Nortel Networks board members faced scathing criticism from shareholders today for failing to detect the accounting irregularities that sent the telecom equipment maker into a tailspin.
”So the board was not aware of anything? What [kind of] organization is this?” a shareholder asked at today’s annual meeting. ”We were in total darkness when this company’s shares were falling from hundreds of dollars to one or two dollars. How come this board allowed this to happen?”
Nortel Chairman L.R. Wilson said the accounting problems, which closely followed the telecom industry meltdown, were ”the last thing we needed or expected”.
Wilson said they were not flagged by internal auditors, outside accountants or employees at any level. ”I would suggest to you that no board could have found these problems,” he said.
Wilson, who will retire after today’s meeting, stopped short of an apology, however. ”We very much regret what has happened and we’ve been committed to address problems head-on and solving them so we can move forward with leadership and integrity,” he said.
The fallout of the accounting scandal included the firing of former CEO Frank Dunn, CFO Douglas Beatty and several other senior executives.
It also cost the Canadian company approximately $200 million to restate earnings statements. What’s more, the company is still in the early stages of defending itself from class-action shareholder lawsuits.