OTTAWA -- An Ontario court acquitted three former senior executives of the failed Nortel Networks on Monday in a complex and protracted fraud case.
Prosecutors had charged that the three -- former chief executive, Frank A. Dunn; the former chief financial officer, Douglas C. Beatty; and the former controller, Michael J. Gollogly -- improperly manipulated cash reserves at Nortel to create profitable quarterly results that then triggered substantial bonus payments.
But Justice Frank Marrocco of the Ontario Superior Court of Justice accepted defense arguments that, at best, the executives engaged in excessively aggressive accounting and not a criminal conspiracy to enrich themselves. He also rejected prosecutors' claims that the company's finances had been misrepresented.
At the height of the dot-com boom of the 1990s, Nortel was a leading global supplier of telecommunications network equipment and became Canada's largest company by stock value, with a market capitalization of $300 billion.
The three executives who were found not guilty on Monday had been appointed by Nortel's board to salvage the company after the technology collapse brought down many of its customers and significantly devalued a large number of companies Nortel had acquired during the boom times. A significant number of small investors in Canada held Nortel shares that ultimately became worthless.
Four years ago Monday, Nortel filed for bankruptcy. Following a prolonged sale of its assets, it now remains little more than a shell company that holds about $9 billion in cash, which is the subject of a dispute between debt holders, former employees and pensioners.
The prosecution of the senior executives in the yearlong trial was dense, involving more than four million documents. But it ultimately hinged on the question of whether the executives held back reserves to improve the company's financial results in specific quarters.
This article originally appeared in The New York Times.