More than a year after Nortel sued Frank Dunn, Frank Dunn has sued Nortel for wrongful dismissal, mental stress and defamation. The details were disclosed in the 10-K. Dunn has kept a very low profile since he was terminated for "cause" by Nortel in April 2004, along with CFO Doug Beatty and controller Michael Gollogly. Dunn, however, popped into the spotlight last month when his lawyer asked an Ontario court for permission not to have Dunn testify to the Ontario Securities Commission. Dunn is concerned his testimony in Canada could be used against him in the U.S. by the SEC, which is conducting its own investigation.
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All Nortel, All the Time 
May 2, 2006 at 7:46 am |
Mental stress? Maybe he does have a case – only someone out of his/her mind would try a stunt like this.
May 2, 2006 at 8:45 am |
good for him
May 2, 2006 at 12:43 pm |
Boy that sucks Royal Canadian Moose cock, eh?
May 2, 2006 at 1:23 pm |
the entire accounting fiasco over 3 years did not make much change. It still showed profitability only the number was much less than earlier. So if this is proven then he is right in suing for defamation etc. as Nortel tarnished his name in the media. They should have just kept their mouths shut but apparently they have a history of tarnishing fired execs.
May 2, 2006 at 2:21 pm |
Nortel’s net income was overstated by 439M in 2003 (from 732M as initially “reported” 1/29/2004 to the 293M number released yesterday in the 10KA…a 60% reduction…eps was slashed from .17 to .07…Dunn orchestrated this fraud to earn huge bonuses for himself…handcuffs will fit nicely on him…Dunn learned how to cook the books early on, as Roth’s CFO:
From yesterday’s 10KA filing:
“…The Revenue Independent Review found that, in an effort to meet internal and external targets, the senior corporate finance management team, none of whom are current employees, changed our accounting policies several times during 2000, either to defer revenue out to a subsequent period or pull revenue into the current period.
After changing internal accounting policies, senior corporate finance management did not understand the relevant U.S. GAAP requirements, misapplied these U.S. GAAP requirements, and in certain circumstances, turned a blind eye to these U.S. GAAP requirements. As a result, the Revenue Independent Review concluded that Nortel recognized revenue for numerous transactions without regard for the proper accounting and this conduct was driven by the need to close revenue and earnings gaps…”
“…Further, the Integrated Market Enforcement Team of the Royal Canadian Mounted Police, or RCMP, has advised us that it would be commencing a criminal investigation into our financial accounting situation…”
Dunn was the ringleader throughout this massive fraud…he has a lot of cheek suing…like the fox suing the owners of the chicken house.
May 3, 2006 at 9:39 am |
I should waltz my way down to his house and slap him silly. Nortel has turned into a house of clowns. They should sell tickets and hold their own internal trials. They might make some money.
May 15, 2006 at 4:34 pm |
Where do I start?…with so much ignorance compact into one website, I’ll have to pick and choose the comments I address. I figure starting with the lowest IQ and moving up will be the most fair to all of you. That puts, “Dunn’s A Crook” first in line. Did it ever occur to you to think over the facts? It might be hard to move all that wool from your eyes, but don’t worry, I will go over the important facts with you.
We’ll begin from the time Dunn took the helm in 2002. First order was to restate earnings according to an internal review, however, this was followed shortly after by an external (i.e. independant) review which led to numbers that not only the entire board signed off on, but the outside auditors signed off on…and why wouldn’t they, they were the ones that came up with them. These numbers included provisions (ie estimates) for future expenses, such as court cases they believed they would lose, and estimates of restructuring charges which would look years ahead. You see, this is how accounting works…if you feel you might lose a court case, you estimate the cost and write it off immediately, restructuring is the same, you write down expected losses immediately. Since these estimates look ahead for several years, it is very tough to get an exact figure. Thus, when you realize the exact number down the road, assuming it is different from the original estimate, that difference flows through income adjusting it either up or down depending on circumstances. This is how accounting works. Frank Dunn did not come up with the GAAP (accounting standards), but I assure you, he did follow them. So as things began to turn around and it became clear as to the actual cost of things, the difference flowed back through income as it is supposed to. This difference was only about 5% of sales as I recall. I challenge any of you to budget your life even within 10% of your actual spending two years ahead. And I’m talking about your personal spending not the spending of a global corporation experiencing something totally foreign to it in the bursting of the tech bubble. Anyway, this difference happened to increase income, which subsequently triggered a bonus to employees. However, the profitability continued well beyond that, so even if the profit was recognized too soon, which I strongly disagree with, the bonuses would have happened.
