The Great Sergio’s End Game is finally exposed - and it ain't pretty.

By Peter M. De Lorenzo

Detroit. It’s no secret that I’m not a fan of The Exalted One, Fiat-Chrysler CEO Sergio Marchionne. From Day One of his adventure here in the U.S., when he took the smoldering near-ruins of Chrysler off of the Obama administration’s hands, I called him the Opportunist of the Century, an out-and-out carpetbagger who was gifted a fading American industrial icon for a song, a company that before then had already been run into the ground by the Germans and carved up and left for dead by the mercenary incompetents at Cerberus.

Yet Marchionne was smart enough to know this: That the True Believers at Chrysler had managed to do yeoman's work in sustaining and nurturing a burgeoning product program - made up of new and freshened Jeeps and a state-of-the-art pickup truck - one that was in desperate need of a cash infusion to turn it into a real, live, competitive product portfolio. And Voila! Sergio was not only just the self-described miracle worker to do it, the Obama administration was just desperate enough to wash their hands of an industry that annoyed and confounded them – lead by the interminably loathsome Steven Rattner, the self-aggrandizing “genius”/media whore who derisively wrote off the industry after taking credit for having saved it - so to hand Marchionne the keys to Chrysler for a relative pittance was a classic no-brainer.

And so it was done.

From there, it got ugly. A conniving PR-hungry Master Manipulator, The Great Sergio charmed the pants off of lesser lights in the media (and trust me, of those there are many) who should have known better. Mixed in with intermittently competent automotive media types who were desperate to have an executive darling that they could canonize – and hungry for self-writing stories that would appease content-at-all-costs editors – the “genius” moniker quickly became attached to Sergio’s every move. “Marchionne’s espresso-fueled work habits are legendary!” the headlines screamed. ”Running two empires with aplomb!” the stories continued, each more nauseating than the last.

The general slant was that Sergio was The Answer, the brilliant times ten visionary who had the guts and gumption to pull the poor, downtrodden souls at Chrysler up by their lapels and give them a purpose for living again. When the reality was the Marchionne was a shrewd, calculating speculator who understood that he could propel his image to lofty new heights on the backs of the True Believers in design, engineering and product development in Auburn Hills, the ones who actually did the heavy lifting and were the sole reason for Chrysler’s rejuvenation. But Sergio didn’t care, because the free ride given to him by the slobbering, bootlicking media meant he didn’t have to.

And that free ride only served to mask the real Sergio, the bombastic, egomaniacal stronzo with ruthless disregard for the people around him, including his 30+ direct reports, a figure that the media routinely touted as being another sign of his brilliance when in reality all it did was magnify the fact that Marchionne’s legendary, micromanaging M.O. was frighteningly out of control. One that would eventually leave a crippled management “structure” and render whatever is left of Fiat-Chrysler in a precarious position, adrift and rudderless the moment Sergio took his cash and left. Which, as insiders know, could be sooner rather than later.

The rest of the story you know if you’ve read this column for any length of time. Protected and handled by his unctuous prick of a PR/bag man, Gualberto Ranieri, Marchionne is now portrayed simply as Sergio the Savior, a saintly auto industry executive bestowed with Lee Iacocca-type cult-hero status (a gross injustice to the albeit spotty legacy of Iacocca, I might add), even though most of his accomplishments were the result of simply being in the right place at exactly the right time.

And now, after seeing Fiat-Chrysler’s profits soar because of new products born and bred due to the blood, sweat and tears of those True Believers (except for the just-completed first quarter when profits were decimated by the crushing costs of two new product launches), it’s time for the final chapter to unfold: Sergio’s End Game.

The High-Octane Truth about The Great Sergio's End Game is that it’s even more ugly than anyone has heretofore imagined.

This entire push by Marchionne - the carefully orchestrated personal image wrangling, the “Imported from Detroit” marketing campaign, the grand gestures to make people think that he actually gives a shit about this community? It was all so much unmitigated bullshit.

It was never about saving Chrysler or rescuing its poor, downtrodden minions. And it was never about doing good for the perennially mocked City of Detroit or the domestic automobile industry for that matter, either. For Marchionne it was about taking over Chrysler, sucking every last dime out of it and using those profits to bolster Fiat, the Italian automaker whose reign as a perennial joke in this business goes back multiple decades.

(One of the first things I said after Marchionne was gifted Chrysler was that it was a grandiose scheme to turn the down-on-its-luck automaker into Fiat North America. I only wish that weren’t true now.)

In Brent Snavely’s piece in the Detroit Free Press today (4/29), the true measure of Sergio Marchionne’s purpose in life is exposed for all to see. Gifted Chrysler by the U.S. Government and funded on the backs of you and me, the U.S. taxpayer, Marchionne is now using Chrysler to sustain that miserable excuse of a car company called Fiat. 

