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Andersen ordered to pay
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March 6, 1998: 10:00 a.m. ET
DeLorean jury holds accounting firm liable for $110 million owed to creditors
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NEW YORK (CNNfn) - A Manhattan jury has ordered Arthur Andersen to pay as much as $110 million to creditors and investors in John DeLorean's failed car business, finding that the accounting firm failed to disclose irregularities in the company's business practices, according to a report in Friday's New York Times.
DeLorean Motor Co. went bankrupt 16 years ago. The case was first filed in Federal court in 1985, but later moved to New York State Supreme Court, where it began five weeks ago, the Times said.
Jurors decided Arthur Andersen should pay $46.2 million, plus as much as $65 million more in interest, for giving its seal of approval to questionable financial statements by DeLorean's company, according to the report.
Plaintiffs in the case argued that DeLorean had siphoned millions of dollars off into a front Panamanian company and then laundered the money, depositing it in Dutch and Swiss bank accounts. They contended Arthur Andersen either was privy to the shady dealings or should have known about them, the newspaper said.
Arthur Andersen spokesman Robert Hubbell was quoted by the Times as saying Andersen was a scapegoat for a debacle the company's financial officers should have foreseen. Hubbell said the final award to creditors likely will be far less than $110 million. He reportedly added, "we will certainly appeal."
The Times also cited Hubbell as saying an internal Arthur Andersen memo presented by the plaintiffs as evidence the accountants had "suspicions" of DeLorean's scheme, actually related to another problem that eventually was solved.
One of the largest DeLorean creditors is the British government, which invested $160 million in grants, loans and guarantees in a subsidiary DeLorean's company opened in Belfast, Northern Ireland, the Times reported.
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