Three former Nortel execs charged with criminal fraud

Criminal charges have been filed against three former Nortel executives, including former chief executive Frank Dunn, over allegations of fraud in 2002 and 2003.

The Royal Canadian Mounted Police of the Greater Toronto Area said Thursday that it has charged Dunn, former chief financial officer Douglas Beatty, and former corporate controller Michael Gollogly with seven counts of criminal activity each.

The fraud related charges include: Fraud Affecting Public Market, Falsification of books and documents and False Prospectus and are all linked to allegations of criminal activity at the Canadian kit maker during 2002 and 2003, when the firm was found to have mis-stated financial results.

Nortel fired a handful of executives in 2004 after it discovered the accounting discrepancies, and the SEC sued the trio, along with former assistant controller MaryAnne Pahapill, last year.

As a result of the scandal Nortel has been forced to restate the last several years of its accounts, revealing a shortfall of billions revenue and significant damage to the company’s reputation.

Nortel released a statement on Thursday, saying that the company, “has fully cooperated with the RCMP and will continue to do so.

“Nortel is rebuilding a great Canadian company while upholding the highest standards of integrity and ethics. Incredible progress has been made in the last few years, and today a new Nortel is emerging under the leadership of a new management team with a proven track record. The company has restored a solid financial controls foundation, is gaining traction with customers and is focused on the future,” the firm said.