Problems Mount-y Up for Nortel
Following an initial review of Nortel's affairs (see Nortel: Material Margin Madness, Dunn's Done With Nortel , and Nortel Rattles Nerves), the Integrated Market Enforcement Team of the Royal Canadian Mounted Police, Canada's national police force, sent Nortel a letter advising the vendor it will "commence a criminal investigation into the Company's financial accounting situation."
No further detail was available from the Mounties, and a Nortel spokesman would say only that the Canadian force "didn't outline the scope of the investigation in the letter, or say whether it was personnel or company based," and that Nortel would be cooperating fully with the probe.
This latest announcment means Nortel's books are now the subject of four official external investigations. The other three are being conducted by the U.S. Attorney's Office for the Northern District of Texas, Dallas Division, the Securities and Exchange Commission (SEC), and the Ontario Securities Commission (see Nortel Gets Federal Subpoena, SEC Pops In on Nortel, and Canadian Regulator Probes Nortel).
It also follows last week's news of yet another securities-related lawsuit (see Nortel Tries On a New Suit), and comes just days before the vendor unveils preliminary, unaudited results for the first two quarters of this year. It is widely expected that Nortel will also announce significant job losses, potentially affecting up to 5,000 staff, at the same time as the financials.
Nortel's share price had closed up nine cents yesterday at $3.42 yesterday before the Mounties' investigation was announced. In pre-market trading this morning, the stock was down 16 cents, nearly 5 percent, at $3.26.
— Ray Le Maistre, International News Editor, Light Reading