Delphi Execs Resign Amid Accounting Issues

Delphi Corp. (DPH), the nation's largest auto supplier, said Thursday that an executive and a former executive have resigned because of accounting irregularities at the company, bringing to four the number of high-ranking employees who have left because of the errors.

Delphi, which is under federal investigation for its accounting, said it has accepted the resignations of treasurer Pam Geller and John Blahnik, former vice president of treasury, mergers and acquisitions. Spokeswoman Claudia Baucus confirmed the resignations were related to the accounting investigation.

John Arle, 57, has been named vice president and treasurer, effective immediately, and will report to John Sheehan, Delphi's acting chief financial officer. Arle was previously vice president of Delphi's corporate audit services.

Derek Kolano, 33, will serve as acting director of Delphi's corporate audit services until Arle's successor is named.

Delphi said it's on track to finish its internal investigation and release restated financial reports by June 30.

Shares of Delphi fell 10 cents, or 2.1 percent, to $4.59 on the New York Stock Exchange (search), where they have traded in a 52-week range of $3.20 to $11.01.

The company said its previously announced refinancing plan remains on schedule and is expected to close before June 15. The refinancing is currently oversubscribed with a total of $2.8 billion, which is within the previously expected $2.5 billion to $3 billion range.

In a filing Thursday with the Securities and Exchange Commission (search), Delphi said that from the time of its 1999 spin-off from General Motors Corp. (GM) through the third quarter of 2004, it wasn't accurately disclosing the amount of sales of European accounts receivable and factors relating to sources of short-term liquidity.

"This inaccuracy was known to company personnel," Delphi said in its filing.

Delphi said its lead financing arrangers, JP Morgan and Citigroup, have expressed their support and agreed to keep the refinancing plan in place.

Delphi's accounting probe began internally last fall and is now being conducted by the SEC and
FBI. Delphi's chief financial officer Alan Dawes and its controller Paul Free resigned over accounting errors in March.

Blahnik was demoted in March to a non-executive position from vice president. Blahnik joined GM's finance staff in 1978 and had been with Delphi for 10 years, Baucus said. Geller joined GM in 1992 and had been at Delphi for eight years.

Delphi has said previously it improperly accounted for $237 million in cash payments for warranty claims to its former parent, General Motors Corp., among other errors.