A DISPUTE over more than $500,000 between listed auto parts company Advanced Engine Components and big four accounting firm Deloitte has resulted in legal action through the Western Australian Supreme Court.
A writ with two plaintiffs – Deloitte Corporate Finance ($431,562) and Deloitte Touche Tohmatsu ($72,901) – lodged on May 6, largely relate to fees charged for a Deloitte Corporate Finance employee seconded to AEC between January 2001 and August 2002 to act as its chief financial officer.
Martin Bennett, principal of law firm Bennett and Co, told WA Business News AEC would be challenging both the quantum and the quality of the fees.
“The bulk of the money relates to the secondment of a financial officer from Deloitte charged out at a very high rate,” Mr Bennett said.
He said there also were additional costs associated with AEC’s audit that related to the legal dispute with Deloitte.
A Deloitte spokeswoman said the writ concerned the recovery of monies owed for professional services rendered.
AEC managing director Tony Middleton said the Deloitte writs aside, the company was travelling well, even though it had cancelled its May 20 extraordinary general meeting.
That meeting had been called to seek shareholder approval for a restructure the company announced in February, including a share consolidation, conversion of debt to equity and placements to strategic and sophisticated investors.
This week, AEC announced its board is reconsidering the terms of the restructure.
AEC has been concentrating on its Natural Gas Vehicle Systems business and has just taken delivery of an engine from Chinese vehicle and engine manufacturer First Auto Works as part of its cooperation agreement with the company.
Mr Middleton said the company would be fitting its technology to the engine, doing some pre-testing and sending it back to China.
“We are also negotiating a further natural gas engine development program with another large Chinese engine manufacturer,” he said. “They are planning to visit us soon.”
Mr Middleton said the Chinese deals had taken longer than anticipated and that, coupled with the board’s decision to reconsider the terms of the restructure, had led to the EGM’s postponement.
The company decided to concentrate on the NGVS side of its business last year, disposing of the ‘sexy’ parts – Bullet Performance Products and super-charger manufacturer Sprintex. It sold BPP – set up to create the Bullet Supercar, an MX 5-like roadster with a super-charged Lexus V8 jammed under its bonnet – in July and its Sprintex division to Australian Automotive Components in October.
It has a $5 million contract with the WA Government to supply 22 buses using its NVGS technology and a $12 million contract with the French Irisbus consortium, Europe’s second largest manufacturer of public transport vehicles.
