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Telecommunications equipment industry

Nortel Networks Faces Criminal Investigation and Restates Earnings

Strategic Insights

— 1 min read

Canadian authorities have launched a criminal investigation into Nortel Networks Corp., the country's largest high-tech company, following a notice from the Royal Canadian Mounted Police. The investigation is in addition to a similar probe by the U.S. attorney's office in Dallas and an examination by securities regulators in both countries. Nortel has been under police review for several months and has already fired three top officials, including its chief executive, after internal inquiries uncovered accounting irregularities. The company has stated that it will cooperate fully with the authorities.

Key Takeaways:

  • Nortel Networks Corp. is facing a criminal investigation by the Royal Canadian Mounted Police, in addition to a similar probe by the U.S. attorney's office in Dallas.
  • The investigation is related to accounting irregularities, which were uncovered by internal inquiries and have led to the firing of three top officials, including the chief executive.
  • The company has stated that it will restate its earnings going back to 2001, which will erase its earnings from continuing operations in 2003 and all earnings for the first half of that year.
  • Nortel is also facing class-action lawsuits related to the accounting scandal.
  • The investigation and restatement process is likely to have significant implications for the company's financial performance and reputation.
  • The Securities and Exchange Commission (SEC) and the Ontario Securities Commission (OSC) are also examining Nortel as part of a broader investigation into the company's accounting practices.

Statistics:

  • Nortel has stated that it will restate its earnings going back to 2001.
  • The restatement will erase Nortel's earnings from continuing operations in 2003 and all earnings for the first half of that year.
  • The company has fired three top officials, including its chief executive, after internal inquiries uncovered accounting irregularities.

Sources:

  • Headline: "Nortel Faces Criminal Investigation over Accounting Scandal".
  • The Associated Press, TORONTO -- Canadian authorities will begin a criminal investigation into the accounting at Nortel Networks Corp.
  • Statement by Nortel spokeswoman Tina Warren to The Associated Press.
  • Statement by Nortel regarding the restatement of earnings.
  • U.S. Securities and Exchange Commission (SEC) website.
  • Ontario Securities Commission (OSC) website.

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