Canadian authorities will begin a criminal investigation into financial
accounting woes at Nortel Networks (Quote), the company said today.
"These matters have been the subject of an ongoing review by the Royal
Canadian Mounted Police," the Toronto company said in a statement. "Nortel
Networks will continue to cooperate fully with the RCMP in connection with
the investigation."
Accounting problems having been dogging the company for months. In April,
Nortel's board of directors
fired president and CEO Frank
Dunn over questions about its books.
They also dismissed CFO Douglas Beatty and controller Michael Gollogly, both
of whom had been on month-long paid leaves.
Asked if authorities are focusing their investigation on former Nortel
executives or if the scope is broader, Nortel spokeswoman Tina Warren said
the "RCMP has not provided details about their timeline or the nature of
their investigation."
In addition to the criminal probe in Canada, the U.S. Attorney's Office's
investigation of the company's accounting is ongoing, and the company faces
class-action lawsuits from investors.
In related news, Nortel said it will release preliminary financial results
for the first half of the year. It previously delayed earnings reports
while an audit team pored over past results.
In the midst of all this distraction, Nortel has notched some lucrative
contracts. Just last week it confirmed that it has received
a letter-of-intent from a state-owned telecom in India.
Under that contract, Nortel will supply equipment to expand the carrier's
GSM (define) network in the eastern and southern sections of the South
Asian country.
Closer to home, Nortel has seen increased demand for softswitches (define), which
allow service providers to offer Voice over IP (define)
and other services. It recently expanded a
deal with cable operator Charter Communications to provide softswitch equipment.
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