Hell No, We Won’t Go….to Ottawa

By Mark Evans | Published: June 11, 2009

Nortel has turned down a request by a Canadian House of Commons finance committee to talk about why it has slashed pension payments and not offered severance to ex-employees, while still offering bonuses to senior executives.

“As Nortel is currently in bankruptcy protection, all matters specified in the invitation are before the courts. Consequently, Nortel, nor its representatives, can comment on these issues beyond that which are already evident in court rulings, documents, and related motions,” Nortel spokesman Mohammed Nakhooda told the Globe & Mail. “Respectfully, Nortel on the advice of counsel, declines the invitation.”

If the Canadian government wants to focus its efforts on Nortel, maybe it should have spent more time a few months ago when the company approach the government for financial help. Nortel’s plea was rejected because its restructuring plans were unclear and unfocused. Even so, Nortel’s demise could mean the loss of thousands of jobs in Canada so maybe both sides should have worked a little harder to work something out.

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Got_Out

While I agree that both sides could/should have moved on this earlier, the real question is where is there greater need and urgency? From a gov't perspective, while there are thousands of jobs at risk these are highly employable technical staff that will eventually be absorbed into other companies, create startups or move on. In short, very employable. Different situation from the Autoworkers where there are large pools of lesser skilled labour involved that will face a much bleaker outlook (long and short term)

From a Nortel perspective, this is all about survival. A billion dollars would be a major contribution to providing the cash to sucessfully restructure and exit as a viable entity.

In the US, we saw the CEO's of the (much larger) automakers go to Washington several times and layout full plans to get support. Here, Nortel go to Ottawa with unfocused plans for multiple scenarios, then refuse to meet based on “legal advice'.

Perhaps this whole thing is leading to the point Mike Z and team want to get to all along.
Got_Out
Moose_Chaser

VERY, VERY bad optics !!!

As the old saying goes: ” (in)Actions Speak Louder Than Words. “

The American boys on the Board don't even know where Ottawa is.

MC
gone2moro

That's interesting. In the US you CANNOT turn down a summons to explain yourself in front of a Senate or Congressional panel. That will get you thrown in jail. You can take the 5th amendmant and not say anything but they will make your day(s) miserable going through the ringer.

Canadian Gov, get a back bone. Hold these idiots feet to the fire.
soundslikesourgrapes

Agree with Nortel on this one.
I wouldn't waste my time talking to a bunch of tolerant out of touch liberal/conservative/ndper's about water under the bridge when you consider the billions they waste on official bilingualism, multiculturalism etc.
Only value would be if they were forced to reinstate severances for current employees. Screw the navel gazing and questions about the past.
They should go if the feds have a blank cheque waiting for them.
Other than that I'd thumb my nose at them also.
sick_sigma

In this particular case I do agree with Nortel management.

The canadian politicians wanted to do a little grandstanding here. No need for NT to help them with that cause.

Unless/until the canadian government is actually bailing Nortel out then they have no grounds to demand a meeting.

Example….. the american government gave AIG a bunch of money. Then it came out that AIG used the government assistance to pay some huge bonuses to the executive management. The american government called in the new CEO and asked him why they did that. In that case, it WAS fair for the government to question how company money was being spent…. because it was the government's money in question.
sick_sigma

I am not 100% on this but here is my understanding of meeting with the US congress.

If they ask you to come, you can say no.

If they tell you to come — via formal subpoena — then you have to say yes.

In this case, I do not think that the canadian government ever issued any formal subpoena. It was more of an informal “hey, why don't you come down here so that we can badmouth you to the media.”
NortelEmp

I'm very surprised that some of you agree with Nortel. This summons is not about revisiting the past, per se, it's about holding the Nortel execs accountable for their decisions, beyond the walls of the enterprise. This process would force the individuals at Nortel to explain the decisions that are hurting Canada's economy. I'm not saying the government should bail them out. Not at all. But I do think that the execs needs to explain the reasoning for their actions, and this process will allow that to happen (to a certain extent). This is really the only public forum available to get information beyond the pr messaging.

