GM Probed for Alleged Payoffs to UAW in 1997
Federal investigators are investigating whether General Motors Corp. paid $200,000 to United Auto Workers officials to settle a costly strike in 1997 in what would be an unprecedented collusion between the union and the manufacturing giant.
The charges were made in a civil lawsuit filed Monday against the UAW and GM. The suit also alleges that the world’s leading auto maker gave jobs to a family member and a friend of senior union officials for which they were not qualified.
“The local union leadership was extorting money from GM by not agreeing to a settlement until GM paid off the union,” said Harold Dunne, an attorney for the plaintiffs in the suit. “GM caved in and paid local leaders money they knew they were not entitled to, in violation of federal law and workers’ rights.”
“It was extortion by the union and bribery by General Motors,” Dunne said in a telephone interview.
Longtime observers of the UAW reacted with surprise at the charges.
“I don’t recall any charge of collusion between management and the union in the past,” said David Lewis, a professor of automotive history at the University of Michigan. “That’s why it’s so shocking to have, on the one hand, union negotiators who sold out to management, and then management who is willing to do such a thing. It’s shocking on both ends. It’s un-UAW-like and un-GM-like.”
The lawsuit, filed in U.S. District Court in Detroit by 21 members of UAW Local 594, seeks class-action status for as many as 6,000 factory workers who each lost $10,000 to $20,000 in wages because of the strike, Dunne said.
In all, the suit seeks $50 million in compensatory damages from GM and the UAW and $500 million from the union in punitive damages for the lost wages.
FBI spokeswoman Dawn Clenney told Reuters news service that a probe was underway but declined to comment further. The Labor Department did not respond to requests for confirmation that it is also investigating the charges.
“General Motors is cooperating with the appropriate agencies involved in the investigation of the 1997 labor settlement,” GM spokesman Brian Akre said.
“We have not yet been served with the class-action civil lawsuit,” Akre said, adding that GM would have no further comment.
Of the American auto makers, GM has traditionally had the most adversarial relationship with the UAW.
Plaintiffs in the lawsuit work at the Pontiac East plant north of Detroit, where a 1997 strike lasted 87 days and shut down production of GM’s highly profitable full-size pickup truck line.
The walkout cost GM production of 70,000 pickup trucks and several hundred million dollars in lost profit in the second quarter of 1997.
The government investigation was first reported Tuesday by the Detroit Free Press.
The newspaper quoted Pat Meyer, founder of UAW Concerns, a self-appointed watchdog body, as saying that the Labor Department inspector general’s office “told me they want [UAW President] Stephen Yokich and his lieutenants. They said it showed the corruption and the nepotism of the UAW.”
The UAW had no comment, spokesman Roger Kerson said.
According to the lawsuit, GM tried to settle the strike by making illegal payments totaling $200,000 disguised as overtime pay to top Local 594 officials in Detroit.
GM’s biggest payoffs were $40,000 to the shop committee chairman and $60,000 to the skilled trades committeeman, according to plaintiffs’ attorney Dunne.
The UAW bargaining committee also demanded that GM hire the son of a UAW vice president and the son of a friend of another local union official as skilled trades workers without the normal training experience, the lawsuit alleges.
GM at first refused the demands and the strike dragged on for two more months before the auto maker gave in, the lawsuit says. The 5,400 Local 594 members who walked off the job were never told of the secret deal to hire the two workers or about the $200,000 in payments, Dunne said.
“We are charging GM with breach of contract and the UAW with breach of [its] responsibility to represent its members,” he said.
Daniel Kruger, a professor at the School of Labor and Industry Relations at Michigan State University, said: “I find it hard to believe that this took place between two parties with collective-bargaining relations going back to 1937. They know how to work together, and all of a sudden to hear allegations of major wrongdoing. . . .”
Investigators are not likely to have an easy time pinning down the charges, Kruger said.
“To prove that these were bogus overtime payments will be very difficult,” he said. “If it was [UAW] committee persons, the overtime really racks up, and they can make more than $100,000 a year.”
UAW committee persons are either auto workers or union employees who monitor factory operations to ensure that contract working conditions are maintained, Kruger said.
The strike began in April 1997 and ended that July. As part of the settlement, GM agreed to hire 567 workers and pay $11 million to settle grievances.
