Two former senior executives and the former chief executive of Nortel Networks were found not guilty on Monday of falsifying financial repots. The prosecutors working the case said that the charges were a result of the defendants’ scheme to report profits and gain bonuses, according to The Associated Press.
All of the charges filed against former chief executive Frank Dunn, chief financial officer Douglas Beatty and corporate controller Michael Gollogly were dismissed by Ontario Superior Court Justice Frank Marrocco. The ruling was issued four years to the day after the company filed for bankruptcy protection and started its liquidation process.
There were two counts of fraud filed against each of the former executives after they were accused of taking part in a bookmaking scam between the years 2002 and 2003 that would trigger $12.8 million in stocks and bonuses for themselves. All three of the executives were fired in 2004 and issued not guilty pleas when the case reached trial last year.
According to Judge Marrocco, he was “not satisfied” that the financials were misrepresented and that the prosecutors did not meet the burden of proof. When the verdicts were handed down, the men hugged and congratulated each other. The prosecutor working the case did not issue a statement regarding the verdict, saying that he had to read the ruling from the judge.
The lawyer for Dunn, David Porter, called the verdict a complete vindication. The defense claimed during the case that there was no evidence that the executives took part in a scam that involved accredited accountants from Nortel and Deloitte & Touche, an outside auditor.
“For a very long time, integrity has been the foundation of Nortel Networks’ corporate governance and business practices. The documentary evidence and testimony re-affirmed this core value that I witnessed over my 28 years with the company,” Dunn said in a statement. “I am looking forward to turning the page on this chapter of my life.”
Nortel employed more than 95,000 people in the decade of the 1990s, when the telecom and Internet industries experienced their boom. The company used to be the second-largest telecommunications gear marker in the world. During a period in 2000, the company was one-third of the market value on the entire Toronto Stock Exchange and boasted a market capitalization of $297 billion.
The company’s ultimate undoing was that it grew too fast, overpaying for companies it acquired with inflated stock. The stock of the company is worthless and it has been delisted. Bankruptcy was filed in 2009 by Nortel and sold its remaining businesses to multiple buyers for over $7.8 billion.