Editing Nortel (section)

== Criticism and controversy ==

=== Payments to lawyers and accountants ===
In 2016, the [[Canadian Broadcasting Corporation]] reported that lawyers and accountants received {{CAD|2.5}}{{nbsp}}billion from Nortel's estate.<ref>{{Cite news|url=http://www.cbc.ca/news/canada/ottawa/nortel-bankruptcy-disability-benefits-1.3796332|title=Former Nortel workers look to Liberals to restore disability benefits|work=CBC News|date=October 11, 2016|first=Julie|last=Ireton|access-date=October 12, 2016|archive-date=October 12, 2016|archive-url=https://web.archive.org/web/20161012045252/http://www.cbc.ca/news/canada/ottawa/nortel-bankruptcy-disability-benefits-1.3796332|url-status=live}}</ref>

=== Kathleen Peterson Case ===
In 2001 Nortel's director of information services [[Michael Peterson trial|Kathleen Peterson]] was found dead at the bottom of a staircase in her home in Durham, NC. Nortel had been enduring heavy layoffs during this time, and family members report that Kathleen was worried she may too be laid off at Nortel.<ref>{{Cite web |last=CATAUDELLA |first=KIMBERLY |date=May 10, 2022 |title=HBO's 'The Staircase': Who was Kathleen Peterson and where did she work? |url=https://www.newsobserver.com/news/local/article260973672.html |access-date=6 Nov 2023 |website=The News and Observer}}</ref> This was used by the prosecution as motive for Kathleen's husband, [[Michael Peterson trial|Michael Peterson]], to murder Kathleen due to her 1.3 million-dollar life insurance policy (partly provided by Nortel) and the couple's $143,000 in credit card debt.<ref>{{Cite web |last=DALESIO |first=EMERY P. |date=2003-07-01 |title=Prosecutors: Money Was Motive in Killing |url=https://www.ourmidland.com/news/article/Prosecutors-Money-Was-Motive-in-Killing-7207032.php |access-date=2023-11-06 |website=Midland Daily News |language=en-US |archive-date=November 6, 2023 |archive-url=https://web.archive.org/web/20231106152035/https://www.ourmidland.com/news/article/Prosecutors-Money-Was-Motive-in-Killing-7207032.php |url-status=dead }}</ref>

=== Environmental damage ===
After bankruptcy, Nortel's estate faced {{CAD|300}}{{nbsp}}million in claims to pay for environmental damage at various sites, including Belleville, Brockville, Kingston and London.<ref>{{cite news |title=Nortel's toxic legacy: Cleaning up former sites to cost millions |url=https://www.cbc.ca/news/canada/ottawa/nortel-toxic-cleanup-ontario-belleville-1.4065596 |access-date=20 May 2020 |work=CBC News |date=April 12, 2017 |archive-date=October 1, 2020 |archive-url=https://web.archive.org/web/20201001054259/https://www.cbc.ca/news/canada/ottawa/nortel-toxic-cleanup-ontario-belleville-1.4065596 |url-status=live }}</ref>

=== Hacks ===
{{See also|Julian Assange#Hacking}}

In September 1991, [[Julian Assange]] was discovered in the act of hacking into the Melbourne master terminal of Nortel.<ref>{{cite magazine |last=Khatchadourian |first=Raffi |url=https://www.newyorker.com/reporting/2010/06/07/100607fa_fact_khatchadourian?currentPage=all |title=WikiLeaks and Julian Paul Assange |magazine=The New Yorker |date=June 7, 2010 |access-date=May 26, 2012 |archive-date=May 27, 2012 |archive-url=https://web.archive.org/web/20120527001503/http://www.newyorker.com/reporting/2010/06/07/100607fa_fact_khatchadourian?currentPage=all |url-status=bot: unknown }}</ref>

