DETROIT -- J.T. Battenberg III's defense lawyer said the former Delphi CEO was too focused on the challenges of running the massive, newly formed auto parts supplier to have had direct involvement in a book-cooking scheme alleged by federal regulators.
Lawyers for the Securities and Exchange Commission countered that Battenberg and other Delphi executives intentionally misled investors about the company's financial health -- and that they had strong motives to do so.
Those contrasting opening arguments began a civil fraud trial that is expected to take more than a month.
Defense lawyer William Jeffress Jr. said Battenberg, 67, spent a total of "less than 24 hours" negotiating a $237 million warranty payment to former parent company General Motors in 2000.
That payment is at the heart of government's fraud charges against the former CEO. Battenberg relied on others to record the deal on Delphi's books, Jeffress said.
Battenberg "played no role in that [accounting] process but signed off because that was what was recommended by the professionals," including an outside auditor, Jeffress said.
"Mr. Battenberg is not an accountant, but he knows the difference between right and wrong," Jeffress said. "He's known that all his life."
In its first full year as a stand-alone company, Delphi was falling short of financial targets it had set for Wall Street analysts, SEC lawyer Jan Felona said.
Battenberg and other executives were seeking to paper over the financial warts and give "a false impression of what was going on at Delphi," Felona said.
Executive bonuses were based on profit benchmarks, so Battenberg and other executives had a personal interest in inflating earnings, she said.
"Money went into their pockets because of the false reporting that went into this warranty transaction," Felona said.
In 2000-04, the SEC alleges, four fraudulent transactions took place, artificially boosting Delphi's earnings and thus its share price. Battenberg is accused of helping orchestrate only the allegedly improper accounting of the GM warranty payment.
Felona said the government plans to call "top executives at GM and lawyers and accountants," who will testify that the $237 million Delphi paid to GM was for faulty parts "and nothing else."
Jeffress said Delphi executives fiercely resisted paying those claims because they stemmed from parts delivered while Delphi was still a GM unit. And GM set aside only $53 million for Delphi to cover potential warranty claims before the parts unit was spun off.