Adelphia’s Ex-CFO Sought Probe of Payments to Director
A former Adelphia Communications Corp. executive said the cable-TV operator rejected his request to hire an outside investigator to probe payments to one of the firm’s directors, the company disclosed.
In a resignation letter dated March 17, Christopher T. Dunstan, then chief financial officer, said Adelphia failed to adequately disclose the payments to the director.
Adelphia summarized Dunstan’s concerns in a filing with the Securities and Exchange Commission on Friday but didn’t provide details of the transaction or explain why Dunstan believed the handling of it was inappropriate.
The company said its board investigated the allegations in February and concluded there was no wrongdoing. But the company decided it was proper to notify the SEC of the allegations.
“We did it in the interest of full disclosure,” spokesman Eric Andrus said.
Adelphia’s ties to its directors have been under scrutiny since last spring, when the firm revealed that it had secretly guaranteed billions of dollars in loans to founder John Rigas.
Rigas and his sons were indicted on fraud charges. Federal prosecutors said members of the family had used the company as their “personal piggy bank.” Adelphia, the fifth-largest U.S. cable company, ousted most of its directors during the scandal. The company filed for bankruptcy protection in June.
Dunstan questioned a transaction involving stock options granted to one of the new directors last year as payment for consulting work he had done for Adelphia before his appointment, said a person familiar with the company.
Although Adelphia is required to report payments to its directors, it was uncertain whether the stock options fell into that category because they were for previous work, the person said.
Adelphia hired Dunstan on a one-year contract in May. The company said it informed him this month that it wouldn’t renew his deal.
The company replaced him with Vanessa Wittman, a former executive at Vancouver, Canada-based fiber-optic network operator 360networks, where she helped the company emerge from bankruptcy proceedings, Andrus said.
Adelphia said in the filing that it intended to investigate the “remaining allegations” in Dunstan’s letter. Andrus declined to elaborate.