DETROIT -- In October 2000, Delphi's top lawyer left a lengthy, urgent voicemail message for his boss, CEO J.T. Battenberg III.
Delphi's general counsel, Logan Robinson, was concerned that "covering up" certain details of a recent $237 million payment to General Motors, partially to pay claims for faulty parts, could trigger a federal investigation.
"I know the market won't like it, but I truly believe we shouldn't downplay our warranty problems," Robinson testified on Friday Nov. 12, reading from notes he said he made prior to leaving the message for Battenberg.
The Securities and Exchange Commission says Battenberg ignored the advice. It says Delphi disguised most of that $237 million payment as pension-related costs stemming from Delphi's separation from GM. Booking it that way inflated Delphi's profits, the SEC says.
Delphi's accounting and disclosure of that payment to GM lies at the heart of the government's civil fraud case against Battenberg, now 67.
Robinson's comments marked the first time jurors heard that Battenberg was kept in the loop on how the GM payment would be accounted for and disclosed.
Robinson also said on the voicemail: "If we start covering up what [GM is] doing to us, we will be the ones in trouble with the SEC." Delphi officials thought GM's demand for the money was unfair, Robinson said.
Battenberg's lawyer, William Jeffress, has argued that the GM deal was broadened beyond the warranty spat to resolve other long-simmering issues between the companies, including pension costs that GM said Delphi owed.
During cross-examination, Robinson backed that theory, saying he attended a meeting in which GM executives agreed to open the settlement to the pension issue.
The trial is expected to last several more weeks.