Wednesday, February 8, 2012

Nortel Show Trial Update: Crown's case continues to unravel

The testimony of witness after witness in the Nortel show trial appears to demonstrate the the Crown doesn't have a case in the fraud prosecution of three senior Executives. Fraud by definition involves deceit, and the Crown has consistently been thwarted in every effort to show that Former Nortel CEO Frank Gunn, CFO Douglas Beatty and Controller Michael Gollogly were anything but forthcoming with the firm's auditors and board.

According to a report in the Financial Post, today's star Crown witness, Sue Shaw, the chief handler of financial consolidation records for the one-time telecom giant’s corporate books, testified to Crown prosecutors earlier this week that $66-million in accrued liabilities had been identified as early as mid-2002 as being no longer necessary to account for. It meant the sum should have been released into quarterly results, a common practice at Nortel at the time.

The Crown alleges the sum, alongside millions more in balance-sheet provisions, never made it to the income statement. Instead, the values were shifted to later periods, an Ontario Superior Court of Justice trial has heard.

Except, it turns out that Ms Shaw actually didn't know what she was talking about.

As The Post detailed:

David Porter, lawyer for former chief executive Frank Dunn, Wednesday entered into evidence a December, 2002 email between Nortel finance officials with an attached spreadsheet. A number of corporate reserves were listed as being dispatched to Nortel’s third-quarter 2002 income. It was presumably a document Ms. Shaw had not seen before.

“It appears that sixty-six million was released in that period,” the witness said. The direct repudiation undercut a central allegation by the Crown in its fraud case..

Oops! Seems yet again, the prosecution is made a fool of in this case. One wonders when pursuing obviously incorrect charges becomes an embarrassment and undermines the administration of justice in Ontario. The longer this trial continues without a summary judgement in favour of the defense, the more glaring that question becomes.

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