GM stock is trading down today after it was reported that General Motors (NYSE:GM) is suing Fiat Chrysler (NYSE:FCAU) over alleged bribing of officials at the United Auto Workers union.
GM alleges that its Detroit rival received an unfair advantage by racketeering union officials with millions of dollars in payments in order to gain concessions in three autoworker strikes in the last decade. Details of the scale of the bribery scandal have been emerging over the course of recent weeks, with several arrests already being made. The lawsuit was filed in a Detroit District Court this morning and claims that FCA corrupted the bargaining process in strikes in 2009, 2011, and 2015. GM shares are down about 3% during Wednesday trading.
GM is seeking damages that could rise into the billions as it alleges that the scandal “left it paying higher wages than FCA, and allowed FCA to use more temporary workers and lower-paid second-tier workers than GM.”
Craig Glidden, Chief Counsel for General Motors, alleges that deceased Fiat Chrysler CEO Sergio Marchionne was central to the corruption scandals, which were specifically intended to hurt GM. “FCA was the clear sponsor of pervasive wrongdoing, paying millions of dollars in bribes to obtain concessions” from the union, Glidden said. “FCA’s manipulation of the collective bargaining process resulted in unfair labour costs and operational advantages for it, causing harm to GM.” GM stock is currently trading at $35.28 and has lost 8% in the last week alone.
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The lawsuit comes just weeks after a 40-day strike of UAW workers at GM. Nearly 50,000 UAW workers went on strike across 55 GM facilities to secure low-cost healthcare, wage increases, quicker access to full-time status for temporary workers, and increased profit-sharing. The workers approved a new four-year deal to bring an end to the strike in October, but not before costing GM nearly $4 billion USD. GM shares have dropped 10% since the strike began as the company scrambles to make up ground.
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