Court dismisses fraud charges against three Nortel executives
By Allison Martell and Susan Taylor
TORONTO (Reuters) - An Ontario Superior Court on Monday dismissed fraud charges against former Nortel Networks Chief Executive Frank Dunn and two other top executives of the failed telecom equipment supplier after a year-long trial involving one of the most spectacular casualties of the 1990's dot-com bubble.
Dunn, along with former Chief Financial Officer Douglas Beatty and former Controller Michael Gollogly, had been accused of misrepresenting Nortel's financial results between 2000 and 2004 in a plan that prosecutors alleged brought them bonus payments while defrauding investors.
The crown had charged that the accused improperly manufactured a loss in one quarter and then engineered a profit in a subsequent three-month period in order to trigger lucrative cash and stock bonuses.
But Justice Frank Marrocco said he was not satisfied that the three accused had improperly accounted for accrued liability balances to misrepresent Nortel's 2002 financial results, nor had they improperly fudged income statements in the first-quarter of 2003 in order to earn a bonus.
"The accused are presumed innocent. The burden is on the prosecution. It was entirely appropriate that we go through this process to find out what happened. The burden, in my view, is not met. The charges are dismissed," he said.
The verdict is bound to focus attention on complaints that Canada is soft on corporate crime. It was released more than four years after the executives were first charged. All three had pleaded not guilty.
FORMER MARKET DARLING
Once the equipment manufacturing arm of Canada's biggest phone company, Nortel became a market darling in the late 1990's as the Internet revolution picked up steam and investors bet the company would make billions selling fibre optics networks. Continued...