The collapse of Canada’s largest technology company is not going to go away silently after all. Three ex-Nortel executives go on trial Monday to face charges of fraudulent bookkeeping that saw most of the losses and revenue decline in the company go unnoticed until it was too late.
Nortel, which was unable to weather the dotcom bubble and that started sustaining huge declines in revenue was finally dealt a deathblow when the company filled for bankruptcy protection. The three executives who shall be making a defence include Frank A. Dunn, Nortel’s former chief executive; Douglas C. Beatty, the former chief financial officer; and Michael J. Gollogly, the former controller, the three of whom were dismissed in 2004.
Nortel, which was mostly owned by small holding companies in Canada went down with the investments of Canadians who still hold bitter resentment for the fall of the technology giant. Unlike most other large technology companies that are largely held by institutional investors and venture capital firms, Nortel was what you may call a nationalised company in the sense that private citizens held the bulk of the shares.
What makes the bitter pill even harder to swallow for Canadians is the fact that in the last throws of the company’s existence, the company executives managed to create a picture that indicated that the company was actually turning profits while in fact it was not and this mirage went on to earn them $5 million in performance bonuses.
Another Canadian tech company that is facing similar challenges is BlackBerry maker Research In Motion that is tottering on the brink of existence owing to shifting fortunes. It’s clear that RIM shareholders will be very weary of any optimistic talk from the management as they would not like to see a repeat of the Nortel collapse. This has seen a change of guard at RIM as well as a more vocal shareholding voice as shareholders take charge of the company’s future.
The Nortel case, which saw the submission of some 4 million documents as evidence, is expected to drag on for months as the prosecution seeks to wrest some judicial restitution from the case for the millions of shareholders who saw their investments wiped out with the fall of Nortel.