The behaviour of Nortel's execs, in terms of how they have deceived employees, pensioners, investors, etc… is APPALLING. There needs to be some process where they face the music. This was it. The fact that they are allowed to decline is equally appalling. Nortel is part of society. They cannot close themselves off to the rest of the world, ESPECIALLY when they are effecting people outside of the company, on a daily basis.

I'm totally disgusted with this one. It's very telling behaviour. The exec team has absolutely no integrity what-so-ever. So much for the core values.

I hope that Ottawa is able to force them to go. I don't care at all what the motives are of the politicians. This process would have allowed the public to know more about what is truly going on at Nortel.
anotheropsguy1

The mistake here is that the Canadian Government did not ask Ernst and Young! They control the purse strings and have all say on matters financial.
less

Speaking of urgency, it is conceivable that the longer you stay at the ever more laughable Nortel and the rustier you get due to involuntary inaction and “loyalty” you could eventually be branded as having been part of the Nortel problem all along.

Mike Z will likely say as much when he ghostwrites his awesome tale of success in times of monemental corporate jihad and global economic meltdown aptly titled “Buy my Book and DVD”. Act now and get a free-gift antique Nortel stress ball. (Nah. I'll wait 12-18 months and buy it cheaper from craigslist)

From what I heard and saw some two years ago, former Richardson employees weren't absorbed all that easily locally. Its so-called telecom corridor is currently something of a ghost town through which countless startups and small businesses had come and gone, even back in the salad days. But there is life going on around the corridor. Prole masses abound everywhere.

Theres too much other stuff going in in Dallas/Ft. Worth. It won't live or die with Nortel/telco. Detroit, on the other hand, is a very large city built mostly on the automobile industry. To assume startup automakers and telecom will stay/come into town and fill the void is iffy.

How about Ottawa? Remove Nortel from the skyline and what else does Ottawa offer its prole masses and highly skilled professionals alike?
vando

But this *wouldn't* be about accountability. This would be political theater that would give Ottawa the warm fuzzies that they were actually doing something, while in the end letting the execs off the hook (other than subjecting some flunkie to a couple of hours of uncomfortable questioning) and doing nothing to actually help the company, the employees, or Canada's tech sector.

It's better to deny the politicians this opportunity to grandstand. Either they should do something that actually makes a difference…or they should get out of the way.
gone2moro

“reinstate severances for current employees” What the heck does that mean.? Current employees are being paid are they not?
GoProto

Shouldn't it say” Consequently, Nortel, nor its representatives CAN”T comment, not CAN comment?? Or, am i mssing something crucial here?
NortelEmp

I respect your point of view, based on your perspective. Please try to look at it differently.

My point is that I don't care how / who gets the Nortel execs to speak. At the VERY least, the Nortel executives would be put into the hot-seat, “forced” to answer to their decisions of late. I think this is a very important process for Nortel, and Canadian society in general, to go through. Canadians are not overly political but there are times when the political system can be used to our advantage. This is one of those times. I think we need to get over the motivation of politicians on this one, and exploit the opportunity for what it's worth.

There has been absolutely no accountability placed on Nortel execs. Shareholders have no power since the shares are worthless. Nortel is hiding behind legislation that is outdated. They are abusing – blatantly – the system. The execs have paid themselves MILLIONS of dollars while withholding payment to suppliers, pensioners, ex-employees. Just look at the latest motion posted by the Calgary employees. Promises to pay severance that were completely ignored. The executives have LIED and they are totally getting away with it. Whether they knew they were lying at the time is debatable, but that still doesn't mean they are off the hook.

Let's get over the motivation of politicians and focus on the real issue. Canadian business does not need this type of executive management. We have prided ourselves on fair and just treatment for decades. If we just let this behaviour slip, what message are we sending to Canadians and world over?
NortelEmp

I'll comment on my own comment.

