* Navistar says Deloitte's bad advice caused restatement
* Navistar has said restatement cost nearly $2 bln pretax
* Deloitte not immediately available to comment
By Jonathan Stempel
NEW YORK, April 26 Navistar International Corp
(NAV.N), the maker of heavy-duty trucks and engines, sued
Deloitte & Touche LLP on Tuesday for more than $500 million,
saying its former auditor's bad accounting advice forced it to
restate nearly three years of results.
In a lawsuit filed in an Illinois state court in Chicago,
Navistar said Deloitte, under pressure from federal regulators,
"ran away" from accounting advice it had given over the years,
and from clean audit opinions it had issued from 2002 to 2005.
Navistar fired Deloitte as its auditor in April 2006 after
a 98-year relationship, and hired KPMG LLP.
It later restated results for its 2003 and 2004 fiscal
years and the first three quarters of its 2005 fiscal year to
correct underpayment of income taxes and how it booked pension
and warranty reserves.
Navistar has said it booked nearly $2 billion of pretax
charges and additional income tax owed, and that delays in
filing its 2005 financials forced it to refinance debt "at
great cost" and be delisted from the New York Stock Exchange.
"Deloitte lied to Navistar ... as to the competency of its
audit and accounting services," the 134-page complaint said.
"In fact, unbeknownst to Navistar, Deloitte's internal
quality control problems were so pervasive that the chance of
'competent' accountants and auditors being assigned to
Navistar's and Deloitte's other clients was as random as
roulette," Navistar added.
The lawsuit also accuses Deloitte of fraud and negligence.
It seeks compensatory damages, punitive damages and other
Clay Perschall, a Deloitte spokesman, did not immediately
return calls seeking comment.
In October 2007, Navistar Chief Executive Daniel Ustian
said an internal probe had found weaknesses in "the skill set
of our people and the knowledge that they had of what proper
Two years later, the Warrenville, Illinois-based company
said it had settled a U.S. Securities and Exchange Commission
probe into the restatement. Navistar did not pay a fine, but
said Ustian agreed to give back some of his 2004 bonus.
Navistar has regained its Big Board listing. Its shares
closed Tuesday up $1.45, or 2.1 percent higher, at $70.17.
The case is Navistar International Corp v. Deloitte &
Touche LLP, Circuit Court of Cook County, Illinois, No.
(Reporting by Jonathan Stempel in New York; Editing by Tim