Financial Post | Business

TORONTO — A former finance director for Nortel Networks Corp. testified Monday that excess accounting reserves that should have been unwound instead remained on the telecom equipment giant’s books.

Helen Verity, whose job a decade ago was to consolidate financial results for Nortel, told a Toronto court she tracked a list of accrued liabilities every quarter, a list that bulged to $5-billion by 2002 through a tumultuous period of downsizing.

By September of that year, however — around the time then-CEO Frank Dunn was predicting Nortel’s return to profitability within a few quarters — hundreds of millions worth of backlogged provisions were “unsupportable,” or lacked sufficient information to remain in place, the court heard.

Ms. Verity testified she asked senior managers whether certain items should come off Nortel’s ledger through 2002, but at the close of each quarter, there was “no change” in their status. Crown prosecutors allege dozens of…

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