Print

Mail

wiki links

Deloitte & Touche agrees to pay to settle Delphi case

The accounting company Deloitte & Touche has agreed to pay US$38.25 million as part of a US$325 million settlement of investor claims of misconduct by Delphi Corp -- the largest auto parts supplier in the US -- and those that oversaw its finances.

Delphi filed for bankruptcy protection in 2005, acknowledging that hundreds of millions of dollars in earnings that it had claimed since General Motors Corp spun it off in 1999 were invalid.

A US Securities and Exchange Commission investigation found that Delphi manipulated its earnings from 2000 to 2004, using several illegal schemes to boost its earnings, including the concealment of a US$237 million transaction in 2000 with GM involving warranty costs.

Deloitte & Touche, now part of the privately held Deloitte Touche Tohmatsu, served as Delphi's outside accountant.

The agreement announced on Thursday requires approval by a US federal judge and completes a US$325 million settlement of investor claims over the accounting issue, lawyers for the investors said. Delphi agreed to pay about US$205 million, with Delphi's insurers and banks paying the rest.

"It's about holding the gatekeepers accountable," said attorney Stuart Grant of Grant & Eisenhofer, one of four law firms representing public employee pension funds and other Delphi investors in the class action suit.

In an e-mail response, Deloitte & Touche spokeswoman Deborah Harrington said the company had a strong legal case but "concluded that it was in the best interests of the firm and its clients to settle this matter now rather than face the burden, expense and uncertainty of continued litigation."

Last month, the US Department of Justice said it decided not to file criminal charges against nine former Delphi officials involving allegations of accounting fraud.

On Dec. 7, a federal bankruptcy judge gave Delphi permission to start soliciting votes for its plan to exit Chapter 11 bankruptcy protection.

The plan would eliminate 27,000 of 33,000 union jobs and would sell or close 21 factories in the US and Mexico. The hedge fund Appaloosa Management LP and five other investors would inject up to US$2.55 billion into Delphi in exchange for shares in the new company.

A court hearing on the plan is expected next month.

Delphi lost US$1.2 billion on revenue of US$6.2 billion in the third quarter..

Deloitte Touche Tohmatsu forecast US$23 billion in revenue for this fiscal year.
This story has been viewed 789 times.