The U.S. Securities and Exchange Commission has charged four more former Nortel Networks Corp. executives with accounting fraud, alleging they manipulated reserves to change Nortel's earnings statements on the orders of more senior officers of the Canadian networking equipment maker. The SEC announced yesterday that it had filed civil fraud charges against Douglas Hamilton, Craig Johnson, James Kinney and Kenneth Taylor, the former vice presidents of finance for Toronto-based Nortel's optical, wireline, wireless and enterprise business units. The commission is seeking unspecified fines, a permanent injunction, repayment of money with interest and an order barring the executives from being officers and directors of any public company.
In March, the SEC filed civil fraud charges against ex-CEO Frank Dunn and other executives - including former Chief Financial Officer Douglas Beatty and former controller Michael Gollogly - alleging they directed a so-called earnings management fraud to manipulate the company's financial reports. In the latest charges, the commission alleges that from the second half of 2002 through January 2003, Hamilton, Johnson, Kinney and Taylor "all determined that their business units held tens of millions of dollars in excess reserves. The four finance vice presidents did not immediately release those excess reserves as required under U.S. Generally Accepted Accounting Principles, but instead maintained them for earnings management purposes."