OTTAWA (Reuters) - Former Nortel Networks boss Frank Dunn was a low-key, numbers man who shunned the limelight as CEO of the telecom equipment maker, but now he’s back at center stage facing new criminal charges from an accounting scandal that’s years old.
The Royal Canadian Mounted Police on Thursday accused Dunn and two other former senior executives of fraudulently misstating financial results in 2002 and 2003.
It marks another round in the one-time university football player’s fight to prove that problems under his tenure were innocent accounting errors rather than an intentional plan to cook the books.
Nortel sacked Dunn and several finance executives in 2004 after discovering that it needed to restate earnings to fix bookkeeping mistakes.
A company review alleged that Dunn directed management to apply accounting policies that did not meet U.S. standards to try and reach profit targets and trigger bonuses.
The accounting crisis led to regulatory and criminal probes along with investor lawsuits, which the company has paid millions of dollars to settle.
Dunn, 54, still faces charges from the U.S. Securities and Exchange Commission and the Ontario Securities Commission.
Nortel’s chief financial officer before his promotion to CEO in 2001 - a time when no one else wanted the job - the steely-eyed Dunn proved a hard-driving leader.
He eliminated tens of thousands of jobs, sold plants, shut business lines and slashed costs after the company’s go-go days as a market darling came crashing down when the high-tech bubble burst.
Dunn succeeded affable CEO John Roth, a plain-spoken engineer who had aggressively built the company with a stock-driven, multi-billion dollar acquisition spree.
But Nortel shares fell from a dizzying peak of C$124.50 to 70 Canadian cents in 2002, a breath-taking 99.4 percent drop.
At the company’s 2002 annual meeting, a weary Dunn faced four hours of intense questioning and stinging criticism from shareholders. Investors dragged the company over the coals on everything from their beaten-down shares to executive compensation.
Dunn, who spent his career at Nortel after joining as a management trainee out of McGill University in 1976, filed a lawsuit against the company in 2006 seeking claims for wrongful dismissal, defamation and mental distress.
A year later, in a 2007 filing with U.S. securities regulators, he said that he “rescued” the company during a “challenging business environment.”
Because Nortel’s insurance company would not pay all of his legal fees, Dunn said in January that he was being denied the chance to defend himself against U.S. and Canadian regulatory lawsuits, Bloomberg News reported. Legal expenses were described by Dunn’s lawyer at a Toronto hearing as “huge.”
In 2005, Dunn sold his massive Toronto-area lakefront home, which was under construction at the time, for about C$8.8 million.
Reporting by Susan Taylor; Editing by Frank McGurty