Former Nortel CEO, CFO, Controller Charged With Fraud

Three former Nortel executives have been criminally charged in Canada with misstating the networking giant's financial results in 2002 and 2003, the Royal Canadian Mounted Police said.

Charged are former Chief Executive Frank Dunn, 54 years old; ex-Chief Financial Officer Douglas Beatty, 53; and former Controller Michael Gollogly, 49.

Nortel fired Dunn and a handful of other senior executives in 2004 after discovering a pattern of dubious accounting practices. The vendor has spent the past few years sorting out the accounting mess and restating results as far back as 2001. The company admitted in 2005 it had overstated revenue by $3.4 billion.

The Securities and Exchange Commission sued Dunn and three other former executives, accusing them of manipulating earnings from 2000 to 2004 to meet analysts' expectations and boost bonus payments. Nortel also sued him and two of the three other executives.

Nortel issued a statement Thursday saying it has fully cooperated with the RCMP and will continue to do so. It noted that Nortel itself "has not been charged and was not the target of this investigation."

The RCMP's Toronto-area integrated market enforcement team laid seven fraud-related charges each against the trio. Their first court appearance is scheduled for later Thursday.

Nortel shares were recently down 12 cents, or 1.2%, at $9.63.

-By Kevin Kingsbury, Dow Jones Newswires; 201-938-2136; kevin.kingsbury@dowjones.com

-By Mike Barris, Dow Jones Newswires; 201-938-5658

(END) Dow Jones Newswires

Posted to the site on 19th June 2008