The Securities and Exchange Commission has charged former Chief Executive Frank Dunn and three other former executives of Nortel Networks Corp. for engaging in an accounting fraud from which the telecommunications-equipment supplier has not completely recovered yet. The SEC and the Ontario Securities Commission, Canada’s main regulator, have been investigating Nortel’s accounting after the problems came to light several years back. The OSC said Monday it has scheduled a hearing on May 1 regarding its investigation.
The SEC’s suit claims the four executives frequently engaged in accounting fraud and misconduct from September 2000 through January 2004. Linda Thomsen, enforcement director of the Securities and Exchange Commission said, ‘each of the defendants betrayed Nortel’s investors and their misconduct gave rise to billions of dollars in shareholder losses’.
The complaint named the three other executives former Controller and Chief Financial Officer Douglas Beatty, former Controller Michael Gollogly and Assistant Controller and corporate reporting Vice President MaryAnne Pahapill.
The SEC complaint further alleged, ‘Dunn, in particular, made known his lack of respect for Nortel`s control organization, which he saw as an impediment to the company`s ability to do business quickly.’
Nortel, which has restated financial results four times, with errors reaching as 1999, made its first restatement in March, 2003. The SEC launched a formal investigation into its restatements in April, 2004. The company’s most recent restatement was submitted in the first week of March.
