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By Henry Dinsdale and Jeff Goodman Car deals UAW's stake in GM and Chrysler G eneral Motors, Chrysler, and the United Auto Workers were hit hard by the global economic crisis. To confront bankruptcy, the car companies reached agreement with the UAW for wage and other con- cessions. In return, the UAW's Voluntary Employee Benefits Association agreed to exchange billions in unpaid contribu- tions for 17.5 per cent of GM's shares and 67 per cent of Chrysler's. Some estimates say the deal nets VEBA less than half of what it was owed, but provides the UAW with representa- tion at the board of directors level. The agreement was too late and became part of the restructuring plan for two of the largest bankruptcies in U.S. history. The restructuring plan was decried as unfairly prejudicial to creditors, but little has been said of the prospect of a union ownership stake. The UAW's stake rais- es the spectre of fundamental conflicts between inherent interests in the role of investor and the role of bargaining agent. The UAW agreement seeks to address these conflicts by requiring the VEBA to hold the UAW's shares and appoint members to the board. While this may address overt union bias on the part of union-nominated board representatives, it does not address the underlying con- flict inherent in the UAW's dual roles. The UAW needs GM and Chrysler to thrive to recoup the billions in contribu- tions foregone and to realize a gain from other concessions. Most analysts agree to do so they must have fewer employ- ees, lower wages, less generous benefits, and fewer plants. UAW opposition risks the viability of GM and Chrysler, and the possible recovery of their invest- ment. Acquiescence risks charges of co- option and scapegoating in the event of future union concessions. The potential conflict of interest runs deep. The right to strike, although con- strained by the deal until 2015, is a good example. The conflicts of interest Right-sized Thinking. It Fits. We are a law rm that combines leadership with teamwork, that aligns best practise with pragmatism, nds passion in expertise and exibility, and has an innate appreciation for your unique challenge. If this sounds like the right t for you, you've discovered Right-sized Thinking. Let us show you where it can lead. Your Authority For: Business Law • Commercial Litigation • Commercial Real Estate Construction • Insolvency and Corporate Restructuring Labour and Employment • Tax • Wills, Estates and Trusts Untitled-12 1 INHOUSE OCTOBER 2009 • 8/24/09 12:51:23 PM 7