Look at what's happening in the UK. Do you think that the british are going to have the same view of Canadian companies, after all of this? I think not. Will they be as receptive to Canadian businesses? I think not. Nortel is ruining things not just for those currently involved, but the future as well. If Canada just stands back and lets it continue, it will appear that Canadians support the behaviour. I, for one, do not. This is not Canadian behaviour in my mind.
NortelEmp

I think either they were quoted incorrectly or they wrote their quote incorrectly. Based on their intention, they should have said “cannot”.
vando

Full disclosure–I'm a U.S. employee. And my experience with the U.S. Congress's attempts to do similar things is, well, discouraging to say the least. Sure, congresscritters got to make fun of automaker C.E.O.'s for taking private jets to the hearing…but did that end up preventing massive bankruptcies? Recall at the time there was still a belief that BK could be avoided…but if anything, the circus atmosphere made the situation worse.

I'd like to believe that the Canadian legislature would do better…and I'll believe it when I see it.

However, I think it would be better overall if the politicians were denied the political cover that their contrived kabuki would give them. Then the ongoing political heat might force them to do something actually useful…you know, actually give Ferchat his $1B. Or assign a special prosecutor.

But sham hearings are just a waste of everyone's time…and we don't have much time left.
vando

One minor correction. In the U.S., if you're a republican government official, and the subpoena was issued by a democratically-controlled senate, apparently attendance is optional. Not sure where that's written in our laws, but it's apparently true.
NortelTragedy

Too little, too late. One could argue that governments around the world are incurring unemployment costs because Nortel BoD, SLT and E&Y chose to not pay severance. Thus, how can they pay SLT bonuses? However, the CAN government hasn't offered a bailout, thus they have no ownership to call the SLT to the mat to defend themselves. This appears to be government grandstanding and too little, too late.
NortelEmp

I see your point. I think that time has run out and that Nortel will be bankrupt so, at the very least, I want to force the Nortel execs to have to answer to what has happened. If the company disappears, I would imagine that there will be MANY people frustrated with the fact that there was never any public accountabilty for it all. Z will go on living with his MILLIONS of dollars, somewhere in the US (or elsewhere). Nortel will be gone and he will never have had to face the Canadian public for any of it. I'm looking ahead to where I see this all going. My guess is that an entire nation is going to be angry at him soon enough, even more so than today. I would pay to sit through a hearing with people grilling him on what happened.
cooluswiz

No money —No Honey , why do Nortel stand in front of politicians so they can use them for a drama, when they did not do anything for Nortel. We should move our office to US as part restructuring…
Breel

As imperfect as the Canadian political system is, it does in fact have a great deal of legitimacy. The folks in the House of Commons are elected to represent the people. The Nortel Executive show complete contempt for the Canadian people by refusing this invitation. I hope they issue a summons to force them to appear.
GoProto

In re-reading it, i think it is just worded in an awkward way.. the word “nor”, I believe was supposed to represent that they cannot.
NortelEmp

Don't forget to bring the debt with you.
Another_Nortel_Watcher

The Canadian Government is clueless. Accountability passed from the Nortel execs to the BoD a long time ago. The government should be calling the BoD onto the carpet and asking them what they were thinking to let this get so bad.

However, the government is only in this for the political mileage that comes from grandstanding. Also, the government flunkies are likely the only organization that operates with the same low-level of insight and knowledge as the Nortel BoD. After all, one of their former best and brightest sits on the Nortel board and did *nothing*.

Waste of time for all involved unless there is money on the table.
NortelEmp

Let's pretend it is a waste of time and cancel the whole thing.

Given that Nortel will likely not get a bail out, what other options are there to hold Nortel (execs and/or board) accountable.

I see everyone disagreeing but what I don't see is an alternative.

Is there a feasiable alternative? Don't say “give them the money”. I mean a feasible alternative to get them in front of the Canadian people to explain what is going on.

All I see on this board is complaining about everything but nobody seems to have any sort of VIABLE alternative. Is that because there isn't one?
Got_Out

Herein lies the rub…accountability.

Shareholders have no ability to hold the SLT accountable any longer – the BoD which is supposed to represent them has long since demonstrated lack of ability/desire/interest to hold Mike and team accountable. There is no annual meeting (by design).

