Two state pension funds and other large investors have sued Delphi Corp. and its auditor, Deloitte & Touche, saying that the auto parts supplier made deals with third-party vendors to hide the company's financial problems.
According to the suit, Delphi executives told workers to violate accounting rules over recognizing revenue and expenses between 1999 and 2001. The company allegedly entered a number of deals, transfering assets to third parties in exchange for hundreds of millions of dollars, while at the same time agreeing to eventually buy back the same assets.
Delphi spun off from parent General Motors Corp. in 1999 and has struggled in the auto parts market, posting net losses of $741 million for the first half of this year -- citing high wage and benefit costs, lower production on key models at GM and high raw materials prices. In March, the company said that accounting irregularities led to the need for a $200-plus million restatement and a host of corporate changes, including the departure of its chief financial officer.The lawsuit was filed in New York and its lead plaintiffs include the Teachers' Retirement System of Oklahoma and the Public Employees' Retirement System of Mississippi.
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