Former Nortel Execs Await Corporate Fraud Ruling 59
An anonymous reader writes "Three former Nortel executives accused of orchestrating a widespread multimillion-dollar fraud will learn their fate in Toronto on Monday, nearly a year after one of the largest criminal trials in Canada's corporate history began. Ontario Superior Court Justice Frank Marrocco is set to rule on whether ex-CEO Frank Dunn, ex-CFO Douglas Beatty and ex-controller Michael Gollogly manipulated financial statements at Nortel Networks Corp., between 2002-2003. The men, who each face two counts of fraud, are accused of participating in a book-cooking scheme designed to trigger $12.8 million in bonuses and stocks for themselves at the once powerful Canadian technology giant."
One of the execs (Score:5, Interesting)
One of the execs got rid of ALL of their stock two days before it tanked.
Now, if your daughter is going to start at an Ivy League school and you need a few hundred grand, that may just be co-incidence.
But I don't think that happened.
Re:One of the execs (Score:5, Interesting)
Re:One of the execs (Score:3, Interesting)
One of the execs got rid of ALL of their stock two days before it tanked.
Now, if your daughter is going to start at an Ivy League school and you need a few hundred grand, that may just be co-incidence.
But I don't think that happened.
Statistics tell us that it will happen by chance, every so often - depending on how many execs the company has, and how often they sell stock on average, this might be quite likely to happen by chance. For 100+ execs with an average sell-off time of ~2 years, it's more likely than not than it happens by chance to one of them right before a company tanks.
Sure, it's suspicious, but we don't convict people over that. What we need to do is prove that it was not chance.
And in far less time after the crime. When it takes half a generation and who knows how much money to get a verdict on whether one is guilty or not, I fully understand that this leads to a high suicide rate among all accused, and undue punishment of those who are innocent.
Anyhow, I don't like lynch mob mentality where people make up their minds based on their gut feelings and bad logic. It's barbaric. Every accused is innocent until found guilty, and our passing armchair judgment does not advance our society; rather the opposite.
When stock is rising, why sell ALL? (Score:4, Interesting)
If they'd sold 20% of their stock, then it would not be more than mildly suspicious.
But when the market is rising, who sells ALL their stock?
Nobody.
And if that is two days before the stock tanks?
It's rather like complaining "they could have died of a heart attack at the same time, so you can't label the 'shooting a gun at them' as anything more than suspicious".
Re:One of the execs (Score:5, Interesting)
Canada has a prime minister, last time I checked.
The individual campaign contribution limit in Canada is $1000. Corporate and union campaign contributions are illegal, and all lobbyists must be registered as such. Transfers from trust funds etc are illegal.
Our Federal election campaigns are 6 weeks long and politicians go into debt to finance them. Campaign spending is limited by law. If you spend more than the limit, you could have your seat taken from you and a by-election called.
I was in Nortel (Score:4, Interesting)
They would not pay the staff bonuses, that would be bad for shareholders, but the bosses get their bonus, and jail time, I hope.
Re:One of the execs (Score:4, Interesting)
It's a shame for them but putting the majority of your savings into a single stock is an incredibly risky thing to do.
If you drive without your seatbelt on and someone crashes into you and you get seriously hurt, the guy may comfort himself all day long that he won't get all the blame for your injuries, but that won't let him off the hook completely anyway.
I await... (Score:2, Interesting)
I await roman_mir or one of his sock puppets posting outraged comments over this "travesty" of justice and affront to "freedom" to perpetrate fraud. And mob rule, etc. etc.
Re:One of the execs (Score:4, Interesting)
As an American, that sounds like the best thing ever. More and more, Canada does seem like a nice alternative in many respects.
Sympathy (Score:4, Interesting)
They should go to jail... but...
I used to know some people in this sort of situation. They business wasn't nearly as big, but they'd run into some financial trouble and if earnings were bellow some arbitrary number, it would trigger a wave of financial ruin on the company. In the case that I was parifrialy aware of (I had a family member working there) They were getting free water, sewer, etc from the city as long as their revenue was X amount. They were short by less than a tenth of a percent. There were also loans who's interest rates would go up. The end result was, if they published the numbers they had, the company was going down. I knew a lot of the people involved and they were very torn up about the whole thing. There were around 1000 people that would lose their jobs, the entire thing would be a mess. So they lied. The company went on to make it out of their financial troubles.
I don't agree with what happened. But there's a lot more to these stories than stock options and greed. Not a single person I knew in that situation was talking about any of that. They were talking about a single earnings number destroying their business and the welfare of the people that worked for them. The moral of my story isn't that you should do this sort of thing... it's that the motives of the people behind this stuff aren't always sharks trying to score money. Some of them really care about their business and the people working there. I don't know if that's the case here, but food for thought or something.
Re:One of the execs (Score:5, Interesting)
It used to be even better than that before the Conservatives screwed things up.
To somewhat offset the contribution limits, we had a program in place that rewarded federal political parties a subsidy of around $2 for every vote cast for one of their candidates during an election. Smaller parties in particular benefited from this (though there was some minimum-vote threshold, IIRC), and it meant your vote wasn't merely symbolic, but directly aided your preferred party even if they didn't win a seat.
The Conservatives decided to kill this program, arguing that parties should only get money from fundraising efforts. This played well with the so-called fiscally responsible right-wing who complained that "their" tax dollars were being wasted. No subsidy meant a few million saved each election, right?
Except campaign contributions are tax-deductable. If you donated the maximum $1000, you got around half of it back in tax deductions, so instead of $2 every 4-5 years of tax dollars I paid into subsidizing exactly who I want, $500 every year goes to subsidizing some rich bastard's tax deduction for contributing $1000 to a party I don't support.
Political donations should not be tax-deductable at all. It should be a purely ideological choice, with zero financial incentives. And if you have enough money to waste on a political party, you obviously don't need the tax deduction.