Analysis: Nortel case spotlights Canada corporate crime record
By Cameron French
TORONTO (Reuters) - The acquittal of three former executives of bankrupt telecommunications company Nortel Networks in a high-profile fraud case is an embarrassing loss for Canadian prosecutors that could have a chilling effect on future efforts to pursue white-collar crime.
The telecom equipment manufacturer fired Chief Executive Frank Dunn and top lieutenants Douglas Beatty and Michael Gollogly in 2004 amid an accounting scandal, and they were charged four years later with altering corporate results to trigger lucrative bonuses.
On Monday, almost a decade after the accounting scandal broke, an Ontario judge ruled that prosecutors had failed to meet the burden of proof that a crime had been committed, leaving the entire prosecution in tatters.
The delays brought back memories of snails-pace investigations in high profile fraud cases like theatre company Livent, whose founders went to jail in 2011 after a scandal-plagued bankruptcy dating from 1998. Bre-X, a C$6 billion gold-salting fraud in the 1990s, has yet to produce a single conviction.
In the United States, in contrast, prosecutors have won several dozen guilty pleas and convictions on insider trading and other white collar crime since the 2008 financial crisis.
"For people who think that fraudsters are allowed to get away with securities fraud in Canada, these acquittals just confirm that view," Cristie Ford, a law professor at University of British Columbia, said of the Nortel case.
TECH BUBBLE STAR
Nortel was one of the stars of the 1990s tech bubble - a business that at its peak was worth about C$400 billion, making up one-third of the Toronto Stock Exchange and employing almost 100,000 people. Continued...