Dial M for Malfeasance? Nortel CFO Out

Executive's pension fund transactions said to be made before company's earnings warning. SEC now notified. Also: Green Mountain Coffee taps GE for ...
Craig SchneiderFebruary 12, 2002

It appears the financial accounting contagion has spread to the great white north.

Terry Hungle — appointed to CFO spot at Nortel Networks just last October — resigned on Monday. The reason? Nortel says he broke rules regarding telco’s 401(k) plan… Nortel claims Hungle’s personal investment transactions occurred right before company’s earnings warning of March 27, as well as positive statements of December 21. Here’s the timeline: in March, Hungle (then vice pres. of finance, business development) allegedly transferred investment of $78,500 from stock fund investing primarily in Nortel’s common shares to fixed income fund. In December, he reportedly transferred $86,300 back to the stock fund — just before company issued earnings guidance. This, according to Nortel.

Frank Dunn, Nortel’s CEO (and former CFO) appointed acting finance chief until replacement is found. Dunn on matter: “…Unfortunate, but the actions we have taken are in the best interests of Nortel Networks. Let me emphasize that this matter solely relates to the personal investment transactions made by Terry Hungle and does not relate to the business, operations or financials of Nortel Networks.” Translation: Dunn on the hook for this one… Nortel has notified U.S. Securities and Exchange Commission and the Ontario Securities Commission of Hungle’s activities…

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William Hogan is taking over as CFO at Green Mountain Coffee… Hogan, most recently vice president of finance for GE Quartz, Inc., also served as finance manager at GE Medical Systems… Hogan replacing Robert Britt, who’s been named vice president of finance and treasurer… According to Yahoo Finance, Britt pocketed $2.2 million from exercised options since May — $3.2 million, if you count estimated proceeds from his proposed sale of restricted shares… Britt will work more closely in key business lines, including finance, the company says, help re-engineer major processes, lead the investor relations program, and retain treasury and risk management roles. What’s left for CFO Hogan?… Specialty coffee maker reports its first quarter earnings on February 14.

Energy services company McDermott International named Francis (Frank) Kalman to the position of CFO, replacing Bruce (Bruce) Longaker, Jr., who steps down at the end of the month… Kalman comes from IT-service provider Vector ESP, where he served as finance chief. Previously, Kalman served as CFO at a series of energy-related companies… On Friday, a federal judge ruled in an asbestos case that McDermott would not have to return $622 million in assets to subsidiary, Babcock & Wilox, which filed for Chapter 11 in February 2000. Shares soared 15 percent Monday on news, along with Q4 earnings, which beat estimates. Excluding non-recurring items, the company reported a profit of 26-cents a share, exceeding average analyst earnings forecast compiled by Thomson Financial/First Call of 22 cents a share… Several analysts recently upgraded McDermott.