Nortel Networks agreed Tuesday to pay $900,000 ($1 million Canadian) to settle charges with the Ontario Securities Commission (OSC) stemming from a number of accounting issues.
Nortel was accused of using questionable accounting practices to issue misleading or false financial statements between 2000 and 2003. In April 2004, the company fired its chief executive officer, chief financial officer Douglas Beatty, and controller Michael Gollogly. It then restated prior results, in what wound up becoming the first of four subsequent restatements.
The company stressed that the settlement, which caps a three-year investigation into the telecom equipment company, recognizes a number of major changes and agreements it made, including a restructured ethics policy and the establishment of a new code of conduct; the improvement of financial processes and controls; the remediation of substantially all internal control issues that formed Nortel’s six original material weaknesses, with one material weakness remaining; improved corporate governance; and the settlement of shareholder class-action lawsuits.
“The decision recognizes the extensive efforts made by Nortel’s senior management and Board of Directors to be forthcoming and transparent in reporting significant accounting and internal control issues, and then solving them,” said Nortel CEO Mike Zafirovski, in a statement.
Under the terms of the OSC Order, Nortel is required to deliver to the OSC quarterly and annual written reports detailing, among other matters, its progress in implementing its remediation plan.
The reports will begin following Nortel’s second quarter 2007 quarterly reports, and must be sent until the company has successfully fixed its remaining material weakness or completed its remediation plan.
The OSC order does not impose any administrative penalty or fine. However, the $900,000 is being described as a contribution towards the costs of the OSC’s investigation, according to the company’s announcement.