Owens vows to clean up Nortel's books
canada.com
Owens vows to clean up Nortel's books
"I didn't seek this job, but I love it"
James Bagnall
CanWest News Service; (Ottawa Citizen)
May 29, 2004
OTTAWA - Investors counting a quick conclusion to the multiple accounting investigations underway at Nortel Networks Corp. should probably think again.
"There are many moving parts to this as you know," Nortel chief executive William Owens said in his first in-depth media interview since he took over the top job on April 28. "We need to talk to you as the days and weeks go on. I don't have an indication [about timing] I can share with you right now."
Nortel is expending a surprising amount of effort internally to comply with the various probes into its accounting.
Mr. Owens said nearly half Nortel's 1,500 financial employees are involved in the effort to compile and restate its financial results going back to 2000. "It's not just getting at the numbers," he said, "we also want to make sure we're as clean as we can be going forward. We don't want to just get through this and find ourselves again in the same kind of delay or issue."
Nortel began its intensive re-examination of its books last summer after its outside auditor, Deloitte & Touche, discovered instances of sloppy financial bookkeeping. Nortel's finance employees made errors recording and monitoring liabilities related to the company's massive downsizing, which began in 2001.
Since Deloitte filed its report to Nortel's audit committee, the accounting probes have expanded to include the Ontario Securities Commission, the U.S. Securities & Exchange Commission and the U.S. Attorney Office for the Northern District of Texas, Dallas Division.
There is also an ongoing annual audit by Deloitte and an independent review being carried out by Nortel's audit committee.
The upshot to date: Nortel has announced two significant revisions of its numbers -- last October and March -- triggering the firing of former CEO Frank Dunn on April 28, along with two of his top financial executives "for cause."
Nortel has not yet revealed why it sacked its executives but Mr. Owens offered some interesting clues.
"To the best of our knowledge," he said, "the issues of the accounting have come purely from inside the financial organization." This suggests that Nortel's extensive sales, marketing and R&D groups are off the hook. But it still leaves open the question of whether the executives were fired for incompetence, fraud or some other reason. Nor is it clear whether Mr. Dunn and his colleagues are being made to pay the price for employees' failings -- or for something they did themselves.
Whatever the reason for the firings, Mr. Owens said he intends to usher in a new regime. "We need to make sure that the culture of our financial reporting is what it needs to be and that our people understand what the standards are," he said. "And I must tell you, the numbers of people that are other than absolutely top notch on the financial team are very, very few."
He added that some of Nortel's accounting difficulties resulted from the fact its various units around the globe use incompatible financial reporting systems. "In some cases, we were winding up the numbers with manual bookkeeping," he said.
Mr. Owens, the former vice-chairman of the U.S. Joint Chiefs of Staff, promises to be a very different kind of CEO compared to his two immediate predecessors, Dunn and John Roth. He is personable and enjoys talking with engineers and customers alike. "I didn't seek this job," he said, "but I love it." Nortel managers who have dealt with him recently say he has a surprisingly well-developed sense of humour.
Thanks to an earlier stint as CEO of Teledesic LLC of Seattle, a satellite communications company, Mr. Owens is also surprisingly familiar with some of Nortel's biggest customers.
Mr. Owens, not surprisingly, appears impatient to get the accounting issues behind him and get on with business. He stressed that the day-to-day work of managing the company's response to the accounting investigations is in the hands of Bill Kerr, his new chief financial officer. "I'm trying to keep my time focused as much as possible on our people and customers," he said.
Nortel managers suggest that Owens looks like a CEO determined to make a fast start, perhaps through a reorganization or highlighting R&D projects he considers especially important. He will be very much hands on. "I love being in the arena as opposed to being a board member," Owens said. "There's nothing like being part of a team and trying to make something happen." |
