Related News:
Former GE Unit Executive Says He Was Pushed Out for Questioning Accounting
General Electric Capital Services was sued by a former executive who claims he was forced out for questioning the company’s treatment of an asset.
Edward Gormbley, who worked for GE Capital from 2000 until he quit in September 2009, filed his suit today in state court in Stamford, Connecticut. The complaint also names parent General Electric Co. and its chief executive officer, Jeffrey Immelt.
Gormbley said he was punished for challenging the valuation of silicon-maker Momentive Performance Materials, an investment asset. GE Capital overstated Momentive’s value in December 2008 to improve its own balance sheet, he said. Valuing the asset correctly would have reduced “GE Capital’s earnings 100 percent,” in the fourth quarter that year, according to the complaint.
“Mr. Gormbley refused to play GE’s game and just ‘get along,” according to the filing. “GE and GE Capital’s response was direct, unmistakable and as subtle as a hangman’s noose.”
Gormbley said he was shorn of responsibilities, was downgraded in employee evaluations and had his annual bonus slashed, effectively forcing him out of the company. He is seeking $10 million in damages.
“The allegations in Mr. Gormbley’s complaint are meritless,” Russell Wilkerson, a spokesman for Fairfield, Connecticut-based GE, said in an e-mailed statement. “The company will vigorously defend itself against these baseless assertions.”
Momentive Sold
Momentive, based in Albany, New York, and formerly known as GE Advanced Materials, was sold by GE to the New York private investment firm Apollo Management LP for $3.8 billion in 2006.
GE Capital, based in Stamford, retained a 10 percent interest in the silicon maker, and held $400 million in notes. The company originally valued its Momentive investment at $50 million, Wilkerson said.
GE “correctly accounted” for its Momentive investment at all times, Wilkerson said. Its present value is about $25 million, he said.
Wilkerson called the claims in the suit “suspect,” adding that Gormbley owes the company more than $100,000 lent to him to pursue a master’s degree in business administration. Wilkerson also said the former executive wrote some of the accounting documents about which he now complains.
In his complaint, Gormbley said GE Capital’s human resources department threatened to revoke the student loans last year.
The case is Gormbley v. General Electric Co., FST-CV10- 6006588-S, Connecticut Superior Court (Stamford).
To contact the reporter on this story: Andrew M. Harris in Chicago at aharris16@bloomberg.net
Rate These Stories
Rate this Page