Reprise for Nortel debacle as Toronto trial opens

Mon Jan 16, 2012 5:31pm EST
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By Alastair Sharp

TORONTO (Reuters) - Three former executives at bankrupt Nortel Networks reached into the "cookie jar" a decade ago to enrich themselves, prosecutors said, opening a fraud trial that dredged up memories of one of the most spectacular casualties of the 1990's dot-com bubble.

The trio - former Chief Executive Frank Dunn, former Chief Financial Officer Douglas Beatty and former Controller Michael Gollogly - misrepresented Nortel's financial results between 2000 and 2004 in a plan that brought them bonus payments while defrauding investors, prosecutor Robert Hubbard said on Monday.

Their day in court came more than three years after the executives were charged and a dozen years after their alleged transgressions began. All three pleaded not guilty.

The long time lapse highlights the complexity of the case as well as what critics say is the slow pace and laxity of Canada's justice system in cases involving alleged corporate wrongdoing.

The crown charges that the accused improperly manufactured a loss in one quarter and then engineered a profit in a subsequent three-month period.

"This cookie jar approach allowed the accused to trigger lucrative cash and stock bonuses to themselves," Hubbard said as the crown laid out its case in a packed Toronto courtroom.

In preparing for the case, prosecutors have been sorting through millions of documents, some of them dating back to before the spectacular collapses of Enron and WorldCom, two of the biggest corporate scandals in U.S. history.