Adelphia Communications – the US cable operator allegedly looted by its controlling clan – is suing former auditor Deloitte & Touche for billions of dollars.

The firm’s founder and former chairman, John Rigas, plus two of his sons and two senior Adelphia executives were each charged with 24 counts of fraud in September. It is claimed they misappropriated billions of dollars from the cable firm, which filed for bankruptcy protection in June.

Adelphia is accusing Deloitte of “negligence, breach of contract, fraud and other wrongful conduct,” arguing that the auditor was “asleep at the switch” during “one of the most egregious instances of corporate self-dealing and financial chicanery in United States corporate history.”

The beancounter is alleged to have known about what is euphemistically termed the Rigases’ “unorthodox cash system”, yet failed to tell the board, repeatedly giving the company accounts the all-clear.

Adelphia claims Deloitte – replaced as auditor by PricewaterhouseCoopers in June – should have brought such wrongdoing to the attention of directors. It argues that under industry guidelines the audit should have been considered ‘high-risk’, entailing extra vigilance.

If Deloitte had blown the whistle, it is claimed, “[the Rigases’] massive self-dealing could have been and would have been prevented, saving Adelphia hundreds of millions, if not billions, of dollars in damages.”

Data sourced from: USA Today; additional content by WARC staff