The Royal Canadian Mounted Police have filed criminal charges against three former executives of Nortel Networks Corp., who appeared in court Thursday.
Frank Dunn, a former CEO of the Brampton, Ont.-based telecom equipment maker, has been charged with two counts of fraud affecting public market, two counts of falsification of books and documents and three counts of false prospectus, under section 400 (1) of the Criminal Code of Canada. Dunn was fired by Nortel’s board of directors in 2004. The charges were announced Thursday by the RCMP’s Greater Toronto Area Integrated Market Enforcement Team.
The Mounties have also charged Douglas Beatty and Michael Gollogly, who were Nortel’s chief financial officer and comptroller respectively in 2003. Nortel’s board turfed Beatty and Gollogly around the same time they canned Dunn. Nortel replaced Dunn with former US Navy admiral Bill Owens, who has since been replaced by Mike Zafirovski. Dunn, Beatty and Gollogly face charges under the same sections of the Criminal code, which the RCMP says “pertain to allegations of criminal activity” during their time at Nortel in 2002 and 2003.
Specifically, police say, the men mis-stated Nortel’s financial results, made “false entries and omitted materials” in financial documents and “circulated or published” material “knowing that it was false in a material particular, with the intent to deceive or defraud the members, shareholders or creditors” of Nortel.
In a statement, Nortel said it “has not been charged and was not the target of this investigation. The company has fully cooperated with the RCMP and will continue to do so.
“Today’s announcement by the RCMP does not distract the company from the work ahead.”