All About Nortel - Latest Comments

Re: Nortel-BSNL: Round II

Reza — Tue, 15 May 2012 13:31:06 -0000

It's kind of sad to go over these memories but I leave this notes here hopefully someone will learn why Nortel went down the way it did.
I was dispatched to India in 2001 to help build the Reliance InfoComm
fibre optics network. We worked 84 hrs a week (yes that's 12 hrs a day, seven days a week) for many months to deliver the within the milestone.
I believe that at one point there were 180-200 contractors from US, Canada, UK, Ireland, Mexico, Australia and S. Africa each charging over 13,000 a month. On top of that add cost of vehicles, logetics etc etc. Nortel had to throw in the Metro Fibre to win the Metro long-haul.

Total tally at the end was $300 Million loss on a $1 Billion project. The client was so tough and would not sign the acceptance until they see virtually zero errors over a 72 hrs on a 2800 km ring test at 10 Gbps. At the outset the standard was six 9's but they moved it up to nine 9's and then almost infinity.

These bad deals had their own toll.

If I have to summarize it, Nortel was riddled with people who didn't care about anything but self interest and in absence of great oversight everybody started digging hole in his part of the boat.

I used to travel to client sites and stay with them for months. After a couple of weeks, i would find a furnished apartment which would cost under $2k. Normal employees would keep charging 130-150 night just to keep their room done by someone else. Comeon, that's $2000 a month extra.

Nortel would fly people business class if the trip covered over two continents. We had people flying out of Miami once every month to Sao Paolo visiting a customer for monthly meeting: Price tag = $8500.

We had people moving around and charging everything from repainting a house before putting on market plus three trips with family to destination to find a house, plus all the cost of real estage agent.. price tag = $90,000 to move a low level manager from Brampton ON to Miami florida...

I think you get the picture. It's easy to blame the problem on the Executives or bad sales deals but it was a compound problem and everybody had a hand in sinking this beatiful cruiseliner....

Re: And So the Case Begins…

protosphere — Tue, 15 May 2012 02:07:31 -0000

http://www.theglobeandmail.com...

Nortel CFO did not manipulate profit, trial told
May. 14, 2012

A lawyer for Douglas Beatty told investigators in 2004 that his client “did not do his job” in overseeing Nortel Network Corp.’s financial statements in 2002 and 2003, but had no role in manipulating profit at the telecommunications giant.

According to the summary of the meeting, Mr. Beatty conceded the company’s use of accounting reserves had been handled incorrectly in various instances, and admitted he did not do enough “due diligence” before approving some decisions.

Mr. Beatty also told investigators he and Mr. Dunn had wanted to fire Mr. Gollogly as controller in the summer of 2003. He said it was because Mr. Gollogly had become “unglued” and was “not sharing his numbers.”

The trial has previously heard testimony that Mr. Gollogly protested a decision made by Mr. Beatty in July, 2003, while Mr. Gollogly was out of town in Montreal one Friday afternoon. Mr. Beatty told Mr. Gollogly’s staff to book three accounting changes that transformed Nortel’s bottom line for the second quarter of 2003 from a loss to a profit.

The request was reversed the following week when Mr. Gollogly returned to the office and complained about the decision to Mr. Dunn and Mr. Beatty. His protest appeared to have upset his superiors.

“Beatty noted that Gollogly and Dunn got along well in [the first quarter of 2003] but Dunn soured on Gollogly and wanted him replaced after this incident,” according to the summary of Mr. Beatty’s interview with investigators.

However, Mr. Gollogly was not fired until Nortel terminated all three men on April 27, 2004.

Re: And So the Case Begins…

bankrupt_bob — Mon, 14 May 2012 15:29:47 -0000

The end is near......

...............................................isn't it?!

Re: And So the Case Begins…

protosphere — Fri, 11 May 2012 02:43:27 -0000

my bias 2 cents:

“If these are right, I have a big problem with my CFO and controller,” the summary quoted him saying at the interview. (rolling over on those below)

Dunn also formed close relationships with the board who also rolled over on him. Looks like the crap goes downhill not up. The plea bargained board also held many no flies on us bored meetings denying obvious red flags of approving and receiving immediate cash bonuses than traditional options.

Also, if auditors approved they must be OK defense says. Same story as if CFO and controller approved they must be OK, or I have a problem with them Dunn says. (btw Nortel later changed auditors who argued data fed in closed meetings with select Nortel personnel)

Lets get some US DA's in here, they know exactly what to look for and ask...this is taking too long, like the Eichmann trials where he danced around being a forced steward of the regime. Subpoena the board, the auditors, put Dunn on the stand, we already know what the entire staff said... provisions were mad hatter...next... why save the punch line to the end when they can entertain throughout I wonder =)

Re: And So the Case Begins…

protosphere — Fri, 11 May 2012 02:32:10 -0000

http://www.theglobeandmail.com...

