The Goodyear Tyre & Rubber Company on Tuesday said it has taken “disciplinary actions” against several senior managers in its European Union operation and streamlined its organisation as part of its ongoing investigation of improper accounting in European and other overseas operations.
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“Although the investigation is not yet complete, Goodyear decided to begin the process of improving the European organisation and to continue strengthening its accounting controls,” the company said in a statement.
The company stressed that the disciplinary actions do not mean that it has yet determined if final results of the investigation will impact its financial statements.
Because these disciplinary actions taken by European Union president Michael Roney relate to a previously announced investigation, and represent a milestone in the process, Goodyear believes they merit public disclosure and that it is important to take these actions because business conduct policies were compromised, regardless of whether there is a material impact to the financial statement, the company said.
As part of the year-end closing process and unrelated to the investigation of improper accounting in Europe, the company has also identified adjustments to the previously announced restatement of its financial statements, which are expected to result in a reduction of operating earnings of $16 million over five years, and a reduction in shareholders’ equity at September 30, 2003, of approximately $23 million.
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By GlobalDataThe largest of these adjustments arises from an understatement of workers’ compensation claims, related to the years 1999 to 2003, at one of its domestic plants. The company is currently reviewing the cause of the understatement.
The disciplinary actions taken in Europe include the sacking (Goodyear uses the term ‘separation’) of several senior managers and reprimand of other European personnel.
“These actions represent an important milestone toward completing the investigation, which is necessary for us to file our audited financials for 2003,” said executive vice president and chief financial officer Robert Tieken.
Tieken also said Goodyear believes a significant portion of the European review has been completed.
The company is not disclosing the names of the affected individuals or their specific disciplinary actions.
