The Securities and Exchange Commission has launched an investigation into Dephi Corp.’s dealings with Electronic Data Systems Corp. and another information-technology provider.
The investigation marks a somewhat unusual turn of events. Although there have been scores of SEC investigations of accounting practices over the past few years, the auto industry has mostly avoided the spotlight.
Last month, however, Delphi received a copy of a formal order of investigation from the commission, the company said in an 8-K filing. The commission is looking into transactions between Delphi and EDS, a long-time supplier of IT services to the auto-parts maker.
Under scrutiny is the accounting treatment for $46 million in payments and credits Delphi received from EDS from 2000 to 2001 and the $3.5 million the company received from another IT service provider in the latter year. The SEC is also investigating the $40.5 million that Delphi shelled out to EDS in 2002 and in early 2003 for system implementation services.
The company is “reviewing the accounting for these and other transactions, including contracts for information technology services and products from the same and other periods,” Delphi stated in the filing.
“We are conducting our own internal review of these transactions with EDS and other information transactions from 2001 to 2003 as well,” a Delphi spokesperson told the Detroit Free Press. “We don’t know whether any other transactions will be within the scope of the SEC’s investigation.”
A spokesman for EDS told The Wall Street Journal, that the transactions were “not material to EDS, and we are cooperating with the SEC on this matter.”
Delphi said that it is fully cooperating with the commission’s requests for information.