It was a mystery legal case, identified in court filings only as "Mr. A vs. The OSC." But the secret has been revealed, and it turns out the plaintiff is actually "Mr. D" -- former Nortel Networks Corp. chief executive officer Frank Dunn.
Mr. Dunn, who was fired by Nortel in 2004, filed an application in the Ontario Superior Court seeking an order prohibiting the Ontario Securities Commission from questioning him in its long-running Nortel investigation.
In an effort to keep Mr. Dunn's identity confidential during a continuing investigation, the motion was filed on March 13 under the name "Mr. A," court records indicate. But a Bloomberg News report says lawyers who attended a court hearing in Toronto on Tuesday inadvertently referred to Mr. Dunn and Nortel.
The OSC also asked the court to bar the public from Tuesday's hearing, but the request was denied by Ontario Superior Court Justice Colin Campbell.
According to Bloomberg News, Mr. Dunn's application argues he should not be compelled to give evidence to the OSC because the information could be turned over to the U.S. Securities and Exchange Commission and used against him in a U.S. criminal proceeding.
In its response, the OSC argues that it is already bound by Ontario Securities Act rules that prohibit it from turning over testimony it obtains to anyone else. The act also says testimony can only be given to a police force or a person responsible for enforcing the criminal law of Canada or any other country with the written consent of the person who provided the testimony.
"It was our position in response that we're bound by the confidentiality provision set out in our legislation and the procedure set out in the Act, and that the court could confirm that position," the OSC's Wendy Dey said yesterday.
She said there was little else she could say about the case because commission investigations are confidential.
Ms. Dey said more details of the case will emerge when Judge Campbell releases his decision in the case. He reserved judgment after the hearing Tuesday.
Neither Mr. Dunn nor his lawyer, Thomas Heintzman, could be reached for comment yesterday.
According to Bloomberg News, Mr. Heintzman told the court hearing that the OSC's proposal to keep its information confidential does not go far enough to protect his client's rights and said the commission should be prohibited from interviewing his client.
He said three members of the SEC are working in the OSC offices on the case.
"The SEC is inside the OSC tent," he said. "These people have the authority, they have the access to whatever the OSC gives them."
Bloomberg said Mr. Heintzman added that there is no guarantee the SEC won't get access to the testimony and pass it on to the U.S. Department of Justice, which would violate his client's constitutional right against self-incrimination.
OSC lawyer Kathryn Daniels told the court Tuesday that the commission appreciates the applicant's risks in the United States, but said the OSC wants to proceed "with an Ontario investigation, for Ontario purposes," according to Bloomberg.
Nortel's accounting woes have sparked regulatory and criminal investigations in Canada and the United States, but no charges have been laid.
The company's bookkeeping troubles started to emerge in the summer of 2003, when Nortel announced it was reviewing its assets and liabilities following a turbulent restructuring period. Three months later, the company announced it had to restate financial results for 2000 to 2003 because of the review, a move that cut losses in the period. Nortel's board of directors then retained law firm Wilmer Cutler Pickering Hale & Dor LLP to examine the factors that led to that restatement.
Nortel shocked investors when it disclosed it would have to restate results again in March, 2004, then followed up a month later by firing Mr. Dunn, chief financial officer Doug Beatty and controller Michael Gollogly. Nortel later fired seven other financial employees.
Nortel last year revealed the outcome of the restatement; a 41-per-cent drop in 2003 profit. The Wilmer Cutler report alleged that Mr. Dunn and his financial team recorded and released provisions in a way that contravened U.S. accounting rules, and they subsequently collected bonuses. Nortel also disclosed at the time it had weaknesses in its financial reporting, which it is still struggling to fix. It announced last month that it had to restate results for a third time.
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