Netherlands-based Stichting Pensioenfonds ABP, the world’s third-largest pension fund, filed suit against the Brampton, Ontario-based information technology company alleginglosses of $195 million associated with Nortel’s precipitous stock price drop. In the suit, ABP charges the company, its former Chief Executive Frank Dunn, former Chief Financial Officer (CFO) Douglas Beatty and former Comptroller Michael Gollogly, all of whom were fired on April 28, with misreporting more than $1 billion in assets, liabilities, and revenue, according to a released issued by law firm Grant & Eisenhofer, who represents ABP.
Prior to ABP’s suit, the OPSEU Pension Trust, which manages about C$9.6 billion on behalf of Ontario government workers, the Ontario Teachers’ Pension Plan Board and New Jersey’s treasury department filed a lawsuit against Nortel and three fired executives that the company issued false and misleading statements about the company’s condition, artificially inflating its stock. All said, there are approximately a dozen lawsuits levied against Nortel seeking to be certified as class-actions.
The suits come as numerous investigations have been launched examining the company from regulatory bodies such as the U.S. Securities and Exchange Commission (SEC), the Ontario Securities Commission and a federal grand jury in Texas, where the company has its American headquarters. Investigators are looking in accounting irregularities at Nortel after the company restated earnings for 2001-2003. Additionally, in 2002 Nortel initiated a “return to profitability” bonus program, which resulted in $300 million paid out to Nortel employees and executives. The suit filed by ABP claims that those bonuses should never have been paid because of the fraud.