Apparently, Nortel is going after three of its former executives - Frank Dunn, Doug Beatty and Michael Gollogly - for bonuses they received after allegedly cooking the company's books in 2002 and 2003.
According to the Toronto Star, Nortel filed a lawsuit against the trio earlier this week. It accuses its former CEO, CFO and controller of "improperly using provisions and accruals to manipulate the company's earnings "in at least four fiscal quarters" — including the third and fourth quarters of 2002 and the first two quarters of 2003."
The Star hammers home the point Dunn has to be evil and greedy by printing a lovely aerial photograph of his large estate on the shores of Lake Ontario. Some people call these types of over-the-top places "McMansions". In Dunn's case, I like to call it a "McRoth" because the only rational explanation for Dunn, who children have hopefully lest the nest, to build such an audacious place is to replicate what his former boss, John Roth, built north of Toronto.
As much as Nortel wants to move forward by putting its accounting scandale behind it, 2005 will be another dramatic year for the telecom equipment maker. For each positive step forward such as hiring Peter Currie as CFO, Nortel will take one or two steps backward as it deals with investigations by the FBI, SEC, RCMP and Ontario Securities Commission, as well as those pesky class-action lawsuits.
Then, you've the telecom equipment market, which is going through a massive transition as spending slows and new low-cost rivals come out of Asia. For those of us who cover Nortel, the soap opera has many episodes left.
Personally, I don't see how financial analysts on Bay St. and Wall St. can get a good handle Nortel's prospects when management will clearly be distracted this year, and new competitive factors are coming out of left field.