Detroit — General Motors Co. is suing a former company director to recoup money embezzled in what it called a criminal scheme that saddled the Detroit automaker with billions of dollars in increased labor costs.
The federal lawsuit against former GM director Joe Ashton, a retired United Auto Workers vice president, is part of a broader legal offensive by the Detroit automaker against key figures linked to a years-long corruption conspiracy within the U.S. auto industry. GM also filed separate lawsuits against rival Fiat Chrysler Automobiles NV and disgraced Vice President Alphons Iacobelli to recover money and prove wrongdoing saddled the Detroit automaker with higher labor costs.
Ashton served on the board from 2014 until The Detroit News revealed he was under federal investigation in November 2017. Late last year, he pleaded guilty for his role in a union bribery and kickback scandal and is awaiting a prison sentence as one of the highest-ranking UAW officials convicted in the years-long scandal.
“His admissions demonstrate that he engaged in criminal conduct that harmed GM during his time on GM’s Board, which constitutes a clear breach of fiduciary duty for which any director would be held accountable,” GM said in a statement Tuesday.
Prosecutors say Ashton demanded $550,000 in kickbacks and bribes from vendors who received rigged bids to produce UAW-branded merchandise. In return, a list of vendors that included Ashton’s personal chiropractor received contracts to produce more than $15.8 million worth of union-branded trinkets, including backpacks, jackets and 58,000 commemorative watches. The trinkets were paid for by GM.
While serving on GM’s board, Ashton also participated in a scheme to help Fiat Chrysler Automobiles NV force a merger, according to the lawsuit filed in federal court in New Jersey.” Ashton’s lawyer could not be reached for comment immediately Tuesday.
Ashton’s criminal conduct violated every conceivable duty owed to GM,” lawyer James Marina wrote in the lawsuit. GM officials have spent almost one year trying to prove the automaker suffered billions in losses due to corrupt actions taken by UAW officials and Fiat Chrysler executives.
Late last year, GM sued Fiat Chrysler in federal court, accusing the late CEO Sergio Marchionne of orchestrating a bribery conspiracy to corrupt three rounds of bargaining with the UAW. GM said it lost “billions” from the arrangement, while Fiat Chrysler called the allegations “meritless” and sought to dismiss the case.
U.S. District Judge Paul Borman dismissed the lawsuit in July, and GM is appealing the decision. The lawsuit filed Monday provides new details about one of the more explosive allegations GM has leveled in recent weeks: that Fiat Chrysler executives and UAW leaders used secret offshore bank accounts to hide millions of dollars in bribes.
GM officials have not provided any public evidence substantiating the offshore bank account allegations. But the lawsuit Monday identified several banks they say were used in the scheme.
Retired UAW President Dennis Williams, who GM accused of being one of the “key players in the takeover conspiracy,” received bribes from Fiat Chrysler that were held in LGT Bank in Switzerland and Mason Private Bank in Liechtenstein, according to the lawsuit.
The accounts were held “in his name and in the name of a business entity he controls,” the lawsuit alleges. Williams’ lawyers did not respond to a message seeking comment.
“Only very recently, after several months of additional investigation, did GM come to learn of certain foreign financial accounts in the Cayman Islands (Cayman National Bank) and Japan (Shinsei Bank) held in the name of Ashton and/or Ashton’s charity,” GM’s lawyer wrote in the lawsuit. “These accounts held or currently hold substantial funds that, upon information, belief, and clear and reasonable inference, were ultimately provided to Ashton by FCA NV.”
GM, however, appeared to back off one claim.
Last month, retired UAW President Ron Gettelfinger denied receiving bribes funneled through a secret overseas bank accounts, one day after General Motors Co. leveled the allegations in federal court. The lawsuit filed Monday does not mention Gettelfinger.
“Mr. Gettelfinger asked for a chance to refute the allegations made against him and GM is giving him that opportunity,” a GM spokesman said in a statement.
Last year, Fiat Chrysler revealed executives were negotiating a settlement that would resolve a federal criminal investigation into whether executives conspired to pay bribes and break labor laws during a years-long conspiracy.
The negotiations were focused on Fiat Chrysler submitting to government oversight for up to five years, paying less than $50 million in penalties and agreeing to make broad institutional changes. But a deal has not emerged in the ensuing 15 months and the status of negotiations is unclear.
On Tuesday, GM also sued Fiat Chrysler and Iacobelli, the Auburn Hills automaker’s disgraced top labor negotiator who is serving a 5 1/2-year sentence for his role in the corruption scandal.
He was convicted of participating in a conspiracy designed to wring concessions from the UAW by funneling money and illegal gifts to labor leaders. Iacobelli also spent worker training funds on a Ferrari, bejeweled pens and a backyard pool. Iacobelli’s lawyer could not be reached for comment immediately Tuesday.
The Fiat Chrysler lawsuit, meanwhile, seeks to revive a part of the original racketeering lawsuit that was dismissed this summer. GM wants Fiat Chrysler to pay billions of dollars in damages for bribing UAW officials and corrupting a collective bargaining process that left GM paying higher labor costs.
Marchionne and others authorized the bribe payments as part of a grand plan code-named “Operation Cylinder” according to the GM lawsuit. The operation was designed to force a merger with GM and leave Marchionne in control of the world’s largest automaker, GM alleged.
The lawsuit alleges “Operation Cylinder” relied on support from UAW leaders Ashton and Williams, who is referred to as Marchionne’s longtime friend and merger “wingman.”
“These UAW leaders’ support was essential to the success of Operation Cylinder because, among other reasons, the UAW could effectively block a merger under certain terms in the (collective bargaining agreement),” the lawsuit alleged. “That the UAW wielded this veto potential over any merger was well known to Marchionne, Iacobelli, and Williams.”
In a statement, an FCA spokeswoman wrote: “Today’s complaint is nothing more than a rehash of the preposterous conspiracy theories propounded by GM in its federal lawsuit that Judge Borman dismissed with prejudice. We will continue to aggressively defend ourselves and will take appropriate steps — including seeking sanctions — against GM’s baseless attempts to tarnish FCA’s reputation.”