Facing inquiries from U.S. and Canadian securities regulators, Nortel Networks Corp. has fired three top executives and put four more on paid leave of absence.
The telecom gear provider, which supplies voice-over-Internet Protocol, optical networking and switches to the cable industry, fired CEO Frank Dunn "for cause," and replaced him with board director William Owens, according to a company statement. It also made permanent the appointments of CFO William Kerr and Controller MaryAnne Pahapill. They replace former CFO Douglas Beatty and former Controller Michael Gollogly, who have also been fired for cause after being placed on paid leave of absence March 15.
In addition, the board also put four senior line of business finance executives on paid leave of absence, pending the results of an independent financial audit of the company's management practices regarding accruals and provisions.
"The Board of Directors believes that the actions announced today are about accountability for our financial reporting and are in the best interests of the company and all of its stakeholders, including our investors, customers and employees," said Lynton (Red) Wilson, Nortel's chairman of the board, in a statement. "These actions are an important step in the process of restoring confidence in the company's leadership and financial reporting."
Indeed, Nortel now faces probes by the U.S. Securities and Exchange Commission and the Ontario Securities Commission. The investigations are focusing on the Nortel's October 2003 restatement of its financial results going back to 2000, and why it announced March 15 that it will likely need to make a second financial restatement, potentially delaying critical filings with the two agencies.
Nortel is cooperating with both sets of regulators and has launched its own independent review.