In 2001 Nortel identified knockoff products circulating in the Chinese market, where they did not compete.<ref>{{Cite news|last=Obiko Pearson|first=Natalie|date=July 1, 2020|title=Did a Chinese Hack Kill Canada's Greatest Tech Company? Nortel was once a world leader in wireless technology. Then came a hack and the rise of Huawei.|work=Bloomberg Businessweek|url=https://www.bloomberg.com/news/features/2020-07-01/did-china-steal-canada-s-edge-in-5g-from-nortel|access-date=July 2, 2020|archive-date=July 1, 2020|archive-url=https://web.archive.org/web/20200701193336/https://www.bloomberg.com/news/features/2020-07-01/did-china-steal-canada-s-edge-in-5g-from-nortel|url-status=live}}</ref> The management chose not to press the issue.<ref>{{cite web |last1=V. Hulme |first1=George |title=Why our lack of understanding on China may be the biggest risk |url=https://www.csoonline.com/article/2597397/why-our-lack-of-understanding-on-china-may-be-the-biggest-risk.html |archive-url=https://web.archive.org/web/20200804140718/https://www.csoonline.com/article/2597397/why-our-lack-of-understanding-on-china-may-be-the-biggest-risk.html |url-status=dead |archive-date=August 4, 2020 |website=csoonline.com |publisher=IOG Communications inc |access-date=14 June 2019 |date=August 25, 2014 }}</ref> Brian Shields, former chief security officer at Nortel, said his company was compromised in 2004 by China-based hackers; executive credentials were accessed remotely, and entire computers were taken over.<ref name="Kehoe">{{Cite web |last=Kehoe |first=John |date=26 May 2014 |title=How Chinese hacking felled telecommunication giant Nortel |url=https://www.afr.com/technology/web/security/how-chinese-hacking-felled-telecommunication-giant-nortel-20140526-iux6a |url-status=live |archive-url=https://web.archive.org/web/20190607204151/https://www.afr.com/technology/web/security/how-chinese-hacking-felled-telecommunication-giant-nortel-20140526-iux6a |archive-date=7 June 2019 |access-date=7 June 2019 |website=[[Australian Financial Review]]}}</ref> Nortel's own specialist did not find any abnormality. In 2008, Shields decided to approach an outside expert, who reported finding sophisticated malware in the company's machines and activities traced to Chinese IP addresses and discussions on a Mandarin [[Internet forum]]. Shields had tried to escalate the issue within the company, but senior staff members did not take any action. [[Mike Zafirovski]], one of Nortel's top executives at the time, was skeptical, citing Shields' reputation for exaggeration.<ref name="FinPo 2012">{{cite web |last1=Berkow |first1=Jameson |title=Nortel hacked to pieces |url=https://business.financialpost.com/technology/nortel-hacked-to-pieces |website=financialpost.com |publisher=Financial Post |access-date=7 June 2019 |date=2012-02-25 |archive-url=https://web.archive.org/web/20190607204136/https://business.financialpost.com/technology/nortel-hacked-to-pieces |archive-date=7 June 2019 |url-status=dead }}</ref>

Nortel sought for but failed to receive help from the [[Royal Canadian Mounted Police|RCMP]]. A former [[Canadian Security Intelligence Service|CSIS]] official said the agency approached the company but was rebuffed.<ref name="Globe and Mail 2012">{{Cite news |last=Marlow |first=Iain |date=15 February 2012 |title=Nortel turned to RCMP about cyber hacking in 2004, ex-employee says |work=The Globe and Mail |url=https://www.theglobeandmail.com/technology/tech-news/nortel-turned-to-rcmp-about-cyber-hacking-in-2004-ex-employee-says/article534295/ |access-date=7 June 2019 |archive-date=August 4, 2019 |archive-url=https://web.archive.org/web/20190804003449/https://www.theglobeandmail.com/technology/tech-news/nortel-turned-to-rcmp-about-cyber-hacking-in-2004-ex-employee-says/article534295/ |url-status=live }}</ref><ref name="Wall-Street-Hacker" />

