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Deloitte Says Adelphia Officials Attempted To Withhold Key Data

Jul 1, 2002 | Dow Jones Business News

Deloitte & Touche LLP said Adelphia Communications Corp. tried to withhold important information from auditors and the government, even after a special committee had been appointed to clear up the company's accounting problems.

Deloitte, which is the U.S. arm of Deloitte Touche Tohmatsu and which was dismissed by Adelphia on June 9 , also said in a filing with the Securities and Exchange Commission that the Coudersport, Pa. , cable-television operator had asked the auditing firm to sign off on financial reports for creditors without supplying enough information to the auditor.

Deloitte said Adelphia eventually agreed to provide the SEC with information it had wanted to withhold, and the company worked out an extension on its credit without the auditor's report.

The disagreements discussed by Deloitte took place after Adelphia in March appointed a special committee to investigate irregular accounting. After Deloitte's dismissal, Adelphia announced that it was offering a preliminary revision of previously reported results, dropping 2001 earnings before interest, taxes, depreciation and amortization, or Ebitda, to $1.2 billion from $1.4 billion and decreasing reported revenue to $3.51 billion from $3.58 billion.

Adelphia ran into trouble in March, when it disclosed that it was a co - borrower with its founding Rigas family on $3.1 billion in loans. Last week, Adelphia filed for protection under Chapter 11 of the U.S. Bankruptcy Code.

Deloitte also complained in its letter, filed by Adelphia with the SEC, that six financial and investor-relations executives who might have been directly implicated in inappropriate conduct were still employed by Adelphia when the auditor was dismissed.

Deloitte said it didn't believe it could rely on statements from those executives, who Deloitte said were cooperating with the probe by the New York U.S. Attorney's office of Adelphia.

Neither Adelphia nor Deloitte identified the six executives. Adelphia, however, said in the SEC filing that its finance and accounting staff were headed by people who had no connection to alleged accounting irregularities. Adelphia said the six executives were reassigned to other duties.

Adelphia said in the filing that it will respond to Deloitte's charges in another SEC filing, but it didn't set a timetable for making that filing.

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