Nortel Networks Ltd. (NYSE/Toronto: NT) reacted to media coverage of its accounting problems today with a statement vowing to seek recovery of any bonuses paid in bad faith.

The statement says: "Following the completion of the independent review, the Board of Directors will review the payments under our bonus plans to determine what actions are appropriate. To the extent the Board determines bonuses have been paid to individuals who have acted improperly, it fully intends to seek recovery. Due to the ongoing nature of the independent review and the regulatory and criminal investigations, it would be inappropriate to comment further."

The company paid out millions of dollars in bonuses following its return to profitability in 2003, but has declined to comment on the issue until now (see Nortel Silent on Baffling Bonuses).

But now its accounts are under investigation, a number of senior executives have been sacked, and there are severe doubts as to whether the company had made it out of the red while the bonuses, which were linked to profitability, were being paid. (See Canadian Regulator Probes Nortel, SEC Pops In on Nortel, Nortel Rattles Nerves, Nortel CFO Out , and Nortel Fires CEO.)

Now Nortel has issued a statement in reponse to a Wall Street Journal article about the equipment firm's finances. The statement says little else, as the internal and external investigations are still under way and the company is due to start providing financial updates related to its restatements later this month (see Nortel Sells Plants, Supplies Update).

Nortel says only that it "will continue to cooperate fully" with the various financial and government authorities" in connection with their investigations and reviews."

— Ray Le Maistre, International Editor, Boardwatch