Nortel allegedly failed to disclose the problem to potential buyers of its business, a "despicable" omission according to Shields. [[Avaya]] and [[Genband]] both acquired parts of Nortel, and some employees used old Nortel machines connected to the new companies' networks. Avaya says it has dealt with the issue after Shields informed the new companies of his investigation.<ref name="Wall-Street-Hacker">{{cite news
 | last = Gorman
 | first = Siobhan
 | title = Chinese Hackers Suspected In Long-Term Nortel Breach
 | work = The Wall Street Journal
 | date = February 14, 2012
 | url = https://www.wsj.com/articles/SB10001424052970203363504577187502201577054?_nocache=1329206812142&user=welcome&mg=id-wsj
 | access-date = February 14, 2012
 | archive-date = August 9, 2018
 | archive-url = https://web.archive.org/web/20180809111844/https://www.wsj.com/articles/SB10001424052970203363504577187502201577054?_nocache=1329206812142&user=welcome&mg=id-wsj
 | url-status = live
 }}</ref><ref name="The-Verge-Hacker">{{cite news
 | last = Tom
 | first = Warren
 | title = Hackers roamed Nortel's network for years without detection
 | work = The Verge
 | date = February 14, 2012
 | url = https://www.theverge.com/2012/2/14/2797047/nortel-undetected-hacking-breach
 | access-date = February 14, 2012
 | archive-date = February 15, 2012
 | archive-url = https://web.archive.org/web/20120215223049/http://www.theverge.com/2012/2/14/2797047/nortel-undetected-hacking-breach
 | url-status = live
 }}</ref><ref>{{cite journal | url=https://www.pcmag.com/article2/0,2817,2400242,00.asp | journal=PC Magazine | first=Chloe | last=Albanesius | title=Report: Nortel Breached by Hackers for Almost 10 Years | date=February 14, 2012 | access-date=September 6, 2017 | archive-date=June 17, 2017 | archive-url=https://web.archive.org/web/20170617192407/http://www.pcmag.com/article2/0,2817,2400242,00.asp | url-status=live }}</ref><ref>{{cite news |last=Stechyson |first=Natalie |url=https://ottawacitizen.com/news/Nortel+hacked+decade+according+report/6154044/story.html |title=Nortel hacked for a decade, according to report |work=Ottawa Citizen |date=February 15, 2012 |access-date=May 26, 2012 |archive-url=https://web.archive.org/web/20120428224649/http://www.ottawacitizen.com/news/Nortel+hacked+decade+according+report/6154044/story.html |archive-date=April 28, 2012 |url-status=dead }}</ref><ref>{{cite news | url=https://www.cbc.ca/news/business/nortel-collapse-linked-to-chinese-hackers-1.1260591 | work=CBC News | title=Nortel collapse linked to Chinese hackers | date=February 16, 2012 | access-date=February 16, 2012 | archive-date=February 16, 2012 | archive-url=https://web.archive.org/web/20120216131258/http://www.cbc.ca/news/business/story/2012/02/15/nortel-hacking-shields-as-it-happens.html | url-status=live }}</ref>

Cybersecurity experts have some doubts about a hack of such magnitude as described by Shields, calling it "unlikely". Shields does not think [[Huawei]] was directly involved, but industry insiders, including him, believe that Huawei and [[ZTE]] were beneficiaries of the hack.<ref name="Kehoe" /><ref>{{cite web |last1=Waddell |first1=Nick |title=Will allegations against Huawei forever change Nortel's legacy? |url=https://www.cantechletter.com/2012/10/will-allegations-against-huawei-forever-change-nortels-legacy/ |website=cantechletter.com |publisher=[[Cantech Letter]] |access-date=7 June 2019 |date=2012-10-15 |archive-url=https://web.archive.org/web/20190607221327/https://www.cantechletter.com/2012/10/will-allegations-against-huawei-forever-change-nortels-legacy/ |archive-date=7 June 2019 |url-status=live }}</ref><ref>{{cite web |last1=Payton |first1=Laura |title=Former Nortel exec warns against working with Huawei |url=https://www.cbc.ca/news/politics/former-nortel-exec-warns-against-working-with-huawei-1.1137006 |website=www.cbc.ca |publisher=CBC |access-date=24 June 2019 |archive-date=June 11, 2019 |archive-url=https://web.archive.org/web/20190611211113/https://www.cbc.ca/news/politics/former-nortel-exec-warns-against-working-with-huawei-1.1137006 |url-status=live }}</ref><ref>{{cite news |last1=Obiko Pearson |first1=Natalie |title=Did a Chinese Hack Kill Canada's Greatest Tech Company? |url=https://www.bloomberg.com/news/features/2020-07-01/did-china-steal-canada-s-edge-in-5g-from-nortel |access-date=1 July 2020 |work=Bloomberg News |date=1 July 2020 |archive-date=July 1, 2020 |archive-url=https://web.archive.org/web/20200701193336/https://www.bloomberg.com/news/features/2020-07-01/did-china-steal-canada-s-edge-in-5g-from-nortel |url-status=live }}</ref>

