Risk & Compliance

New Problems, New Shakeups at Delphi

Disclosure failures at the auto-parts maker lead to the resignations of treasurer Pam Geller and former vice president of treasury, mergers and acq...
Stephen TaubJune 10, 2005

Delphi Corp. — whose accounting is being probed by the Securities and Exchange Commission and the Federal Bureau of Investigation — announced that it has accepted the resignations of treasurer Pam Geller and former vice president of treasury, mergers and acquisitions John Blahnik.

The auto-parts maker stated that it asked for the resignations after a review by its audit committee found inaccuracies in previously disclosed non-GAAP measures of Delphi’s net liquidity. The review concluded that the company did not accurately disclose to credit-rating agencies, analysts, or Delphi’s board of directors the amount of sales of European accounts receivable or factoring arrangements from the time of the company’s 1999 spin-off from General Motors through the third quarter of 2004.

The undisclosed factoring ranged from a low of $187 million in the first quarter of 2002 to $374 million in the second quarter of 2001, according to a regulatory filing.

The company stated that it believes these sales were properly accounted for under U.S. GAAP and that they should not impact its consolidated financial statements, and that Deloitte & Touche is in the process of auditing the accounting for these factoring arrangements.

Delphi also announced that its refinancing plan — currently oversubscribed with a total facility size of $2.8 billion — should close before June 15, and that the company remains on track to issue its restated financials by June 30.

In Delphi’s finance department, vice president of corporate audit services John Arle has been named vice president and treasurer, effective immediately. Arle, who remains a member of the Delphi Strategy Board, will report to acting chief financial officer John D. Sheehan. Derek Kolano will serve as acting director of corporate audit services until a successor for Arle is named.

Sheehan, who continues to hold the positions of chief accounting officer and controller, became acting CFO in March upon the resignation of vice chairman and chief financial officer Alan S. Dawes. At that time, Delphi also announced that chief accountant and controller Paul Free had left the company and that Blahnik had been reassigned to a non-officer position.