Chrysler Investigated for Securities Fraud

When bad news come, they come in packs. This is what Chrysler officials might think, as yet another problem adds to the troubles American manufacturer Chrysler finds itself in. The state of Indiana is investigating the company for securities fraud after the collapse of its joint venture with Getrag Transmission, Autonews reported.

The investigation started two weeks ago and was confirmed today by Jim Gavin, a spokesman for Secretary of State Todd Rokita. The reason behind the investigation are Tipton County (the place were the joint venture plant was to be built) revenue bonds sold to both Chrysler and Getrag. Kokomo Tribune reported two weeks back that the county sold $11 million in bonds to the two companies.

The venture broke down last year, when Chrysler sued Getrag for failure to secure the necessary financing, forcing the smaller company to file for Chapter 11 protection. The joint venture would have employed 1,200 workers from Tipton County.

Chrysler said in a statement yesterday it is ready to transfer $5.5 million in bonds to the county as a sign of its ""good faith efforts to minimize the impact" of the venture break down. The company added that it had paid $14.5 million in "infrastructure improvements" in the region.

Despite the offer, Jim Gavin said the state will go on with the investigation and stressed that the inquiry will target Chrysler, and not Getrag.

The two companies have been at war ever since they've cancelled the venture. In February, Mitchell Roob, Indiana's secretary of commerce urged Chrysler to pay $4 billion to the over 40 contractors who have not been paid due to the venture failure. Chrysler said the contractors were hired by Getrag, which in turn forced the supplier to pursue "court action against Chrysler seeking to enforce commitments Chrysler made to the project."
If you liked the article, please follow us:  Google News icon Google News Youtube Instagram X (Twitter)
About the author: Daniel Patrascu
Daniel Patrascu profile photo

Daniel loves writing (or so he claims), and he uses this skill to offer readers a "behind the scenes" look at the automotive industry. He also enjoys talking about space exploration and robots, because in his view the only way forward for humanity is away from this planet, in metal bodies.
Full profile


Would you like AUTOEVOLUTION to send you notifications?

You will only receive our top stories