Thursday, May. 10, 2012

Frank Dunn told Nortel Networks Corp. investigators that “a lot concerns me” about the company’s use of accounting reserves to meet profit targets in 2003, but he maintained that he was not involved in any improper use of provisions.

The former chief executive officer allegedly made the remarks in 2004 during an interview with company investigators. A written summary of the conversation was revealed

Dunn said he was “surprised” by what he was learning from investigators about e-mails sent between Nortel staff members who were allegedly asked to identify accounting reserves that could be used to help meet profit targets in 2002 and 2003.

“Dunn noted that on reading all of the e-mails together, ‘a lot concerns me,’ ” the interview summary says. “He later remarked, ‘Do I think someone is going to be able to explain away all of this? No.’ ”

Crown attorney Robert Hubbard read portions of the interview summary – which was prepared by investigators from U.S. law firm

Mr. Dunn reported that he was unaware of any wrongful behaviour by either Mr. Beatty or Mr. Gollogly and knew of no wrongdoing at Nortel. He insisted that the company had legitimately earned a profit in 2003 and it was not the result of manipulations.

But he also said he was unaware that Nortel had identified $189-million of “unsupported” reserves that it was continuing to carry on its balance sheet in 2003 even though they should not have been maintained.

“If these are right, I have a big problem with my CFO and controller,” the summary quoted him saying at the interview.

The interview summary also said Mr. Dunn “questioned how the CFO and controller could have certified the accuracy of the financial statements if they knew that unsupported corporate and [non-operating] provisions were maintained on the balance sheet.”

Lawyers Abbey Sirivar and Thomas Heintzman were subpoenaed to testify about the interview they attended with Mr. Dunn in 2004.

Both lawyers testified that they recalled little that was said at the meeting. Mr. Hubbard read portions of Wilmer Cutler’s meeting summary to ask if it helped “refresh” their memories, but both said the excerpts did not help.

Although Mr. Heintzman testified Thursday that he remembered little of the meeting, he said he did have a clear memory of one conversation about Nortel’s financial results for the fourth quarter of 2002.

At the interview, Wilmer Cutler staff suggested Mr. Dunn had told them previously that Nortel had created new provisions in the fourth quarter of 2002 to turn a profit into a loss for the period because he didn’t want to pay bonuses for a single quarter of profitability after losing so much in the first nine months of the year.

But Mr. Dunn replied that he had never previously made those remarks.

“He said, ‘I never said that. The provisions used were properly used,’ ” Mr. Heintzman recalled Thursday.

“That’s the only thing I could remember about the meeting.”

In a ruling last week, Mr. Justice Frank Marrocco of the Ontario Superior Court said Mr. Hubbard was not allowed to use notes made by lawyers at the interview or enter them as evidence at the trial.

Re: And So the Case Begins…

protosphere — Mon, 07 May 2012 23:16:12 -0000

http://www.theglobeandmail.com...

May. 07, 2012

Nortel lawyers don’t have to hand over notes, judge rules

It is unclear how much the four lawyers – including Bay Street veterans Thomas Heintzman and James Douglas – will be able to tell the court about the interviews without the use of the notes.

The long-running trial began in January, and the Crown has said it expects to complete its witnesses by the end of June.

Re: And So the Case Begins…

protosphere — Thu, 03 May 2012 02:09:59 -0000

http://www.theglobeandmail.com...

Nortel financials fluctuated as entries booked, reversed: testimony

Tuesday, May. 01, 2012

Former Nortel director of finance Michael McMillan testified Tuesday at the fraud trial of three former top executives about a confusing week for Nortel’s accounting staff in July, 2003, as they adjusted accounting reserves repeatedly while closing the books on the company’s second quarter.

The changes pushed Nortel from a large operating loss for the period to an unexpectedly large profit, then back down to a smaller profit that was in line with earlier forecasts, court heard.

The Crown has contended the changes were part of an effort by former chief executive officer Frank Dunn, former chief financial officer Douglas Beatty and former controller Michael Gollogly to manipulate and fine-tune Nortel’s profits to earn special “return to profitability” bonuses for executives.

Re: And So the Case Begins…

protosphere — Tue, 01 May 2012 02:25:45 -0000

http://www.theglobeandmail.com...