Debt holders are locked in by the “protection” process. Really dont get a say till there is a proposal to accept/decline (not yet in place). Very limited ability to hold anyone accountable

Employees only real power is to leave. The company can end employment without notice or compensation and certainly has demonstrated that it isnt listening or really caring. No ability to drive accountability

New customers have a choice. Customers with installed gear have fewer short term choices, but more option as time goes by.

So, if the gov't cant or wont, who is left?? Given that Nortel (and EY) have shown lack of regard for law when convenient is it suprising that Nortel has declined the oppty to explain. Without a “bailout” as leverage, it wouldnt seem like anything will happen.

One potential exception – if the lawsuit against Mike Z, Pavi and others as individuals makes it to court, there could be a day of some level of reckoning and accountability.

Sad state of affairs. Ultimately, the guys that are responsible for the final acts in this tragedy will not be held accountable. Only pride and reputation will be damaged. And that pain will be comforted with millions of $$
Got_Out

You are making two key assumptions: 1) There is a “Nortel” on the other side of restructuring and 2) you are still part of it (as in “our office”). As a Canadian, I see no issue seeing the back of Mike Z crossing the border to the US one final time.
Got_Out

It would appear that a lot of the skills are reusable in other Tech Sector companies in Ottawa (not just Telecom). Much like Silicon Valley, it will re-invent as needed

Im not sure the Feds are that worried about Ottawa itself. While Telecom has been big (Nortel, Mitel, etc), it is still fundamentally a gov't town and will always be. With Nortel having long since lost its position as “the jewel of Canadian tech” to RIM, Im not sure either the Fed or Ontario govts would be concerned enough to take serious action if some jobs shifted Ottawa a few hundred miles southwest to K/W.
TongueInCheek

I see two possible alternatives here.

1 – Have the Federal Government of Canada, through the Export Development Corporation (A Crown Corporation and a registered Creditor on the Service List), file a motion with the courts for E&Y and Nortel to answer specific questions. The downside to this is that the answers could easily be a simple statement of law that permits these actions that have been approved by the courts.

2 – Throw Nortel $1 Billion or $2 Billion bail-out dollars with strict provisions that the KEIP and KERP programs terminate immediately and that Severance payments be made with a retro-active date. However, those Severance payments would likely only apply to Canadian employees since the Government of Canada has no jurisdiction in other countries.

We also need to remember the primary purpose of this blog.
NortelEmp

What is the primary purpose of this blog? That's a sincere question.
joremero

I agree on this “Unless/until the canadian government is actually bailing out Nortel then they have no grounds to demand a meeting.”
protosphere

First they were protected under “safe harbor” and extended enormous leniency under the benefit of doubt. We saw the endless events transpire from insider only CFOs to revisions and SEC monitoring numbers as they rewarded financial innovation, etc… endless… just too endless to list….

Now they are protected under “bankruptcy” laws as they pay bonuses circumventing growing creditors, cut severances, get delays approved like past EDC loan extensions were good news, as they loot the corpse etc… bonus driven since the fraud and astoundingly thereafter, they even kept the fraud bonuses! Who watched this stuff? Anyone? Anyone?

We have witnessed endless and astoundingly profound events Notell's legal might has taken full advantage of any way they could all along. This following the largest fraud settlement in their own country (they even tanked with revisions). Endless I tell ya….

So endless it is too easy to get sidetracked with endless endless endless other astounding events we catalyze to fill pages full about what this company has pulld and continues to pull… endless…and totally unbelievable… to be witnessed to be believed…as they do not want to explain with bells on at an inquiry today

Now, should we blame the lack of ethics or lack of laws that allowed and allows them to operate this way and make a laughing stock of our courts and our joke regulating bodies through the guidelines and loopholes their army of lawyers take full advantage of to the point of rewriting the very laws of physics or seemingly convince any judge the earth is flat.

