Ex-Nortel execs charged in accounting scandal

The Royal Canadian Mounted Police this week charged three former Nortel executives with fraud stemming from an accounting scandal that led to their ouster in 2004.

Former CEO Frank Dunn, former CFO Douglas Beatty and ex-corporate controller Michael Gollogly all face multiple charges, including fraud affecting the public market, falsification of books and documents, and false prospectus. The charges pertain to allegations of criminal accounting activity within Nortel during 2002 and 2003.

Nortel fired the three executives "for cause" in April, 2004. The company then took years to restate its financial results for the years in question.

The charges allege that Dunn, Beatty and Gollogly fraudulently misstated the financial results of Nortel. The RCMP further alleges that the three made false entries and omitted materials in documents and materials pertaining to the financial results of Nortel.

The charges also allege that Dunn, Beatty and Gollogly knowingly deceived or defrauded the members, shareholders or creditors of Nortel.

The three former executives made their first court appearance this week.

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."

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