UPDATE: Charges against all three are dismissed
Justice Frank Marrocco said he was not satisfied that the three accused had improperly accounted for accrued liability balances to misrepresent Nortel’s 2002 financial results, nor had they improperly fudged income statements in the first-quarter of 2003 in order to earn a bonus. ”The accused are presumed innocent. The burden is on the prosecution. It was entirely appropriate that we go through this process to find out what happened. The burden, in my view, is not met. The charges are dismissed,” he said.
The verdict is bound to focus attention on complaints that Canada is soft on corporate crime. It was released more than four years after the executives were first charged. All three had pleaded not guilty.
In light of the failure to criminally prosecute Dick Fuld of Lehman Brothers, the sentencing of these three Nortel executives tomorrow, may send a message that Canada is prepared to do the right thing and apply stiff criminal penalties in such cases. All three have already paid large fines, but have also insisted that they are “not guilty” of criminal fraud. The Court Justice who will hand down the sentences tomorrow, presided as prosecutor over the largest previous case of corporate fraud in Canadian history. Observers are hopeful that Canada will treat this situation much differently than in the Dick Fuld case.