Canadian police have launched a criminal investigation into the “financial accounting situation” at Nortel Networks Corp. that forced the company to restate its figures for the past three years.
The Integrated Market Enforcement Team of the Royal Canadian Mounted Police (RCMP) had been keeping a watch over the situation at Nortel. Its decision to mount a full-scale investigation suggests that allegations that the figures were massaged to exaggerate losses during the recession and then overstate a recovery to enhance executive bonuses are being taken seriously by the authorities.
In April, Nortel fired CEO Frank Dunn, former CFO Douglas Beatty and controller Michael Gollogly after discovering that its financial results for the past three years would have to be revised.
Nortel said it would continue to cooperate fully with the RCMP over the investigation.
Nortel plans to provide estimated limited preliminary first half results and an update on its current situation on Thursday.