During the dot com bubble of the early 2000's, Nortel's Board had approved billions of dolars worth of acquisitions of what turned out to be near worthless investments, and it fell to CEO Frank Dunn and CFO Douglas Beatty to try to turn that around. They instituted massive spending cuts that resulted in billions of savings and as far as financial markets were concerned, they were able to effect a miraculous resurrection at Nortel.
The Crown is alleging an extremely complex fraud on the part of Dunn, Beatty and controller Michael Gollogly to manipulate losses and earnings from one quarter to the next in order to meet the conditions for performance bonuses for the senior executives.
However there's no proof that ever happened.
Everything the trio of Dunn, Beatty and controller Michael Gollogly did was approved by the auditing firm Deloitte and fell withing the parameters of normal business practices and reporting. Just days before trial, amid the four million documents the crown has submitted as being relevant without identifying a single one that specifically shows fraud by the defendants, charges of falsifying documents were dropped. The fraud charges remain, but there is much speculation that this is simply a case of the government trying to look like it is doing something in the face of the anger and outrage from the public about a series of events which few people understand.
In today's National Post, James Bagnall provides an excellent summary of the issues:
It's an important article about a major case that details how, rather than bringing three criminals to justice, the government may be wasting millions more taxpayer dollars on an expensive show trial that will accomplish nothing other than to demonize three innocent men."The deeper you dig into the accounting history of Nortel, the easier it is to believe that the board of directors, its private investigators and the RCMP just plain got it wrong - that the atmosphere may have been so poisoned by Nortel's spectacular fall from grace that many were simply looking for someone to blame."