Bagnall: Nortel allegations finally fade away, with no apologies and no blame laid
James Bagnall in The Ottawa Citizen:
Imagine that you had been fired a decade ago, sued for fraud by securities regulators on both sides of the border, then charged with crimes you had not committed.
Think about your reaction when, after you were cleared of criminal wrongdoing, the civil authorities waited nearly two years before withdrawing their allegations — late on the Friday before Christmas week.
This was how the Ontario Securities Commission and U.S. Securities and Exchange Commission, earlier this month, terminated their quests to prove that former Nortel executives had cooked their company’s books.
By now, Douglas Beatty, Frank Dunn and Michael Gollogly know better than to expect an apology for what they endured. Set against the spectacular failure of the firm they worked for, their personal pain seems almost trivial.
Yet, something terribly profound has occurred: One of the country’s greatest companies slipped through the cracks and no one has been held to account. Not the top executives who led Nortel into the telecom crash of 2001; not Wilmer Cutler, the Washington law firm hired to take a second look at Nortel’s accounting; not Nortel’s directors, whose uncritical acceptance of Wilmer Cutler’s work set the legal train wreck in motion; not the RCMP, which laid criminal charges despite having reviewed fewer than 10 per cent of the relevant documents.
We can’t know whether Nortel would have survived had board chairman Red Wilson forced Wilmer Cutler to justify its allegations of improper accounting. But this we do know: On March 15, 2004, Beatty and Gollogly were put on leave at the urging of Wilmer Cutler. Shareholders initiated a class-action lawsuit two days later that Nortel would settle for $575 million in cash and $2 billion in shares.
The company filed for bankruptcy protection Jan. 14, 2009, because it felt it couldn’t pay $107 million in debt interest.
Here we are nearly six years later, the consequences plain...