Delphi settles fraud charges

From the Associated Press

Federal securities regulators charged auto parts giant Delphi Corp. and 13 individuals Monday with scheming to hide the poor condition of the company’s finances from 2000 to 2004.

Delphi and six of the individuals simultaneously settled the charges, the Securities and Exchange Commission said in a complaint filed in federal court in Detroit. The case against the seven other people is pending.

Delphi, the nation’s largest auto parts supplier, filed for bankruptcy protection in October 2005. Resolving the SEC probe could help the company move closer to emerging from bankruptcy next year.

Troy, Mich.-based Delphi settled charges of financial fraud without admitting or denying the allegations, the SEC said. No financial penalty was levied against the company.


Delphi Chief Executive Robert S. Miller said the company had “cooperated fully with the commission’s investigation and will continue to do so.”

The SEC also said it had settled charges with six of the people named in the complaint, including former Chief Financial Officer Alan Dawes, who agreed to pay $687,000 in fines and restitution.

Others charged in the case included three former executives of an information technology consulting company with which Delphi had contracted.

The SEC investigation found that Delphi had manipulated its financial results from 2000 to 2004, using several illegal schemes to boost its earnings -- including concealing a $237-million transaction in 2000 with its former parent, General Motors Corp., involving warranty costs.

The company also boosted reported cash flow in 2003 and 2004 by hiding as much as $325 million in sales of accounts receivable, the agency said.

Linda Chatman Thomsen, director of the SEC’s enforcement unit, said the facts were “particularly troubling because of the number of fraudulent schemes engaged in by Delphi, the length of time over which they occurred and the number of Delphi employees, including senior officers, who carried out the schemes.”

Former Delphi CEO J.T. Battenberg is one of the seven people who did not settle with the SEC on Monday.

Battenberg, in a statement, said the SEC complaint against him “relates entirely to a settlement of disputes between Delphi and General Motors in September 2000 that I believed and continue to believe was entirely lawful and proper.”


“I fully cooperated with Delphi and with the SEC in their investigations of this matter both before and after my retirement, and am disappointed to say the least that this lawsuit has been filed,” he said.

“I deny the allegations against me and will ask that the court hear the evidence at the earliest possible time,” Battenberg added.