FBI Probes Delphi’s Accounting

The investigation of the auto-parts maker is said to be centered on the company’s accounting practices; the SEC and DOJ are also looking into the m...
Stephen TaubApril 1, 2005

The FBI is investigating the accounting practices of Delphi Corp., the world’s largest supplier of auto parts. This, according to the Detroit News.

“The FBI is involved in the investigation and we are coordinating with the Securities and Exchange Commission, Department of Justice, and the United States Postal Inspectors,” Dawn Clenney, a representative for the FBI’s Detroit office, told the paper.

The probe is in the early stages and was opened after the SEC made a criminal referral to the fraud section of the Department of Justice in Washington, the paper added.

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Early last month Delphi disclosed it would restate results after company management uncovered accounting errors dating back to 1999, the year the auto-parts maker was spun off from General Motors.

The restatement led to a shakeup in the company’s finance department. Alan Dawes resigned as vice chairman and CFO. Chief accountant and controller Paul Free also left the company, and John Blahnik, vice president of treasury, mergers and acquisitions, and new markets, was reassigned to a non-officer position.

Several weeks later, Delphi acknowledged that it improperly accounted for $237 million in cash payments made to its former parent in 2000 as part of a settlement agreement.

Delphi representative Claudia Baucus confirmed the FBI’s investigation to the Detroit News, saying the probe stemmed from the inquiry launched by the SEC in August. She also told the paper that the Justice Department investigation “is related to this whole accounting investigation.”