DETROIT (Bloomberg) — Federal agents arrested a senior United Auto Workers (UAW) official closely tied to the union’s president and charged him with embezzlement, intensifying a years-long corruption scandal that has clouded labour talks with U.S. automakers.
Vance Pearson, who serves on the UAW’s international executive board and succeeded President Gary Jones as head of the union’s largest geographical region, faces charges including conspiracy, money laundering, filing false reports, and mail and wire fraud, according to a criminal complaint filed Thursday.
Pearson, 58, and other senior UAW officials allegedly used union money to buy more than $100,000 worth of golf clothing and gear and embezzled more than $60,000 to purchase cigars and related items. His arrest follows the convictions of several other officials who took millions from union training centres and a recent guilty plea by a former UAW official involved in a kickback scheme.
The UAW is in the midst of negotiations with General Motors (GM), Ford Motor and Fiat Chrysler Automobiles over new four-year contracts. The current pacts expire at midnight on Saturday, and union officials have warned of a possible strike for GM, the automaker they’ve made an initial target for bargaining.
“This arrest is something different,” said Harley Shaiken, a labour professor at the University of California at Berkeley. “This is on the eve of the deadline for a contract at General Motors and it is a sitting regional director. It couldn’t come at a worse time.”
“While these allegations are very concerning, we strongly believe that the government has misconstrued any number of facts and emphasize that these are merely allegations, not proof of wrongdoing,” Brian Rothenberg, a UAW spokesman, said in an email. “Regardless, we will not let this distract us from the critical negotiations underway with GM to gain better wages and benefits for the more the 400,000 members of our union.”
GM issued an emailed statement saying it was “outraged and deeply concerned.”
“These serious allegations represent a stunning abuse of power and trust,” the automaker said. “There is no excuse for union officials to enrich themselves at the expense of the union membership they represent.”
Pearson succeeded Jones last year as head of the UAW’s Region 5 and was the second-in-command for the region when the alleged embezzlement took place. The complaint identifies Pearson by name and describes the involvement of four other union officials, including a former senior leader and current senior officer.
Last month, Federal Bureau of Investigation agents raided the homes of Jones and Dennis Williams, his predecessor as president of the union. The UAW called the searches unnecessary, saying it was cooperating with the probe and would address any wrongdoing.
In the complaint, agents describe carrying out raids in August of residences and offices of senior UAW officials, including Pearson’s, and seizing hundreds of bottles of high-end liquor, golf clubs and gear, cigars and related items, and tens of thousands of dollars in cash.