DETROIT - Delphi Corp., the nation's largest auto-parts company, ousted the only chief financial officer in its history yesterday as part of a continuing investigation that has uncovered numerous accounting errors for every year since the company was spun off from General Motors Corp. in 1999.
The investigation, which found that the company overstated its profits and misrepresented how much cash it made from operations, also led to the departure of Delphi's chief accounting officer and the demotion of a vice president.
The improper accounting is minor in some respects for a company of Delphi's size, but it greatly inflated its profits in 2001. Delphi overstated its pretax profits that year by more than 1,000 percent, turning a $6 million pretax profit into a $67 million one, the company said.
In total, Delphi misstated profits by about $166 million and overstated cash earned by $446.5 million, for a combined total of $612.5 million over a six-year period.
The Delphi shake-up is sobering news at a time of great difficulty in Detroit's auto industry, which has been beset by falling sales at GM and Ford Motor Co., and by supplier bankruptcies.
Delphi's accounting investigation is not complete. The company has identified potential accounting irregularities, including more than $322 million in payments between it and GM.
Delphi began the investigation in August after the Securities and Exchange Commission told Delphi it was the target of a formal SEC investigation.
The magnitude of what it uncovered and the executive departures were unexpected.
Delphi Vice Chairman and Chief Financial Officer Alan S. Dawes resigned after the board of directors "expressed a loss of confidence in him," Delphi said. Dawes, a 50-year-old Harvard graduate, had been with GM in management positions from 1981 until Delphi's spinoff.
He had been seen as a potential candidate for chief executive officer after the announcement last week that J.T. Battenberg III, the only CEO Delphi has had, was stepping down by the end of the year.
Business experts said the announcement of the ouster of Dawes raises questions about the 61-year-old Battenberg's departure, although the company says the departures are unrelated.
Delphi, which has more than 185,000 employees worldwide, is a $27 billion-a-year maker of parts including steering systems and XM satellite radios.
