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UAW president resigns after union accuses him of false accounting

By Nick Carey and David Shepardson
FILE PHOTO: United Auto Workers President Gary Jones in a file photo taken in July 2019.

By Nick Carey and David Shepardson

DETROIT/NEW YORK (Reuters) - United Auto Workers President Gary Jones resigned on Wednesday shortly after the union moved to remove him office amid a widening corruption probe from U.S. prosecutors, a union source told Reuters.

Jones' lawyer Bruce Maffeo told the Detroit News that the decision was based "on his belief that his continuing to serve will only distract the union from its core mission to improve the lives of its members and their families."

A UAW spokesman could not confirm the resignation. Maffeo did not respond to repeated messages from Reuters.

To date, 10 people have pleaded guilty in connection with the criminal investigation into illegal payoffs.

In late October, another UAW official was charged with embezzling hundreds of thousands of dollars in an alleged scheme that a person familiar with the case told Reuters involved Jones.

Earlier on Wednesday the union filed charges under its bylaws against Jones, who had taken a paid leave of absence in early November, accusing him of "false, misleading and inaccurate expense records."

Maffeo told the Detroit News that Jones' decision to resign "was reached before learning of the internal charges filed earlier today by the UAW."

The union also filed similar charges against UAW board member Vance Pearson, who was charged in September with conspiring to embezzle union funds.

An attorney for Pearson, N. Scott Rosenblum, did not immediately comment.

In late August, the FBI conducted searches at Jones’ suburban Detroit home and other locations.

The widening probe has raised questions about whether the U.S. government might seek to take over the UAW.

Earlier this month, former UAW vice president and former General Motors Co <GM.N> board member Joseph Ashton was charged with conspiracy to commit money laundering and wire fraud.

The probe has also involved a number of Fiat Chrysler Automobiles NV <FCHA.MI> <FCAU.N> executives.

"This is a somber day, but our UAW Constitution has provided the necessary tools to deal with these charges," acting UAW president Rory Gamble said in a statement earlier in the day, before news of Jones' resignation. "We are committed at the UAW to take all necessary steps including continuing to implement ethics reforms and greater financial controls to prevent these type of charges from ever happening again."

Since assuming the interim role, Gamble has announced a series of ethics reforms to clean up the UAW.

Earlier on Wednesday GM filed a racketeering lawsuit against FCA, alleging that its rival bribed UAW union officials over many years to corrupt the labor contract bargaining process and gain advantages, costing GM billions of dollars.

The lawsuit comes at a delicate time for FCA, which is working on a planned merger with French automaker PSA <PEUP.PA> and is negotiating a four-year labor contract with the UAW.



(Reporting by Nick Carey in Detroit and David Shepardson; Additional reporting by Soundarya J in Bengaluru; Editing by Matthew Lewis and Leslie Adler)