OTTOWA-In its quarterly filing with U.S. regulators, Nortel Networks Corp. revealed it received a subpoena on Aug. 23 from the U.S. Attorney’s office for the Northern District of Texas requiring the telecommunications equipment provider to hand over additional documents related to an ongoing criminal probe into the company’s retirement and long-term investment plans.
In May of 2004, the company received subpoenas from the grand jury for paperwork related to financial statements and other documents dating back to 2000. Nortel recently restated years of financial results after an independent audit showed the company had manipulated its results.
The U.S. Securities and Exchange Commission, along with Canada’s Ontario Securities Commission are also investigating the Brampton, Ontario-based company’s accounting history.
On Wednesday, the same day the company posted its third-quarter results, Nortel said that an audit committee found no additional accounting problems after looking into revenue restatements for 1999 and 2000.
The revelation of more subpoenas likely will thwart excitement over Nortel following its positive earnings.
Nortel also recently announced the settlement of a lawsuit brought on by Motorola Inc. after Nortel hired former Motorola president and chief operating officer Mike Zafirovski as its chief executive officer.
Motorola alleged that Zafirovski’s move to Nortel’s top seat would create a breeding ground for misappropriation of trade secrets and breaches of multiple non-compete, confidentiality and no-solicitation agreements Zafirovski signed with Motorola. The lawsuit sought an injunction to stop Zafirovski from joining Nortel for two years, but was settled early this week. Zafirovski agreed to uphold the agreements he signed with Motorola and to repay Motorola $11.5 million, which was part of his separation payment from Motorola. Nortel said it plans to fully reimburse Zafirovski for his repayment to Motorola.
