Nortel fraud case begins
Canada, 17th January: Fraud trial of Nortel Networks Corp. has begun with allegations against its three executives of creating false financial reports for showing profits.
Crown prosecutors say these executives made false financial entries on the balance sheet to show profits and it would lead to triggering bonuses to the tune of million dollars.
Although, the three former executives of Nortel Networks had been fired nearly eight years ago, the fraud trial has started now.
According to reports, Michael Gollogly, Douglas Beatty and Frank Dunn, corporate controller, chief financial officer and former chief executive respectively, had been dismissed way back in 2004.
Fraud charges were laid against the three involved by the RCMP in 2008.
And the firm had sought bankruptcy protection five years later in 2009 in Canada. The company has a solid history of around 127 years in Canada and it had nearly 95,000 workforce during the 1990s. Nortel accounted for as much as one-third of the total market value on the Toronto Stock Exchange.
Prosecutor Robert Hubbard said all these three former executives of Norton allegedly used cash provisions kept aside for covering costs. And such action resulted in unexpected earnings while providing rewards in the form of stocks and cash to all these three officials, he maintained.
Speaking before Superior Court Justice Frank Marrocco, Hubbard said the three had set their aims and they did whatever possible to meet their aims. They somehow misled the auditors and the board by hiding forecasts as well as several other vital documents during the probe.
The three men had made pleas alleging their innocence at the beginning of the Nortel trial. Allegations are still awaiting to be proved in court. The Crown case includes an e-mail involving Beatty explaining funds needed to be added to show increased income in the year 2003 to Dunn.
Mr. Hubbard clarified Mr. Marrocco that the three accused were actually aware of their bonus targets.
He further maintained that the accruals or accounting reserves used by the accused to meet income targets will be shown by the Crown. The list of nearly 28 possible witnesses includes big names including John Cleghorn, former audit committee chairman and Lynton Wilson, a former Nortel chairman.