Former Nortel execs face criminal charges
The Royal Canadian Mounted Police have charged three former Nortel execs on several criminal fraud-related counts.
Three former Nortel Networks executives are being criminally charged in Canada for misstating the company's financial results in 2002 and 2003.
Nortel's former CEO Frank Dunn along with former CFO Douglas Beatty, and former controller Michael Gollogly have been charged with fraud, according to the Royal Canadian Mounted Police. The executives were fired in 2004 as part of a massive accounting scandal at the company. As a result of the scandal, Nortel, which makes and sells equipment to phone companies, was forced to restate earnings as far back as 2001. In 2005, the company admitted it had overstated revenue by $3.4 billion.
The three men plus another former executive had previously been charged in a civil fraud suit by the Securities and Exchange Commission in the U.S. The SEC suit accuses the former execs of manipulating the company's earnings from 2000 to 2004, when its stock started declining as a result of the telecom bust. Nortel is also suing Dunn, Beatty, and Gollogly for bonuses the men were paid in 2003.
Nortel said in a statement that it's been cooperating with the Royal Canadian Mounted Police. Nortel itself has not been charged nor has it been the target of the investigation.