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FCA CEO calls claims it used offshore accounts to bribe UAW officials 'blatantly false'

Breana Noble
The Detroit News

General Motors Co.'s civil racketeering lawsuit is an attempt to harm the reputation of Fiat Chrysler Automobiles NV and its employees with "blatantly false" accusations, FCA CEO Mike Manley told employees Monday in a letter obtained by The Detroit News.

The memo came after Fiat Chrysler responded to GM's amended lawsuit accusing the Italian American automaker of using offshore bank accounts to bribe United Auto Workers officials and keep its own executives quiet.

Fiat Chrysler Automobiles NV's lawyers Steven Holley says General Motors Co.'s allegations that offshore bank accounts were used to bribe United Auto Workers officials is baseless and "despicable."

"GM’s initial shot at disrupting our business was totally without merit and as such was entirely rejected by the judge last month," Manley wrote. "This most recent filing is nothing more than a repeat of previous salacious claims, all of which are unfounded. It is peppered with absurd conspiracy theories about corporate espionage and double agents, none of which have the slightest foundation and indeed all of which are blatantly false."

In a federal court filing, Fiat Chrysler's lawyer Steven Holley argues the "despicable" new allegations are unsubstantiated. They also do not change the determination that members of the rank-and-file — and not GM — were the direct victims of payments made to UAW officials from training center funds for which three former FCA employees have been convicted, Holley said.

"GM’s proposed Amended Complaint reads like a script from a third-rate spy movie, full of preposterous allegations that FCA paid not one, but two, 'mole[s]' to 'infiltrate GM' and 'funnel inside information to [FCA]' using money 'stashed' in a 'broad network' of 'secret overseas [bank] accounts,'" Holley wrote. "None of that is true."

Fiat Chrysler responded a week after GM claimed the rival automaker used secret offshore bank accounts to hide millions of dollars in bribes. GM raised the new allegations while requesting U.S. District Judge Paul Borman reinstate its civil racketeering lawsuit against FCA and call the secret accounts new evidence.

Borman last month dismissed the case that accused Fiat Chrysler's late CEO, Sergio Marchionne, of orchestrating a bribery conspiracy to corrupt three rounds of bargaining with the UAW. The conspiracy was designed to harm and take over Detroit's largest automaker, according to the lawsuit, which said GM lost "billions" of dollars. Fiat Chrysler has called the claims "meritless."

Last week, GM alleged former UAW officials and Fiat Chrysler executives controlled offshore bank accounts in Switzerland, Luxembourg, Liechtenstein, Italy, Singapore, the Cayman Islands and other countries. Tens of millions of dollars flowed into the accounts and were used to bribe UAW leaders, according to GM.

The accounts, GM alleged, benefited or were linked to several notable figures, including former UAW President Dennis Williams; former FCA labor negotiator Alphons Iacobelli, who was later hired by GM, and former UAW Vice President Joe Ashton, who sat on GM's board.

"GM stands behind its pleading," the automaker said in a statement. "FCA’s corruption of the collective bargaining process remains undeniable — a federal investigation is ongoing and there have already been multiple guilty pleas. New facts uncovered through GM’s investigation which FCA tries to discount — including offshore accounts in multiple countries  — implicate numerous individuals and make GM’s RICO case even stronger.

"GM seeks to uncover in Court the full extent of harm the FCA bribery scheme caused GM. Nothing in the defendants’ replies counters the significance of these allegations and the direct harm the defendants’ corruption caused GM, and the Court should amend its prior judgment and reinstate our case."

It would be a rare move for Borman to take up the case after dismissing it, said Peter Henning, a law professor at Wayne State University.

"He's focused on how the UAW members got the short end of the stick," Henning said. "It's likely GM's allegations fail to meet its requirement that newly discovered evidence clearly could have produced a different result if presented before the original decision, and so I don't think he's going to change his decision at all."

Iacobelli's lawyer on Saturday called the claims baseless and "scurrilous," likening GM's conduct to the late Sen. Joseph McCarthy claiming to have a list of government employees who belonged to the Communist party in the 1950s. He denied Iacobelli's ownership of such bank accounts.

FCA acknowledged the existence of overseas bank accounts as a Dutch company headquartered in the United Kingdom doing business all around the world. But the bribery allegations are "the product of a fevered imagination," Holley wrote.

"There is not one wellpled allegation in the proposed Amended Complaint that these foreign bank accounts were used to pay bribes or facilitate any other illegal conduct," he wrote. "Instead, GM merely asserts, on 'information and belief,' that the existence of foreign accounts must mean that Iacobelli and Ashton were 'moles' who infiltrated GM, passed unspecified inside information about GM to FCA, and ensured that the alleged concessions provided to FCA by the UAW were not also provided to GM."

The filing also says payoffs through the foreign accounts benefited former UAW President Ron Gettelfinger, who retired in 2010. In a statement issued by the union, Gettelfinger denied receiving bribes or holding offshore accounts.

GM is precluded from trying to reinstate the lawsuit unless the automaker's legal team finds new information or can point to legal errors. But using "baseless speculation" to tarnish the reputations of FCA and its employees is an "inexcusable litigation tactic," Holley wrote.

"GM must know that the prospect of the Court changing its mind on the crucial issue of RICO causation is slim to none," he wrote, "so this motion is apparently a vehicle for GM to make more defamatory and baseless accusations about a competitor that is winning in the marketplace."

bnoble@detroitnews.com

Twitter: @BreanaCNoble