Former Nortel executives, Frank Dunn, former CFO Douglas Beatty and former controller Michael Gollogly have been acquitted in the year-long Nortel fraud trial.
Her Majesty the Queen v. Frank A. Dunn, Douglas C. Beatty, and Michael J. Gollogly, which opened a year ago, looked to determine whether or not the trio were guilty of seven charges, including two charges of fraud over $5,000, three charges of falsifying public statements, and another charge of omitting key financial information from a financial record.
The prosecution said the men collaborated to falsify records that triggered $12.8-million in bonuses related to the company’s returning to profitability.
Ontario Superior Court Judge Frank Marrocco said the burden of proof was not met.
Dunn, in a statement released to the media, said: “I am pleased with today’s decision and after waiting almost nine years, I am grateful to have received vindication. Throughout my career at Nortel, it was an honour to work with such a dedicated, highly principled and committed group of people. For a very long time, integrity has been the foundation of Nortel Networks’ Corporate governance and business practices. The documentary evidence and testimony re-affirmed this core value that I witnessed over my 28 years with the company. I am looking forward to turning the page on this chapter of my life and have no further comment at this time.”
At its peak, in 2000, Nortel had a market value of $350 billion. At one time, the stock represented 36% of the entire value of the Toronto Stock Exchange and employed 90,000 people.
The seemingly endless downward spiral of Nortel actually began on October 25, 2000, when CEO John Roth warned, for the first time, that the company would not meet its sales targets. The stock fell from $96 to $71 that day. By 2002, half of the company’s 90,000 workers had been laid off. And then it got worse. Debt downgrades, missed reporting deadlines and financial restatements killed a meager rally in the stock. Nortel declared bankruptcy on January 14, 2009.