Yahoo News Los Angeles motor show 2020: General Motors files against fellow car-maker Fiat Chrysler Automobiles
In the past the United States’ Rico Act has been used to prosecute gangsters such as the Gambino and Lucchese families, but news at the LA show is that General Motors (GM) has filed a Rico lawsuit against Fiat Chrysler Automobiles (FCA) and several of its executives alleging a “multi-year pattern of corruption” in its dealings with the car-making trade union, the UAW.
The Racketeering Influenced and Corrupt Organizations Act of 1970 also bought down rogue trader Michael Milken in 1989 and the GM lawsuit accuses former Fiat boss Sergio Marchionne, who died last year, of being a central figure in “conceiving, executing and sponsoring the fraudulent activity”. Several other FCA employees are also named.
The lawsuit relates to automotive pay negotiations between 2011 and 2015 and alleges that bribes were made to union officials, which had the result of giving FCA a big advantage in their labour costs.
According to the GM Authority website, no UAW officials are named.
With FCA and the PSA Peugeot Citroen group currently talking about a merger of the two companies, GM’s lawsuit will have thrown a big spanner in the works and a big headache for due-diligence lawyers.
"We are astonished by this filing, both its content and its timing," Fiat Chrysler said in a statement quoted in USA Today. "We can only assume this was intended to disrupt our proposed merger with PSA as well as our negotiations with the UAW.
"We intend to vigorously defend against this meritless lawsuit and pursue all legal remedies in response to it."
They say it never rains but it pours, and while it is raining outside the LA show halls, in the corporate offices of FCA and General Motors it’s chucking it down.
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