Three former top executives of Nortel Networks Corporation (PINK:NRTLQ) have been acquitted of fraud charges after a lengthy trial, in light of one of Canada’s biggest corporate collapses.
Frank Dunn, Nortel’s former chief executive, former Chief Financial Officer, Douglas Beatty and former corporate Controller, Michael Gollogly, were accused of misrepresentation of company’s financial results of four years from 2000-2004 to obtain the entitlement of bonuses worth 12.8 million Canadian dollars.
The Royal Canadian Mounted Police, Canada’s federal police force, started its own criminal investigation against the three executives in 2008.
Today, however, Canadian judiciary acquitted the three executives of all the fraud charges pressed against them, entitling them to the bonuses they claimed earlier. The acquittal was announced by Mr. Justice Frank Marrocco of the Ontario Superior Court, who presided over their trial last year. According to Judge Marrocco, the trio were found not guilty of the fraud charges press against them by their former employer.
In their defense, the trio explained that the accounting decisions were legal and appropriate at the time of representation and the method was approved by Nortel’s auditors from Deloitte & Touche.
The trial took account of the company’s activities between 2002 and 2003, when the top 3 executives were accused of intentionally manipulating the company’s accounts to push it back to profitability. While those manipulations never caused the company to face a financial collapse, the myriad problems within the management led the company to lay off of its top management team.
Nortel Networks Corporation (PINK:NRTLQ) spent millions of dollars investigating the issue and came up with two successive restatements of its books in 2003 and 2005.
Nortel was Canada’s largest telecommunications company for 12 years, before it came face to face with the economic downfall in the technology sector that brought the company nearest to bankruptcy in year 2009. The company is grappling with the downturn by carrying mediation session to resolve outstanding claims.
Lawyers involved in the fraud trial presented the evidence that the employees at Nortel Networks Corporation (PINK:NRTLQ) were not manipulated by the executives to follow their alleged plan. They explained that the release of million dollar reserves was part of a well-intentioned effort to fix the accounting.