Toronto (May 18, 2004) -- The probe into accounting irregularities at Nortel Networks widened as a federal grand jury in Texas subpoenaed the Canadian telecommunications firm to produce financial documents dating back four years as part of a criminal investigation.
The documents, which included financial statements and corporate, personnel and accounting records dating back to Jan. 1, 2000, were requested as part a criminal investigation being conducted by the U.S. Attorney’s Office for the Northern District of Texas, Dallas Division. In a May 14 statement, the company said it would fully cooperate with authorities.
The company, which is under investigation by U.S. and Canadian securities regulators in connection with its past financial restatements, last month fired three of its top executives and said it would restate results as far back as 2001.
In late April, the company fired its former CEO and president Frank Dunn, former chief financial officer Douglas Beatty and former controller Michael Gollogly, and named a director, William Owens, as president and CEO. Nortel also placed four "senior line of business finance executives" on paid leave pending a review by Nortel's audit committee of the circumstances that led to the restatement of the company's financial statements for 2000, 2001 and 2002, and the first and second quarters of 2003. The audit committee last month expanded the period being covered by the review -- which has focused on management’s practices regarding accruals and provisions -- to include all of 2003.
Nortel said it would revise its prior results for the year ended Dec. 31, 2003, and would restate quarterly results for all of 2003 and for earlier periods including 2002 and 2001, slashing by about half its previously announced net earnings for 2003.
-- WebCPA staff
