BusinessCompany NewsDeloitte faces SEC inquiry over Adelphia

Deloitte faces SEC inquiry over Adelphia

Deloitte & Touche in the US faces an investigation by the Securities & Exchange Commission over its role as auditors at failed telecommunications company Adelphia.

This follows the arrest of the company’s founder John Rigas, his two sons as well as two former Adelphia executives on charges of criminal fraud, in relation to their use of company funds.

Rigas’ son Timothy was Adelphias’s chief financial officer, while his other son Michael was the former vice-president of operations.

An investigation dating back to March revealed evidence of loans totalling $2.3bn (£1.5bn) made to off-balance sheet entities controlled by the Rigas family. The charges carry a maximum prison sentence of 100 years.

Adelphia, once the sixth biggest telecom in America, filed for Chapter 11 bankruptcy protection last month, joining a lengthening list of US telecom vendors to go bust incluidng WorldCom and Global Crossings.

In a statement Adelphia said it supported the actions taken by the federal government to arrest Rigas, three of his sons and two others.

It said that since the ousting of the Rigas family from the board in May 2002, it had ‘co-operated with the investigations of the SEC and the US Attorneys from the Southern District of New York and the Middle District of Pennsylvania’.

Furthermore, it said it had taken ‘significant action to restore the company’s reputation and credibility’.

Deloitte had not yet responded to requests for comment.

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