November 26, 2019 / 12:04 PM / 10 days ago

Former UAW official charged with embezzlement to appear in U.S. court

DETROIT, Nov 26 (Reuters) - A former United Auto Workers board member charged with conspiring with other union leaders to embezzle hundreds of thousands of dollars of rank-and-file members’ dues is scheduled to appear in federal court in Detroit on Tuesday.

The court appearance of Vance Pearson, 58, comes just days after General Motors Co filed a racketeering lawsuit against Fiat Chrysler Automobiles NV (FCA) in connection with a spreading corruption probe, accusing its rival of bribing UAW officials to gain advantages at GM’s expense.

That lawsuit comes as FCA is working on a planned merger with France’s PSA, parent of Peugeot.

The probe has also involved a number of FCA executives. To date, 10 people have pleaded guilty in connection with the U.S. criminal investigation of illegal payoffs.

Pearson’s arrest in September came at a sensitive time for the union, which was negotiating new four-year contracts with GM, Ford Motor Co and FCA. Negotiators are still hammering out details of a contract with FCA, which is the last of Detroit’s automakers without a new collective bargaining agreement.

The salacious details in the complaint against Pearson included vast sums being spent on lavish entertainment by labor leaders - including $440 bottles of champagne originally created to please a Russian czar and scantily clad women to light union leaders’ cigars.

Pearson’s arrest was also sensitive because he was the head of the union’s Region 5, which covers 17 U.S. states - a role he took over from former UAW President Gary Jones after serving as his second in command.

Jones has also been linked to the federal probe, but he has not been charged with any crime. The FBI searched his home in August.

Both Jones and Pearson resigned their posts and membership of the UAW after the union launched proceedings last week to force them from office.

Acting UAW President Rory Gamble has promised to clean up the union, unveiling a series of ethics reforms to regain the confidence of rank-and-file members and avoid a possible U.S. government takeover of the labor organization.

In 1988, the U.S. Justice Department sued to force out senior leaders at the International Brotherhood of Teamsters union and appointed a trustee because of the union’s connection to organized crime.

The government oversaw the union from March 1989 until 2015, when it agreed to a five-year transition period that will end in February. (Reporting By Nick Carey; Editing by Dan Grebler)

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