General Motors is trying to revive an incendiary lawsuit against Fiat Chrysler Automobiles with explosive new allegations including bribes paid from secret offshore bank accounts and a union official acting as a double agent between the two automotive giants.
Why it matters: The extraordinary legal battle is occurring amid earth-shaking changes in the global auto industry — ones that threaten to turn both litigants into dinosaurs if they aren't nimble enough to pivot to a future where transportation is a service, cars run on electrons and robots handle the driving.
Quick take: GM contends former FCA CEO Sergio Marchionne, who died in 2018, orchestrated a multimillion-dollar racketeering conspiracy — including bribes — that corrupted labor negotiations with the United Auto Workers for more than a decade.
- The reason: An attempt to financially weaken GM and force it into a global merger it had twice rejected, in 2008 and again in 2015.
Driving the news: GM this week asked a federal judge to reinstate its unprecedented lawsuit against FCA, citing new information about the tactics it says FCA used in order to gain a substantial labor cost advantage over GM worth billions of dollars.
- Just last month, U.S. District Judge Paul Borman threw out GM's lawsuit, which had shocked the tight-knit industry when it was filed in November 2019.
- Now GM says the alleged scheme "is much broader and deeper than previously suspected or revealed" and the judge should reconsider his dismissal.
GM's stunning new allegations include a claim that a top UAW official serving on GM's board of directors as a representative of the union's retiree health benefits trust was actually a "mole" who was being paid by FCA to feed them information about GM's business strategy.
- GM also claims its investigators discovered evidence of offshore bank accounts in Switzerland, the Cayman Islands and other countries that were linked to senior UAW officials and Fiat Chrysler's former head of labor relations.
- Of note: GM's lawsuit runs parallel to an ongoing corruption probe by the U.S. Justice Department that has already resulted in guilty pleas and jail terms for at least 10 former UAW and FCA officials.
What they're saying: FCA officials privately say they believe GM's legal bombshell was intended to disrupt FCA's pending merger with another global automaker, France's PSA Groupe.
"As we have said from the date the original lawsuit was filed, it is meritless. ... FCA will continue to defend itself vigorously and pursue all available remedies in response to GM's attempts to resurrect this groundless lawsuit."— FCA statement
"The UAW is unaware of any allegations regarding illicit off-shore accounts as claimed by GM ... nor has the U.S. Attorney's Office, or anyone else, ever raised this type of allegation with the UAW. If GM actually has substantive information supporting its allegations, we ask that they provide it to us so we can take all appropriate actions."— UAW statement
My thought bubble: Exploiting rivals' weaknesses to gain advantage is nothing new in the auto industry. But whether GM's lawsuit is a paranoid fantasy or the manifestation of a simmering grudge between two long-term rivals, the stakes couldn't be higher in an industry being turned upside-down.