A fraud trial against three former executives of Nortel Networks began Monday in Ontario Superior Court in Toronto.
Former CEO Frank Dunn, former CFO Douglas Beatty and former Controller Michael Gollogly are accused of altering financial results for the telecommunications equipment company in order to reap millions of dollars in bonuses. The lawyers for each defendant have all said no frauds were committed.
Brendan Crawley, a spokesman for the Ontario Attorney General, told Bloomberg in an email that each former executive will be charged with two counts of fraud. Trial is expected to last between six and nine months. Prosecutors have turned over approximately four million documents to the prosecution.
Crawley said prosecutors will lay out their case in court on the record, and won't be making any comment before then.
Dunn became CEO in 2001 and oversaw a restructuring of the Mississauga, Ontario-based equipment maker which included massive layoffs. The company unexpectedly returned to profitability in 2003, allowing executives to reap performance bonuses. But auditors later found that nearly $900 million in liabilities were left off balance sheets beginning in 1998.
Dunn, Beatty and Gollogy were fired in April 2004 for financial mismanagement. In addition to facing criminal charges in Canada, the U.S. Securities and Exchange Commission has filed civil fraud charges against the executives.
The company filed for bankruptcy in early 2009 and announced later in the year that it planned on to sell off all its business units. The company has sold its business portfolio for at least $7.5 billion, according to Bloomberg, including a $4.5 billion patent sale to a syndicate that included Apple, Research in Motion, Microsoft and EMC in 2011. Nortel Networks, a descendant of AT&T's Western Electric, was one of the world's biggest manufacturers of telecommunications equipment for fixed- and wireless networks.