News

Nortel Networks Corp. former chief executive officer Frank Dunn, former chief financial officer Douglas Beatty, and former controllers Michael Gollogly and MaryAnne Pahapill are being sued by the SEC. They are accused of engaging in accounting fraud to meet earnings forecasts.

Frank Dunn, 53, was fired in April, 2004, after an accounting crisis forced the company to restate financial results for the second time in under a year. Mr. Dunn was promoted to president and CEO from chief financial officer in November, 2001, and led the former high-tech Canadian darling through a drastic downsizing. He was appointed CFO in 2000 by CEO John Roth. A certified management accountant, he spent his entire career with Nortel, joining the company in 1976 after graduating from McGill University.

Nortel's former chief financial officer Douglas Beatty was also fired in April, 2004, amid the escalating accounting mess. He was promoted from controller to chief financial officer in 2002. A chartered accountant, he worked at Nortel predecessor Northern Telecom from 1986 to 1995. Mr. Beatty, 52, returned to Nortel in March 1999 as controller. He sued the company last year, alleging wrongful dismissal. He is seeking damages for wrongful dismissal, aggravated, punitive and exemplary damages, and special damages in his lawsuit.

Michael Gollogly, the former controller at Nortel, was also sacked in the 2004 accounting crisis. Mr. Gollogly, 48, is a chartered accountant who joined Northern Telecom in October, 1996, as an assistant vice-president for corporate reporting. He was appointed controller in July, 2002. Mr. Gollogly is also suing his former employer, seeking $4-million in compensatory, mental distress, punitive and aggravated damages, plus other costs.

MaryAnne Pahapill, a former Nortel finance official, was installed as interim controller, effectively the company's chief accountant, in March, 2004 after Mr. Beatty and Mr. Gollogy were placed on paid leave pending an internal review of the company's financial results. Ms. Pahapill's job was made permanent in April. A chartered accountant, Ms. Pahapill, 46, joined Nortel in 1998 and held a number of finance positions, including vice-president of corporate reporting, assistant controller and assistant treasurer. Early in 2005, she left Nortel and accepted a position as head of accounting policy and shareholder reporting at Toronto-Dominion Bank.