Yesterday, Ontario Superior Court Justice Frank Marrocco dismissed fraud charges against former Nortel CEO Frank Dunn, former CFO Douglas Beatty and former controller Michael Gollogly. It represents yet another high-profile not guilty verdict in a Canadian "white-collar" criminal trial.
National Post columnist Terence Corcoran has described the prosecution of the Nortel executives as a "corporate witch hunt" prompted in part by "post-Enron regulatory overkill". Whether or not this is a fair characterization, it seems likely that how Canadian regulators, investors and the general public reacted to Nortel's accounting...er..."irregularities" was coloured in part by the accounting scandals of what has come to be known as the Enron era.
The lesson that Canadian business executives might wish to take away from the Nortel example is the importance of trust. Specifically, the importance of having the trust of regulators, investors and the general public, so that when an event occurs that could be interpreted in two different ways, one benign and the other malignant, the company will be given the benefit of the doubt. How corporate executives are to win back this trust in our current post-Enron, post-financial crisis, post-Occupy age is unclear, but moving away from "aggressive" accounting practices might not be a bad place to start.