Apr. 30, 2012

Senior officials at Nortel Networks Corp. booked a special $73-million “return to profitability” bonus payment at the end of the first quarter of 2003 even though staff had not completed financial statements yet for the period.

Former director of finance Michael McMillan told Crown attorney Amanda Rubaszek he did not know who authorized the April 5 entry, but it would have had to come from senior staff.

“Was profitability known at that time, on April 5?” Ms. Rubaszek asked.

“Not to my knowledge,” Mr. McMillan replied.

Mr. McMillan also testified Monday about another item that was booked early in the first quarter close process.

It involved the unwinding of $35-million of “out of balance” accounting provisions. The reversal, booked April 5, had the effect of boosting profit by $35-million in the first-quarter financial statements.

Mr. McMillan testified that after the reversal was booked, he was asked to analyze the “out of balance” provision to see if it was still needed. He said his work on the report lasted until into July.

Mr. Justice Frank Marrocco, who is presiding over the trial, asked Mr. McMillan how $35-million of the provision could be released in early April when the analysis of it had not yet been done.

Mr. McMillan replied that there was a judgment call that some of the provision could be released even before the detailed analysis was completed on the total amount because the number was trending downward.

Ms. Rubaszek asked Mr. McMillan if he was comfortable with the level of analysis that had been done before the decision was made to reverse the reserve and boost profit in the first quarter.

“I wasn’t comfortable we had enough detail,” he replied. “We couldn’t find a lot of support [for the provision]. From that perspective, I wasn’t totally comfortable.”

Re: No Review for You, Nortel

Andrew B Sparks — Mon, 30 Apr 2012 17:05:36 -0000

This is for Eric, but anyone can call me. Couldn't reach you on the phone. I mediate for about 12 investment groups and our firm Silverstone, Taylor & Klein is processing over 150 former Nortel employees' claims right now to be paid at 80-85% by the end of May with no recourse. We charge a 6% fee of the amount recovered, but you get the guaranteed amount instead of waiting to get the short end of the stick with Nortel. Call me at 214-693-0756

Andrew Sparks
Silverstone, Taylor & Klein

Re: And So the Case Begins…

wasthere — Fri, 20 Apr 2012 18:36:08 -0000

IRS are the biggest jackals of all. Not a single claim from them while NT was still in operation. As soon as Nortel filled for bankruptcy protectection : oh yeah by the way you guys who us 2 billions $ for years past of wrong accouting. This opportunist and ,way after the facts claim, should be thrown down the drain !

Re: And So the Case Begins…

wasthere — Fri, 20 Apr 2012 18:26:37 -0000

Mediation process starts april 24. I would give 24 hrs to all creditors to come to an agreement. If not ; just split the god damn money equally in respect of their individual valid claims. To easy, I guess, some jackals like the IRS or the Nortel European subsidiaries (who did delay the process for nearly a year) and possibly our own Canadian pensioners lawers would probably oppose. Greed and stupidity at their best !

http://nortelmediation.com/

Re: And So the Case Begins…

4merEmployee22 — Fri, 20 Apr 2012 09:27:31 -0000

Pensions and Benefits were channeled or being diverted to this segment of society.

Re: And So the Case Begins…

protosphere — Thu, 19 Apr 2012 22:54:26 -0000

http://www.theglobeandmail.com...

Apr. 18, 2012

Crown pushes to allow Nortel CEO’s lawyer’s notes as evidence

Lawyers for the two men say the notes are covered by litigation privilege, which exempts documents from evidence if they are prepared by or for lawyers for use in legal cases. The Crown wants the notes admitted to provide evidence about what the two men said during internal interviews with company investigators.

Mr. Hubbard suggested the gist of Mr. Dunn’s comments in his 2004 interview was that he was unaware of many of the accounting matters being revealed to him by investigators hired by Nortel’s board.

“It’s fundamentally different than what the defence is advancing at this trial,” Mr. Hubbard said.

The defence has primarily argued at the fraud trial that the accused believed the accounting decisions at Nortel were appropriate at the time.

Re: And So the Case Begins…

wasthere — Thu, 19 Apr 2012 19:19:50 -0000

These bonds are rockin' !

http://www.investinginbonds.co...

Re: And So the Case Begins…

4merEmployee22 — Thu, 19 Apr 2012 17:17:31 -0000

another extension? Just exactly what is there to restructure when almost all their business units have been sold? More bonus galore? and lawyers loved it and loved it forever and ever, no more Amen!

Re: And So the Case Begins…

protosphere — Wed, 18 Apr 2012 16:07:33 -0000

http://www.theglobeandmail.com...

