Deloitte US settles Delphi

Deloitte US has agreed to pay $38.2 million to settle claims
relating to alleged accounting improprieties at its former audit
client, auto parts manufacturer Delphi.

On 30 June 2005, Delphi was forced to restate its financial
results for fiscal years dating back to 1999. In doing so, it
reversed hundreds of millions of dollars in reported earnings
during those periods, according to Grant & Eisenhofer, the
co-lead counsel to a group of plaintiffs who represent the
investors who acquired Delphi securities between 7 March 2000 and 3
March 2005.

In a statement about the Delphi settlement, Deloitte US said it is
“pleased that it has been able to resolve the securities class
action brought by investors in Delphi Corporation. Although it has
strong defences to these claims, Deloitte concluded that it was in
the best interests of the firm and its clients to settle this
matter now rather than face the burden, expense and uncertainty of
continued litigation.”

Grant & Eisenhofer managing partner Stuart Grant told
IAB the plaintiffs are thrilled with the settlement. “This
was a tremendous result,” he said. “The accounting industry is
certainly starting to change its tone. I think more and more they
are understanding that they are the gatekeepers and they are going
to be held responsible, particularly if they actually have the
information of the wrongdoing. A lot of times the accounting firms
say ‘well gee, we didn’t know, we couldn’t have known’ and the
truth is they might have known and they should have known. But this
wasn’t either of those, [Deloitte] did know and they didn’t do
anything about it.”

The shareholder payment from Deloitte follows an earlier commitment
by Delphi to settle claims worth more than $205 million. Additional
payments from Delphi’s insurance carriers and former banks bring
the total settlement to more than $325 million, Grant &
Eisenhofer said.

The settlements are awaiting approval from Gerald Rosen, the
federal judge in the Eastern District of Michigan who is presiding
over the case.

Carolyn Canham