Both sides should have worked something out well before this in terms of legal guidelines and governance than after everything is gone, closed loopholes, as they refuse to talk

As they loot the corpse. their lawyers say it is before the courts who extended delays and approved bonuses…. is it unethical happy talk Notell's fault or our faulty courts. laws, and contrary to regulating bodies. Does money buy this much legal power to operate in this way in Canada. In the US, Ebbers and Skilling are doing 24 /25 years and I doubt Dunn will even see 7 here to get an idea of open season by the economically powerful who hold close relationships with those in high places to the greater numbers prayers for relief !

Anyone see the grave injustices on the backs of employees, taxpayers, investors, creditors, suppliers, investors, etc… as they hold so many hostage so many times in hope of the proverbial reserection that is always bonus driven and hiding sooo much with so many still there like they keep gettiong away with murder since keeping fraud bonuses to reward printing paper before loopholes are closed to trade options for cash as they pay bonuses after downplaying folding, etc./ endless…

If NoTell had nothing to hide than gag employees, analysts, their investors, and now government, they would come out and simply state they need this talent to wind down operations to get the best value for units they are unable to sell anyways. Anything than claim we do not have to go because our lawyers said we don't have to and we pay them plenty to speak…Now they will only review others bellyaching instead… may as well have pleaded no contest and astoundingly with no further penalty or inquiry yet again… unbelievable… no respect to boot.

Who saw this early with CEO defrauding MOT, promoting criminally charged green pals over proven vterans, hiring Bankrptcy pro Binning early yet after so many insider only CFOs, rewarding financial innovation, extending repair of controls the lenient SEC finally monitored, rewarding cuts on expensive losing revenues they bought to make numbers, false forecasts and happy talk amid endless contradiction following mega-fraud with so many still there keeping bonuses as fraud trials loom… Like making a deal with the devil every time…

Today they don't want to face the analysts they fed, the investors they called buying opportunities they were to work in their best interests like the employee, they don't want employees to even talk, and they sure won't be at any inquiry but leave it to their army of mega powerful lawyers as they increase lawsuit insurance and ironically trade losing options for cash yet again… too astounding, too endless…

Ironic everyone suffers except those who leach and contradict driving it to the ground and perhaps more profound they can and do… so who is really to blame Where are the laws in place and the moral majority's legal muscle amid all this enormously powerful smoke and mirrors pony show protection all along defying physics for this hard to flush turd? Is the private sector that much more powerful than the public sector in Canada?
Another_Nortel_Watcher

Employees and customers are the only groups with any power to do anything at this point.

Customers can take away business. The larger the customer, the larger the leverage. At this point, I'm sure most big customers have given up on Nortel and are making other plans. Don't look for help from this direction.

The more employees act as a group, the more leverage they have. Get organized and make noise. Call in sick en masse on the same day and get somebody with nothing to lose to speak to the national press. Arrange it beforehand. Be very clear about the message and be consistent: regime change – Nortel officers are circumventing corporate accountability rules for apparent personal gain and to cover up gross incompetency and repeated failures to perform required fiduciary duties. Special government intervention is justified and required.

The executive team failed Nortel through incompetency. The BoD then failed Nortel through inaction. Now shift the focus to the corporate regulators – the government. The government looks and feels a lot like the BoD, doesn't it?

There has been enough whining already about lost jobs, no severance, Nortel's importance, etc. – everybody has heard that and doesn't need to hear it again. Take it to a higher level about failed corporate governance and failed corporate regulators.
joremero

Try to find something illegal and charge them for that.. other than that, I don't see how
OhCanada

As for as Corporate Scumbags go, these guys are the worst of the worst.

I hope someone do a serious documentary around this. This story of bringing down a national institution due to utter incompetency and lack of moral on the part of the executives remind me of the sad story of the great Canada Avro Arrow Jet story in the 1950s (another great loss to Canada).
http://www.videosift.com/video/the-Avro-Arrow-C…

Some one should expose these guys. I guess at the end, Karma will always come back and hit them on their heads.
4merEmployee22

Can someone apply the FREEDOM OF INFORMATION ACTS HERE?