Apr. 18, 2012

A contentious set of notes cannot be used as evidence at the criminal trial of former Nortel Networks Corp. chief executive Frank Dunn because they were prepared by his lawyers for use in anticipated lawsuits, a Toronto court heard Wednesday.

Lawyers for the two men say the notes are covered by litigation privilege, which exempts documents from evidence that are prepared by or for lawyers for use in legal cases. The Crown wants the notes admitted to provide evidence about what the two men said during internal interviews with company investigators.

Judge Marrocco said Wednesday he will not immediate rule on the issue, but will make a decision in future weeks before the lawyers are scheduled to return to the trial as witnesses.

Mark Sandler, a lawyer representing Mr. Dunn at his Toronto fraud trial, said the notes meet all the tests to be covered by litigation privilege, most notably that the dominant purpose Mr. Dunn’s lawyers had for making the notes was for their use in anticipated legal action. The Crown also has alternative ways to refresh witness’s memories without needing the notes, he said.

Many litigation matters emerged after the May, 2004, interview, Mr. Sandler added, and are ongoing today, so the privilege is still needed. Mr. Dunn is facing legal action by the Ontario Securities Commission and the U.S. Securities and Exchange Commission, and is also involved in lawsuits with Nortel, he said.

Mr. Sandler said most past cases where judges have granted exceptions to compel disclosure of documents involving litigation privilege were civil court matters involving lawsuits, and were not criminal court matters, where the quality of evidence must be even higher.

Abbey (Junior) Sirivar, one of Mr. Dunn’s lawyers who took notes at the 2004 interview, testified Tuesday he was not confident the notes were a faithful recording of the meeting. Mr. Sirivar said he could not keep up with the rapid dialogue at the day-long meeting and eventually stopped trying to record all the questions and answers. He said he didn’t see documents that were being presented to Mr. Dunn and was unfamiliar with accounting terminology used at the meeting.

Mr. Sandler said the notes may have been good enough for lawyers to use afterward to identify the key legal issues “at play” for Mr. Dunn at the time, but they would not meet the “forensic” standards of evidence at a criminal trial.

Mr. Dunn, Mr. Beatty and former Nortel controller Michael Gollogly are accused of fraudulently manipulating Nortel’s accounting reserves in 2002 and 2003 to push the company to profitability and trigger bonuses for themselves.

The men have denied all the allegations.

Re: And So the Case Begins…

protosphere — Wed, 18 Apr 2012 00:32:34 -0000

http://www.theglobeandmail.com...

Apr. 17, 2012

Lawyer for ex-Nortel chief tells court of ‘accusatory’ questioning of client

In a rare move, prominent Bay Street legal veteran Thomas Heintzman testified Tuesday at Mr. Dunn’s Toronto fraud trial after receiving a subpoena from the Crown compelling him to appear as a witness at the long-running hearing. The trial also heard Tuesday from Abbey (Junior) Sirivar, a younger lawyer who worked with Mr. Heintzman,

Mr. Heintzman testified he was surprised that the meeting – held on a Sunday afternoon at his law firm’s offices in downtown Toronto – became quickly hostile. “It was much more aggressive and accusatory than I had expected,” he said.

The trial heard Tuesday, however, that Mr. Dunn’s lawyers will not provide the notes they took at the 2004 meeting because they say they are subject to “litigation privilege,” which means they were prepared with the idea they would be used in the numerous lawsuits and legal matters that emerged at that time.

But Mr. Hubbard asked Mr. Heintzman if the notes of the meeting have ever been used in any of the litigation matters that followed.

Mr. Heintzman said they have not specifically been used

Mr. Heintzman testified he doesn’t remember a lot of what was said at the meeting, and it was not recorded. He said he does not believe he made any notes of the proceedings but isn’t certain.

Mr. Sirivar testified he took notes, but is not confident they were an accurate reflection of what happened at the meeting because people spoke quickly, referred to documents he could not see and used terminology he didn’t know.

Re: And So the Case Begins…

wasthere — Tue, 17 Apr 2012 19:22:03 -0000

Another extension for Nortel. Lawyers love it $$$ ......

http://www.obj.ca/Technology/2...

Re: And So the Case Begins…

protosphere — Mon, 16 Apr 2012 00:12:22 -0000

especially after they get through with them., why they switched auditors the defense is hiding behind, why only certain Nortel members were allowed behind closed doors with them, why only insider CFOs post the crime scene, how the board rolled over on those they held close relationships, etc... it was endless and if they don;t blow the top off it, we will, right here. =)

Re: And So the Case Begins…

protosphere — Mon, 16 Apr 2012 00:08:53 -0000

I post the links to the articles that cover both sides of the argument. Read them yourself to learn more if you like.

