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Delphi Pension Dust-Up Under Federal Investigation

Did undue political influence cost many retirees their pensions?

by on Sep.15, 2010

Former Delphi CEO Steve Miller initially promised to keep both blue- and white-collar pension programs once he got the partsmaker out of Chapter 11.

A new federal investigation is underway, looking at whether undue political influence ultimately cost thousands of Delphi retirees a large chunk of their pensions.

An independent counsel has been brought in to review a controversial decision by the Pension Benefit Guarantee Corp., or PBGC, to assume control of the Delphi Corp. salaried pension program as the supplier finally emerged from its long run through bankruptcy.

Neil M. Barofsky, a special inspector general for the Troubled Asset Relief Program, said, in a letter to a New York congressman, that his office would examine whether officials from the Treasury Department’s automotive task force — or the White House — pressured General Motors to protect the pensions of Delphi’s blue collar workers, while the PBGC slashed the pensions of salaried employees.

Barofsky said his office would try to determine whether political considerations played any role in the decisions, “favoring hourly over salaried retirees.”

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There’s no question there were a lot of vested parties desperately hoping to drag Delphi out of its Chapter 11 quagmire, last year, the longest any major industrial company had ever been caught in the bankruptcy process.