The Italian automaker – and that term should be applied very loosely in this case – is on the ropes. Paralyzed by a byzantine network of unions, plagued by serial incompetence (except for its show pony Ferrari division, of course), and buttressed by a relentlessly inept Italian government that manages to make our current bumblers in Washington look like direct descendants of our Founding Fathers, Fiat is now officially on the U.S. taxpayers dole, thanks to Sergio and his grand little plan. Every last dime of Chrysler’s profitability is now being used to prop up Fiat, an industry embarrassment that should have been left for dead long ago.

Think about that for a moment.

People - and the computer screen-stained vampires in our esteemed media, of course - like to get all upset about the bailout of General Motors and love using the pejorative term, “Government Motors.” But the bottom line in this discussion is that what’s going on in Auburn Hills is far more egregious. Marchionne basically sold the Obama administration a lasagna-stuffed bill of goods in order to guarantee Fiat’s financial future once and for all, figuring a free cash infusion would make The Great Sergio a living, breathing Italian legend and reduce Chrysler to pawn status in the quest to save Fiat from certain doom.

But as with anything in life there are complications, and Marchionne knew that his boldfaced carpetbagging scheme would have some uncomfortable exposures down the road. That’s what his carefully orchestrated “savior” image campaign and manufactured “man of the people” persona was designed for, it was supposed to kick in and mask a multitude of sins, allowing him to skate under the radar and get what he wanted.

Well, a funny thing happened on the way to his burgeoning sainthood, because now Sergio’s End Game – and his blatant mercenary tendencies – is coming to the fore, and it ain’t pretty.

First there was the recent debt financing maneuvering, as Sergio knew that he was in desperate need of additional cash so that Fiat could buy the rest of Chrysler outright. He was confident, of course, that this was just a process and that he would smoothly emerge from it unscathed and without incident, like a six-inch “gimme” putt. Then again things don’t always go as planned when it comes to propping up a loser car company like Fiat. Bankers handing out billions tend to look deeper than most, and every time a new layer of Fiat’s dismal outlook is revealed new questions are asked. Especially with the dismal outlook of the European market.

But that’s only one dimension to this mess.

The other dimension to Sergio’s little problem has to do with the amount of cash that Fiat will need to buy out the VEBA (Voluntary Employee Beneficiary Association), the UAW’s retiree health care trust, which holds 41.5 percent of Chrysler.

Here’s how Snavely summed it up: “A complete merger could give Fiat access to Chrysler’s cash, which it does not have now. But Fiat wants the VEBA’s stake for as little as $4.7 billion, based on its offer for 3.3% of Chrysler’s shares. Attorneys for the VEBA have estimated the entire stake is worth as much as $11.5 billion, Reuters reported, citing documents filed in a Delaware court after Fiat sued the trust.

That $6.8-billion gap is a big deal for more than 63,000 UAW retirees who are depending on the VEBA to cover some of their medical costs.

At the end of 2011 the VEBA had assets valued at $8.8 billion compared with $13.8 billion in total benefit obligations, according to a court filing. The less Fiat pays, the more likely the VEBA will have to reduce benefits.”

Or, as Credit Suisse analyst Eric Hauser was quoted in Snavely’s piece, “You have got a situation where about 65,000 Chrysler employees are subsidizing about 150,000 Fiat employees. This is a situation that is absolutely not sustainable.”

Not sustainable: Two beautiful words that have never stopped Sergio before, or entered into his mind for that matter. From the moment he strolled into Washington, D.C., with his pants pockets turned inside out and his hand out, Marchionne has demonstrated an uncanny ability in relieving the U.S. Government and We, The Taxpayers of our money.

And lest you think the General Motors situation is far worse remember that GM, despite its past financial stumbling, is still an American-owned company. And the undeniable fact remains that Chrysler is now an Italian-owned company that was acquired through the largesse of the U.S. Government and the American taxpayer.

And since he flat-out absconded with Chrysler and its assets when the Obama administration basically had a gun to their heads, why wouldn’t Marchionne think he could get the rest of Chrysler’s financial stake for somewhere less than $.50 on the dollar?

It’s clear that Sergio Marchionne isn’t through holding up America, Inc. for more cash. Not by a long shot. And it’s also clear that Sergio is absolutely convinced that he will get his way, yet again. But I for one hope that cooler heads prevail and more than a couple billion pounds of flesh are extracted from Marchionne’s hide in this case.

Chrysler – along with the talented True Believers in Auburn Hills and its long-suffering dealers - deserves to survive and thrive on its own merits.

It doesn’t deserve to be a pawn in this carpetbagging mercenary’s game of ego gratification.

And it most certainly doesn’t deserve to be saddled with the unenviable task of keeping a perennial Italian industrial embarrassment - one that insultingly masquerades as being “Imported from Detroit” - from slipping into oblivion.

And that’s the High-Octane Truth for this week.