When a judge dismissed fraud charges against three former Nortel executives Monday, more than 12,000 pensioners were left hoping that a third round of mediation talks might restore their stake in the company’s remaining assets.
On Monday, former Nortel executives Frank A. Dunn, Douglas C. Beatty and Michael J. Gollogly were found not guilty of defrauding the company and investors of millions of dollars after a year-long trial. Ontario Superior Court Justice Frank Marrocco said he was “not satisfied beyond a reasonable doubt” that the three men “deliberately misrepresented the financial results of Nortel Networks Corporation.”
The executives were each facing two counts of fraud, one for defrauding “the investing public” and one for defrauding the company.
Marrocco delivered his verdict on the same day that another round of mediation talks aimed at dividing up the $9 billion remaining in Nortel’s accounts started in Toronto.
The talks will run until Jan. 18 and representatives from all the major stakeholder groups have been asked to attend with respective legal counsel capable of conducting settlement negotiations.
Attendees include lawyers from the company’s entities in Canada, the U.S. and Europe, as well as Nortel retirees fighting for their pensions.
Prior to this round of talks, Ontario Chief Justice Winkler, the presiding judge over the mediation, asked each affected group for a confidential settlement proposal. He received the proposals last year and has since reviewed them with advisors.
Following the ruling, Michael Moorcroft, director of the Nortel Retirees Protection Committee for the Greater Toronto Area, told CTV News Channel that stakeholders are hoping that this round of talks will lead to a settlement, to keep the case from dragging on indefinitely in the courts
“Really if mediation doesn’t solve the problem, this is likely to go on in the courts for years,” Moorcroft said.
“We need a fair settlement out of this mediation to recover any of the money -- serious money -- lost through this bankruptcy.”
Previous attempts to broker a settlement failed, as competing stakeholders argued over who should get what piece of the pie. Moorcroft said there are about $25 billion in claims.
Among the 20,000 stakeholders from Nortel are 12,000 pensioners, 5,000 deferred pensioners, 3,000 former employees and 400 people who had been receiving long-term disability benefits.
Moorcroft said he was “not really surprised” by Monday’s verdict, after reviewing the evidence that was brought against the three men in court.
“Most of us who had looked over it and talked over it were pretty sure there wasn’t much evidence of fraud, if any,” Moorcroft said.
He said many affected stakeholders have lost between 30 and 50 per cent of their gross pensions, as well as supplementary benefits, life insurance, medical and dental coverage and long-term disability benefits.
“Many of the people I know personally have had to downsize fairly quickly,” Moorcroft said. “They’ve moved houses, they’ve moved out of the city or out of the suburbs to other municipalities where the taxes aren’t as high. They’ve had to sell their houses and move in together or with their children.”
Nortel was once one of Canada’s biggest business success stories, employing more than 90,000 employees around the world, and was valued at nearly $300 billion. Share prices were once as high as $124.50 before plummeting to penny stock status.
The company filed for bankruptcy in 2009, throwing thousands of employees out of work.
