racketeering lawsuit. The monitors, including a federal judge, former federal prosecutor and a labor lawyer, were appointed to monitor alleged corruption and supervise new voting procedures. The Teamsters exited government oversight in February 2020.

Johnny Pruitte, a member of UAW Local 276 with 28 years of union membership who also backed efforts for direct elections, has long considered whether a government takeover would be good for the union. He's decided it would be the best way "to win back the confidence of the UAW members."

"It appears for the membership it's probably going to be best for them to put in a checks and balance system so that the UAW will be forced to go by some rules and regulations because even if the membership thought that the higher-ups were pure and clean and non-corrupted, there's still just so much distrust among the membership," he said. "I hear it every day."

Twitter: @robertsnellnews