Automotive parts supplier Collins & Aikman has said that two directors who were the subject of an internal accounting investigation have resigned to pursue other business interests. Collins & Aikman also said the two directors, Charles Becker and Elkin McCallum, would not have qualified as independent directors because of their large stock holdings in the company, Reuters reported. The report added that the company, headed by former US president Ronald Reagan’s budget director David Stockman, said it expects to announce more changes to its board as it completes New York Stock Exchange requirements for independent board composition – the NYSE requires that at least half of a listed company’s board of directors be independent, with no material relationship to the company. Reuters noted that, last August, Collins & Aikman of Troy, Michigan, said its audit committee was investigating business transactions between the company and the two directors as well as some accounting for revenue and machinery but, in March, the company said it completed the inquiry and found no reason to restate previous financial statements. The report said the audit committee reviewed the company’s acquisition of automotive plastics maker Becker Group in 2001 from Charles Becker. Citing the company’s annual report, Reuters said that Collins & Aikman agreed to pay Charles Becker $11.3 million not to start a competing company. Collins & Aikman also leases its Michigan headquarters and five manufacturing facilities from companies owned by Becker. Access the most comprehensive Company Profiles
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The supplier of car fabrics, instrument panels and other automotive parts also examined transactions between the company and Elkin McCallum, the news agency added, noting that McCallum was named to Collins & Aikman’s board after the company bought automotive fabrics maker Joan Fabrics from McCallum in 2001 and that the company later bought a lamination company from McCallum. Reuters said the audit committee concluded that the transactions had a legitimate business purpose, were negotiated fairly, and were intended to advance the interests of the company and not to benefit the directors at the company’s expense. The report noted that Collins & Aikman announced the inquiry within days after CEO Jerry Mosingo resigned after just one year on the job and Stockman took over as CEO in addition to being chairman.
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