The Ontario Securities Commission has brought allegations of its own against three of the four former Nortel Networks Corp. executives that were also charged by the US Securities and Exchange Commission today.

The OSC announced a hearing scheduled for May 1 to consider possible disciplinary action against former Nortel executives Frank Dunn, Douglas Beatty and Michael Gollogly. It will consider cease trade sanctions, registration and director & officer bans, administrative penalties, disgorgement and costs.

The statement of allegations issued by the OSC relates to Nortel’s financial results for the fiscal year ended Dec. 31, 2000, the third and fourth quarters of 2002 and the first and second quarters of 2003.

OSC staff allege that the respondents “authorized, permitted or acquiesced in the making of material misstatements” in Nortel’s public financial disclosure; that they failed to implement appropriate internal controls; and, that the firm had a corporate culture of non-compliance with GAAP. It alleges that two types of improper accounting practices were involved, including improper revenue recognition, and improper recording of accrued liabilities and provisions.

None of these allegations have been proven.

Dunn issued a statement welcoming the OSC hearing today. “I am looking forward to the opportunity that this open and transparent process will give for the truth to finally come out about the events of 2000 and 2003,” Dunn said. “I expect the commission will conduct a full and fair hearing and will allow all interested parties to fully participate in the hearing. I believe an important outcome of this hearing will be the resolution of the negative perception, created through 2004 and 2005, of the commitment,dedication and, above all, the integrity of Nortel employees.”

Dunn added that the case should be being handled by the OSC alone.

“I am disappointed that, after three years, the United States Securities and Exchange Commission has brought charges on the same day in respect of the same matter as the Ontario Securities Commission,” Dunn said.

“I think it would have been appropriate, under the circumstances, if the authorities in the United States had deferred to the Ontario Securities Commission in what is really a Canadian matter, and had
acknowledged that the Canadian authorities are fully capable of addressing these important issues,” he said. “I hope that, so that the issues can now be fully and fairly explored, they will be dealt with in a hearing in Canada.”