Canadian telecoms equipment provider Nortel Networks listed on the Toronto Stock Exchange in 1973 and then on the New York Stock Exchange (NYSE) in 1975. Between 1999 and 2000, the company expanded rapidly through a series of acquisitions. In October 2003, Nortel announced that it would restate earnings from FY00 to 1H03. The restatement reduced losses between FY00 and 1H03 by US$505m. However, in March 2004, the company said it would restate earnings again and would be looking into the circumstances of the earlier restatement. This prompted a number of regulatory investigations. In March 2006, the company said it would restate earnings for a third time, from FY03 through to FY05. In 2007, the SEC revealed that Nortel accelerated more than US$1bn of revenues into FY00 through bill and hold transactions and a further US$150m in aggressive sales recognition to Telamon. In reality, it was loss-making. In a second scandal, Nortel improperly established over US$400m of excess accruals/provisions by FY02. These provisions were increased during a restructuring in FY01 and then released between FY01 and FY03 to manipulate the company’s earnings trajectory. This allowed the company to pay significant performance bonuses to senior management. The company is a confirmed fraud.

Last updated February 2022

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