UAW union settles corruption probe with Justice Division

UAW President Rory Gamble (left) and US attorney Matthew Schneider announce a settlement agreement in Detroit on December 14, 2020 to end a year-long corruption investigation into the union.

Michael Wayland / CNBC

DETROIT – The federal prosecutor has agreed to end a multi-year corruption investigation into the United Auto Workers as part of a proposed civil settlement that includes an independent monitor that will oversee the American union for six years.

US attorney Matthew Schneider and UAW President Rory Gamble said Monday that the deal, which has yet to be formally approved by the government, comes after months of negotiations between the two sides, including several voluntary reforms by the union.

Other requirements under the contract are that the union hold a nationwide vote to potentially reform its voting process and make certain repayments, including a $ 1.5 million payment to the Internal Revenue Service. The UAW has already repaid approximately $ 15 million to training centers for improper chargebacks uncovered by officials.

“Today we are joining forces to announce that the UAW, one of the largest and most respected unions in the world, is now on its way to being free from corruption,” Schneider said during a joint press conference on Monday in the US Detroit District Attorney’s Office. “During our five-year investigation we have uncovered a staggering level of corruption and fraud by a number of senior UAW leaders.”

The investigation has led to convictions of 15 people, including two former UAW presidents, three Fiat Chrysler executives and a former General Motors board member who was a union leader. The prison terms for those involved ranged from 60 days to 6½ years. A handful of people are still waiting to be sentenced.

Schneider said the deal ended the UAW’s investigation, but more people could be charged if other illegal activities were exposed. He stressed that gambling is not a goal. He said the investigations into Fiat Chrysler and Ford Motor are still ongoing. He reaffirmed that GM is no longer a target of the probe.

“This is for our members,” Gamble said during the press event. “Today is about them. Today is about justice for their very hard-earned dues and the things they provide not just in society but in their individual communities as a whole.”

UAW President Rory Gamble (left) and US attorney Matthew Schneider clash after a settlement agreement was announced in Detroit on December 14, 2020 to end a year-long corruption investigation against the union.

Michael Wayland / CNBC

Schneider thanked Gamble for their cooperation and leading the union to reach the settlement. Gamble called the US attorney “brother” at least twice, a term that is often used in the union among members. The two ended the press conference with a punch.

The independent observer, who must be approved by the government, will not be involved in collective bargaining between the union and the companies in which its members work. The six year period can be shorter or longer depending on the needs and recommendations of the monitor.

“We are determined to make the work of the monitor very boring,” said Gamble, adding that members of the union’s highest board of directors agreed to the settlement. “We will continue to do everything in our power to ensure that past mistakes are never repeated.”

When the union’s federal investigation was published in July 2017, it focused on a training center jointly operated by the UAW and Fiat Chrysler. But it was quickly expanded to perform similar operations with GM and Ford.

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