Fiat Chrysler Automobiles US Agrees to Plead Guilty and Pay $30 Million Criminal Fine for Conspiring to Make Illegal Payments to United Auto Workers Executives

In the latest chapter of the saga involving systematic corruption within the United Auto Workers (“UAW”) and Fiat Chrysler Automobiles (“FCA”), on January 27 the U.S. Attorney’s Office for the Eastern District of Michigan announced that FCA US LLC, the U.S. operating subsidiary of global automaker Stellantis, had been charged with and had agreed to plead guilty to conspiring to violate the Labor Management Relations Act (“Taft-Hartley Act”), by making illegal payments to UAW officers.

The U.S. Attorney’s Office stated that it had filed a criminal information against FCA.  The information charges FCA with conspiring with other entities and individuals to violate the Taft-Hartley Act by making more than $3.5 million in illegal payments to UAW officials from 2009 to 2016.  During the period of the conspiracy, FCA executives “engineered illegal payments” to UAW officials.  The categories of such payments included:

  • “[E]xtravagant meals, rounds of golf, lavish parties for the UAW International Executive Board, an Italian-made shotgun, clothing, designer shoes, and other personal items paid for with credit cards issued by” the UAW-Chrysler Skill Development & Training Program d/b/a the UAW-Chrysler National Training Center (NTC);
  • Payoff of the $262,000 home mortgage of former UAW Vice President General Holiefield;
  • Receipt by Holiefield and his widow of “hundreds of thousands of dollars directed through Holiefield’s purported charitable organization, as well as companies controlled by him which had contracts with the training center.”

The agreement between the Department and FCA is a plea agreement under Rule 11 of the Federal Rules of Criminal Procedure.  Unlike a Deferred Prosecution Agreement, under which a corporation may be required to pay a criminal penalty but does not have to plead guilty to criminal charges, a Rule 11 agreement with a corporate defendant contemplates that the corporation will enter a guilty plea in federal court and receive a criminal sentence from a federal district judge.  As of January 27, a guilty plea hearing had not yet been set, and the U.S. District Court in Detroit must still review and approve that agreement before imposing any sentence.

Under the terms of the agreement, FCA has agreed to pay a $30 million fine, to serve a three-year term of probation, and to have the U.S. government select an independent compliance monitor to oversee FCA’s adherence to federal labor laws during that three-year period.

Based on the collective press releases and agreements stemming from the Department’s investigation, the FCA resolution could be considered a logical counterpoint to the Justice Department’s December 14, 2020 agreement with the UAW concerning corruption at the highest levels of UAW management.  But those documents provide no explanation for how multiple FCA officials, over an eight-year period, could have conducted such systematic corruption despite the existence of legal and compliance teams within the company.

One indication of the weaknesses within FCA’s compliance program is the fact that FCA did not make clear in its Code of Conduct until 2018 that employees “have a duty to report violations of law, regulation or company policy.”  A more searching review of actions and decisions within FCA will be necessary for FCA to understand the full scope of its compliance failures, and for other companies to learn from those failures.

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