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A sketch made in the courtroom of the Nortel executives' trial on Monday, Jan. 16, 2011. Anne Clark-Stewart of Nortel Retirees and Former Employees Protection Canada appears on Canada AM, Tuesday, Jan. 17, 2012. Anne Clark-Stewart of Nortel Retirees and Former Employees Protection Canada appears on Canada AM, Tuesday, Jan. 17, 2012.

Nortel insolvency left pensioners suffering, rep says

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CTV News Video

Canada AM: Effect on former Nortel employees
Anne Clark-Stewart of Nortel Retirees and Former Employees Protection Canada says her life is in financial disarray, and explains how 35 to 40 per cent of pensions have been lost.
CTV National News: Former executives face court
Nortel, which was one of the world's biggest high tech companies, is now the subject of a fraud trial. Three top executives are accused of manipulating the company's financial statement to win big bonuses. Scott Laurie has the details.

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A sketch made in the courtroom of the Nortel executives' trial on Monday, Jan. 16, 2011. Anne Clark-Stewart of Nortel Retirees and Former Employees Protection Canada appears on Canada AM, Tuesday, Jan. 17, 2012. Anne Clark-Stewart of Nortel Retirees and Former Employees Protection Canada appears on Canada AM, Tuesday, Jan. 17, 2012.

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A sketch made in the courtroom of the Nortel executives' trial on Monday, Jan. 16, 2011.

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Date: Tue. Jan. 17 2012 9:43 AM ET

With three former Nortel executives standing trial on charges they falsified the company's financial records, another ex-exec says whatever happens in court can't compensate for the hardships caused by the once-mighty tech company's insolvency.

Nortel retiree representative Anne Clark-Stewart says that, just like her, the lives of some 22,000 pensioners and former employees are in "financial disarray."

In an interview on CTV's Canada AM Tuesday, the Nortel Retirees and Former Employees Protection Canada representative said they've all been deeply affected by the company's pension fund deficit.

According to the last assessment in 2009, Clark-Stewart said Nortel's pension fund was short $1.2 billion.

"We've lost anywhere from 45 to 30 per cent of our pensions, depending on where we worked in Canada. We've lost all of our medical benefits. We've lost our life insurance. And at our stage of life a lot of us have health issues where we can't replace those," she said.

The average Nortel pensioner is now in her mid-70s.

In that context, the former Nortel executive said pension and benefit cuts have been particularly hard to cope with.

"I've moved twice in the last four years. Downsized each time. Can no longer afford to own a home, which I've always done," she said, lamenting that she is now in a rented condo.

But, she added, "Lots of people though are in a worse position than I am."

And even though Clark-Stewart says pensioners are owed too much to ever reasonably expect to see compensation, she says she's not bitter.

"I'm angry. But bitter, I don't know. I'm not a bitter person," she said.

At one time, Nortel rode the technology boom to become Canada's most valuable company.

Its stock faded from a peak of $124.50 per share in 2000, however, eventually forcing the company to seek court protection from its creditors in 2009.

The company's stock has since been delisted.

Three former executives were in a Toronto court Monday, for the start of an anticipated 6-month trial on charges they worked together to falsify financial reports that made the company appear more profitable than it actually was.

According to the Crown, the alleged fraud amounted to errors totalling "over half a billion Canadian dollars" in the first and second quarters of 2003.

"The only real question is, did you know it at the time?" Crown attorney Robert Hubbard asked in court Monday, arguing that the alleged irregular accounting kept the accused in line for performance-related bonuses.

Former chief executive Frank Dunn, former chief financial officer Douglas Beatty and former corporate controller Michael Gollogly, all of whom were dismissed from Nortel in 2004, entered pleas of not guilty.

Clark is willing to reserve judgment on the guilt or innocence of the accused, but doesn't expect much to change for the former employees she represents -- no matter what happens in court.

"The pensioners are owed so much money out of this insolvency with Nortel that there's no way that whatever happens, if they are proved guilty, will compensate for the deficit in our pension fund," she said.