Wouldn't it be nice to know how much funds now is set aside for

the mentioned ESCROW ACCOUNT???? Why is there an ESCROW

account? Was this a part of RESTRUCTURING PLAN???
TongueInCheek

It is a prudent business decision to investigate alternatives to Nortel given current circumstances. However, there are very limited budgets in support of Rip and Replace of current systems because there is limited ROI advantages to do so. Customers can continue to upgrade and add to existing infrastructures and they have support agreements in place.

If it is a new requirement, then of course they will strongly evaluate alternatives, if there is a strong ROI justification to do so.
TongueInCheek

When was the last time you saw any blog headline related to positive things at Nortel, such as their #1 Global Market Share ranking for Carrier VoIP?

If a person posts positive comments or positive speculation they run the risk of being attacked. This blog is now basically a Bash and Attack blog with information consistency of The National Enquirer.

Remember, there are people on this blog that desperately want to see Nortel destroyed, and you as an employee harmed.
The psychiatrist

Isn't Nortel obliged to inform the Canadian government of their restructuring plans since they will affect workers in Canada who will be facing a situation where they aren't qualified for EI benefits because of some technicallity surrounding the issue of severance pay?

I've read here before that some workers can not apply for EI benefits even though they have been let go by Nortel and it's all because of some severance issues that result in a worker not meeting some EI criteria?
The psychiatrist

ANW

I think one area where all this incompetency could come to light is through a proposed class action lawsuit against Nortel's ELT and the BoD by the shareholders who are entitled to know what happened with their evaporated investment.In fact there is already one against them that covers a limited time frame,but more importantly a class action lawsuit would allow an investigation into the many decision making processes that took place from the time that Z and his team came on board and that were ultimately approved by Nortel's BoD which would then shine a light on how grossly incompetent they have been for shareholders.

They can be hush hush under the disguise of this bancruptcy restructuring but they would have no choice but to be investigated through a drawn up class action lawsuit claiming incompetency by shareholders (the owners) of Nortel who have a right to know what happened to their investment and why it got to be this way.
The psychiatrist

“When was the last time you saw any blog headline related to positive things at Nortel, such as their #1 Global Market Share ranking for Carrier VoIP?”

The difference in seeing a positive about Nortel such as the example you mentioned is that workers can feel somewhat secure in that their employer will keep them employed as a result of healthy business in this area and can go on living their life,but when the negatives are brought to light and demonstrate how Nortel is treating those who have lost their jobs without severance while those who have lead Nortel down the path of destruction set aside huge bonus money for themselves is always going to get more attention.
nortelex

I would love to hear positive things for Nortel. Seriously.

but after lies after lies I am beginning to doubt any positivity from this management.
AnotherSlave

Obliged isn't in the Nortel vocabulary.
redhat2009

$90 mil. Check article 101. in E&Y's Pre-filing Report issued Jan 14.
InTheRoundEye

Most sheep (employees) are busy this week cleaning out their offices of which Nortel closed more than 100.

On a lighter note, we are now full-time telecommuters!
Another_Nortel_Watcher

There may be some requirement to provide data to government departments. That is not the same thing as sitting in front of a kangaroo court of politicians seeking exposure opportunities.
Another_Nortel_Watcher

No, sorry. Freedom of information applies to government records and documents, not businesses.
Another_Nortel_Watcher

No, this is much worse. A bad decision by the government is what brought down the Avro jet. Sustained gross incompetence over a period of 3+ years is what has brought Nortel down. There was lots of time to do something about it.

Personally, I think some regulatory changes should come out of this disaster. For example, if a publicly traded company shows 6 straight quarters of decline in value, perhaps it should trigger a government-sponsored audit to make sure the board is awake and on top of things. Nothing onerous, just a few checks and balances to help prevent runaway trains like Nortel.
Another_Nortel_Watcher

I agree. I sincerely hope that there will be many class-action lawsuits against the officers of the company and the BoD. I hope the rest of the industry views these individuals as poison for what they have done to Nortel.

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