Shall we move on. Following this return to profitability, with no warning whatsoever, Frank Dunn and several other employees were terminated with cause. The cause they say, was inaccurate financial statements. In came the new CEO Bill Owens, who’s military background ensured that he had never balanced a book in his life. Then, queue the accountants. From my understanding, out of the approximately 1100 employees in the Brampton HQ at the time, 400 were outside accountants trying to correct the financial statements. Over a year later and what I’m sure came to hundreds of millions of dollars later, the books were finally right. So Mr Integreity Bill Owens is told what a great job he did and sent on his way with the standard Nortel executive pension which I’m sure comes to almost 7 figures annually. This allows them to settle a class action in excess of 2 billion and pay the new CEO Mike Z over 10 million before he even shows up for work. What is the first thing he does?…You guessed it, re-states because he does not want to sign off of the work of 400 accountants and hundreds of thousands of man hours. These are people whose sole job is accounting, and they are good at it.
So why wouldn’t those numbers be signed off on? Do you think this might be because the numbers weren’t right again?…if so, why is Bill Owens not the subject of investigation? Perhaps it is because with a company so complex, as Nortel is, things aren’t as cut and dry as you think. I bet you the next re-statement will bring us right back to the original numbers that Frank Dunn signed off on.
My prediction is that the only case that is proven will be Frank Dunn’s wrongful dismissal case! In my opinion the men that should be on trial are John Cleghorn and Red Wilson. Why hasn’t the head of the audit committee been subject to investigation? And how about the only man that has been there the entire time Nortel has been Nortel, Mr Lynton Wilson?
Any comments?
May 31, 2006 at 12:19 am |
On May 14, 2004, Nortel announced that it had received a federal grand jury subpoena for the production of certain documents, including financial statements and corporate, personnel and accounting records, in connection with an ongoing criminal investigation being conducted by the U.S. Attorney’s Office for the Northern District of Texas, Dallas Division.
On August 23, 2005, Nortel received an additional federal grand jury subpoena in this investigation seeking production of additional documents, including documents relating to the Nortel Retirement Income Plan and the Nortel Long-Term Investment Plan.
Dunn is going to be indicted..the only question is when…
June 9, 2006 at 3:18 pm |
Man are you guys going to look like even bigger morons when Nortel settles out of court in order to avoid admitting guilt and Dunn walks away vindicated…and it will happen…the only question is when.
June 13, 2006 at 6:22 pm |
Perfect pages… tnx
June 16, 2006 at 10:55 am |
The point that is being missed here is that the restatements are a direct result of the culture that Frank Dunn championed. You did not bring bad news to Frank: he lacked the maturity and leadership to deal with it constructively. You did not present “real” issues to Frank. Frank is a ‘form over substance’ individual. Nortel was not the primary concern with Frank; ensuring that ‘Frank’ didn’t appear to be at fault for anything was Frank’s only agenda. We in Nortel’s Finance leadership would constantly deride Frank for his lack of original thought and his inability to encourage teamwork. Frank’s forte was ensuring every business issue had an individual to blame and berating people who were trying to improve Nortel as a company and weren’t segmented business unit focused.
Bottom line: if the magnitude of the financial restatements don’t hang Frank, his incompetence as both CEO and CFO should. Please look at the billions of dollars of acquisitions Frank championed (and totally deluted the stock value as a result) when he was CFO. Has Nortel received any return whatsoever from these? Look – the number after billions of write-offs is negative. Frank was terminated for cause. Nortel’s problem is they terminated him five years too late.
January 22, 2007 at 4:38 pm |
After further inquiries with Mike Z and discussions with Nortel’s investor Relations, it appears they are NOT going to compensate any shareholder, period.
Their policy appears to be to ignore all investors who “hung in there” hoping the “old” stock value would come back ’some day!’ Well, forget it, it’s not happening. The reverse split of 1 for 10 put a stop to that–BIG TIME.
( It was suggested a contingency fund be created to refund loyal investors who stayed with Nortel on the expectation their stock value would improve under new management. )
If you did not participate in the two class action settlements that expired on November 20th 2006 then you qualify for this new law suit.
We need to know how many (pre Dec 1st 2006)shares you hold and at what price you paid for them. If the average paid is below say, $8. then it may not be in your best interest to participate. It’s possible that the stock “might” climb to $80. some day!
Looking forward to receiving your information–type Nortel 1 for 10 in the subject of your e-mail.
Thank you, Bill Ritchie.
cwritchie@cogeco.ca