Comments are now closed for this story

Ian Ottawa
said

When the employees were living the good life as if they had the world by the tail they should have saved a portion of their income. That said however the Nortel Senior Staff knew the way things would turn out and they placed a comfortable pillow filled with cash where they were jumping out the window. I know people that worked at Nortel and one who was let go had her pension halved while her son-in law who was kept on received a bonus two weeks after she got the news on the pension adjustment. She was not happy.


Fed Up!
said

When is a responsible government going to step in and stop companies from underfunding and all out stealing from employee pension funds. This has been allowed to go on for far to long. Why is it that companies are expected to have fiscal responsibilities to stock holders and not to the people that make them the money and then turn around and pay huge compensation to the officers that create the mess. Enough is enough!


spaz
said

Add to the "performance bonus" that these executives reaped........just think for a moment the millions or billions in commissons the investment world reaped from Nortel's stocks.Not only did this bunch make commissions as Nortel rode the wave higher, they also reaped a financial reward as Nortel fell from the sky.It seems the little guy gets it on the chin every time.


Rick
said

I worked for Nortel and later for Sanmina (when part of Nortel's manufacturing was spun off in the early 2000s). Interesting enough, the execs at our local Sanmina Branch (mostly former Nortel employeees) were doing much the same sort fixing the books at month's end so that they could earn huge bonuses. They were doing this by moving unsold inventory off of the company books to inflate sales/reduce inventory. Hardly legal, but I always suspected greed and poor understanding of the legalities rulled the day. I have often wondered if Solectron and some of the other spun off Nortel manufacturers were being run the same way.


Frankemm
said

Why should the Canadian taxpayer be on the hook to make up for private enterprises mistakes.Companies are always preaching that they want less interference and involvment by government,you don t get to have it both ways.


Don
said

Why should tax payers be expected to bail out a private company?


Oakvillian
said

Many families and pensioners were affected by top Nortel Execs. Frank Dunn built an enormous home in Oakville. Make these guys pay back some of their money so that the pensioners can get some help. Where's the morality and ethics of some of these top executives? Come on guys, repent of your sins! Putting them in jail might be great, but how about they contribute some of their investments for their former employees.


eddytoronto
said

I will say it again Your Pensions will be Worthless...


Mike McNamara
said

Life in prison would do justice for these white collared scum,they took the lives of many good,hard working people.


Dave from Toronto
said

I have one question. If these guys falsified the books to the tune of $500,000,000 and pocketed the proceeds, where is the money they took?It can't all have gone to whimsical buys. Some of it must be recoverable in the form of property or other such purchases.


Mark in Newmarket
said

Just another good example of greed and how a few benefited financially (short term only) and how countless thousands lost their shirt because of these top execs greed and dishonesty. Hopefully the truth will come out of what they did and that the full extent of the law be executed. I hope that Bay St. is watching this closely, so that others who may have thought of doing the same thing would think twice before screwing honest, decent hardworking people out of their money.


bob
said

Perhaps people should remember also that Nortel was wrapped up with Bell and was only 'spun off' a year or 3 before this fiasco. The management mentality didn't just develop overnight and imho was well underway before the split. That should be investigated also as well as those at Bell that profited and Bell should (could?) be held up as somehow complicit?....


kg1
said

Once again we see the effects of self-importance and greed take over. Disgusting, however with that in mind the judicial system will give them a slap on the wrist insisting that the damage to their own reputation is justice enough. (not!)


dan
said

The management of nortel should lose everything they own. Then they should be put in jail until they die. The other crooks would think twice before they make thousands of people suffer.


Iam
said

These guys and their immediate families should be stripped of all assets, homes, cars, investments etc.It won't cover what has been lost but it's a start and more to the point, they should be made to suffer and have to endure on the same level, the hardships many many pensioners are forced to live with now.As for making up the deficits on the pension, the feds should be forced to do so, federal policies setup the environment which enabled them to get away with what they did in the first place. PC, Lib... doesn't matter, it was a total failure on the governments part.


J NB
said

what goes up, must come down.


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