Was there anything specific that you disagree with?

Enlightenment is always refreshing. I have my views, you are certainly welcome to yours.

Re: And So the Case Begins…

protosphere — Sun, 15 Apr 2012 23:31:44 -0000

http://www.theglobeandmail.com...

Sunday, Apr. 15, 2012

Nortel fraud trial to hear from lawyers for accused

are not happy about being subpoenaed to testify for the Crown. At a pretrial hearing last June, the accused unsuccessfully fought an attempt to have their lawyers added to the witness list.

lawyers have since refused to comply with a subpoena asking for their notes of the interviews with investigators.

Mr. Justice Ian Nordheimer of the Ontario Superior Court ruled last year that the Crown could not enter as evidence the investigative report prepared for Nortel’s board by U.S. law firm Wilmer Cutler Pickering Hale & Dorr LPP. A summary of the report, released by Nortel in January, 2005, lays out Wilmer Cutler’s conclusions about accounting problems that occurred at Nortel while the company was under the leadership of Mr. Dunn and Mr. Beatty.

Judge Nordheimer concluded the report was filled with conclusions that did not meet the tests for evidence in a criminal trial.

The Crown, however, is particularly keen to introduce evidence about comments made by Mr. Dunn and Mr. Beatty in interviews with Wilmer Cutler for the preparation of the report.

Mr. Hubbard, who is leading the Crown team at the trial, told Judge Marrocco last Wednesday that the pretrial decision blocking the use of Wilmer Cutler’s work meant the Crown concluded it would have to find another way to introduce evidence about the interviews, and decided instead to call other people who witnessed them – the lawyers who were present to represent the accused.

“If they do not produce their notes and the only stimulus is the [Wilmer Cutler] document, then I have the right to refresh their memory with it, even if it is not admissible,” Mr. Hubbard said.

Re: And So the Case Begins…

bankrupt_bob — Fri, 13 Apr 2012 19:01:40 -0000

...because there IS no DEFENSE!

Re: And So the Case Begins…

Guest — Fri, 13 Apr 2012 11:11:59 -0000

Protosphere. Why do you only post the articles regarding the crown and not the articles regarding the defense? Seems bias to me.

Re: And So the Case Begins…

protosphere — Tue, 10 Apr 2012 23:59:14 -0000

http://www.theglobeandmail.com...

Apr. 10, 2012

Ms. Mezon testified she returned to her office after the late-day decision and was in a hurry to go home because her husband was quite ill.

“I figured we were finished and done,” Ms. Mezon testified.

Instead, she said an accounting employee came into her office and mentioned she had been told there was a need to find an “offset” that could be booked in the financial statements to bolster and offset the drop in income caused by the JDS decision.

Shortly afterward, she said then-controller Michael Gollogly came to her office and mentioned the same thing.

“The purpose for the offset was so we didn’t have to change all the documents that had been built related to the announcement of the earnings,” Ms. Mezon testified.

At the beginning of the trial, the Crown said the decision to offset the JDS drop in income with a $25.5-million change in the inventory provision was an “inappropriate and arbitrary” accounting decision done simply to ensure income in the quarter would not change.

Ms. Mezon testified Tuesday she didn’t feel it was her responsibility to find an offset when approached on Jan. 21, and left the office for the evening.

The next morning, she said she learned an accounting entry had been booked to reduce a provision for excess inventory by the exactly same amount – $25,519,848 – boosting income as a result and offsetting the reduction caused by the JDS transaction.

“The issue became could we – without making a mistake – have the ability to try to change all the numbers or should we stick with the numbers,” she said. “Because there was a feeling there was no way possible we could miss the press release date.”

Asked Tuesday what she did when she learned about the offset, Ms. Mezon said she contacted Ken Crosson, an employee responsible for the company’s excess inventory reserves, to ask whether he was okay with the decision to reduce his $1-billion inventory provision by $25.5-million.

“I was thinking ultimately about whether or not the [financial] statements as a whole were okay,” she said.

She added the company did not feel the inventory change was a material transaction because the inventory provision was so large at the time and the $25-million change was not a large amount of the total.

“This was very unusual,” Ms. Mezon added. “No one ever recalls having to deal with something this late in the process before.”

Ms. Mezon resigned from Nortel in June, 2003. She later served as a member of the Accounting Standards Board, which sets Canada’s accounting rules. (Ms. Mezon, is now chief accountant at Royal Bank of Canada.)

Re: And So the Case Begins…

David Austin — Thu, 05 Apr 2012 01:50:36 -0000

I think you mean Nortel dissolution day? (the end of liquidation).