Global Business

All’s Not Right at International Rectifier

Seventeen-year veteran CFO Michael McGee is fired and the global sales VP resigns as internal investigation of its accounting heats up. Finance VP ...
Kate PlourdJuly 2, 2007

International Rectifier Corp. fired long-time CFO Michael P. McGee on Sunday, several months into the company’s internal investigation into accounting irregularities at one of the firm’s foreign subsidiaries.

Reached at the company’s El Segundo, Calif., headquarters, a spokesman told that he could not comment on whether McGee’s termination — after 17 years as CFO — was linked to the ongoing investigation. Also over the weekend, the maker of power-management chips and other products said its executive vice president of global sales and marketing, Robert Grant, had resigned, although it did not elaborate.

Attempts to contact McGee were unsuccessful. The company said it named Linda J. Pahl, currently the vice president, corporate finance, to be acting CFO. She joined the company in January 1999 as director of global finance, and before that was vice president and CFO of Blue Cross of California at Wellpoint Health Networks Inc. International Rectifier CEO Alexander Lidow will take over Grant’s duties until a replacement is found.

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In April, the company announced that it was probing revenue-recognition and other accounting irregularities at a foreign subsidiary that it didn’t identify. The irregularities related to unsubstantiated orders, and involved some shipments to warehouses not in the company’s logistical system. The company also disclosed at the time that material weaknesses existed in internal controls at that foreign subsidiary

The investigation was carried out by independent investigators hired by outside legal counsel at the request of the International Rectifier audit committee, the company said. Based on previous findings from the investigation, the company had said that reported financial results from the previous six quarters and the June 2006 fiscal year, were unreliable. This week, it said that investigation was continuing.

During his tenure at the company, McGee also served from 2000 to 2005 as co-chief executive and chairman of the Japanese semiconductor company Nihon Inter Electronics Corp., turning that troubled company around with a restructuring plan. In a 2006 interview
McGee told CFO Magazine he was “a much better CFO today” because of his experience at Nihon.

This week, International Rectifier said that Jack O. Vance, chairman of the audit committee and lead independent director, is coordinating activities of the audit committee during the investigation.