Friday, October 07, 2005

Delphi, Deloitte Accused of Misleading Investors

Major auto parts supplier Delphi, Inc. and auditor Deloitte and Touche have been accused of making deals with outside parties to hide financial problems. Pension funds from Mississippi and Oklahoma and other institutional plantiffs claimed that Delphi ordered employees to violate accounting rules (with D&T presumably complicit) and entered into buy-back arrangements with third parties which were detrimental to company operations. This past March, Delphi took a $200 million restatement hit, citing prior accounting irregularities and discharging its CFO. Raw materials prices and high labor costs have also hit Delphi hard; the company has losses approaching $3/4 billion for the first half of 2005.

Obviously, Delphi needs a new oracle [pun intended]. I am sorry to hear the D&T angle; we are now getting close to having all of the Big Four in legal trouble.


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