=== Government bailouts ===

==== 2003 ====

On February 16, 2003, the [[Winnipeg Sun]] published an article criticising the Canadian Federal government for propping up "mega-loser Nortel" through [[Export Development Canada]] (EDC). The article interviewed Walter Robinson of the [[Canadian Taxpayers Federation]] who termed this EDC support as "corporate welfare at its worst". Mr. Robinson was appalled that Canadians who already lost billions on Nortel on the stock market would be asked for even more money through their taxes to support Nortel.<ref name="SunMedia-EDC2003"/>

==== 2009 ====

The EDC had agreed to provide up to {{CAD|30}}{{nbsp}}million in short-term financing through an existing bonding facility. This money was previously available to Nortel, and no special funding was made available. The Canadian government resisted characterizing its position on Nortel as a bailout.<ref>{{cite news | url=https://www.reuters.com/article/idCAN1446286920090114 | work=Reuters | first=Randall | last=Palmer | title=Update 2-Canada government pledges to help Nortel | date=January 14, 2009 | access-date=July 1, 2017 | archive-date=November 24, 2020 | archive-url=https://web.archive.org/web/20201124050912/https://www.reuters.com/article/idCAN1446286920090114 | url-status=live }}</ref>

=== Illegal breach of trust in Nortel's Health and Welfare Trust ===

There have been reports of financial irregularities at Nortel's Health and Welfare Trust. [[Diane Urquhart]], a financial analyst, testified before a parliamentary committee that $100 million is missing from the HWT and that a $37 million loan to the corporation has not been paid back.<ref>[http://parlvuvod.parl.gc.ca/StreamLogger/2010/2010-03/000178b2.wmv Standing committee on Finance hearings] {{webarchive |url=https://web.archive.org/web/20150906000922/http://parlvuvod.parl.gc.ca/StreamLogger/2010/2010-03/000178b2.wmv |date=September 6, 2015 }}</ref> The HWT was an unregistered trust maintained by Nortel to provide medical, dental, life insurance, long-term disability and survivor income and pension transition benefits.<ref>[http://documentcentre.eycan.com/eycm_library/Project%20Copperhead/English/Court%20Orders/77.%20Settlement%20Agreement%20Order/EndorsementSettlement.pdf Superior Court of Justice&nbsp;– Ontario Endorsement] {{webarchive |url=https://web.archive.org/web/20100331035546/http://documentcentre.eycan.com/eycm_library/Project%20Copperhead/English/Court%20Orders/77.%20Settlement%20Agreement%20Order/EndorsementSettlement.pdf |date=March 31, 2010 }}</ref><ref>{{cite news |url=https://ottawa.ctvnews.ca/senate-kills-bill-that-would-help-disabled-nortel-workers-1.583953 |archive-url=https://web.archive.org/web/20121022025450/http://ottawa.ctvnews.ca/senate-kills-bill-that-would-help-disabled-nortel-workers-1.583953 |url-status=bot: unknown |archive-date=October 22, 2012 |title=Senate kills bill that would help disabled Nortel workers |work=CTV News |date=December 9, 2010 |access-date=March 12, 2011 }}</ref>
Until 2005 Nortel fully funded the disability insurance in its HWT. However, it is alleged that since then, the HWT Governance Committees and third party [[trustee]], [[Northern Trust]], breached their [[fiduciary]] duties to protect Nortel's disabled employees and survivors of deceased employees by allowing Nortel to misdirect over {{CAD|100}}{{nbsp}}million from the HWT for purposes inconsistent with the terms of the HWT.<ref>{{Cite web |url=http://ismymoneysafe.org/pdf/SystemicFailureofEmployerSponsoredDisabilityInsurance.pdf |title=Systemic Failure of Employer Sponsored Disability Insurance |access-date=February 5, 2016 |archive-url=https://web.archive.org/web/20160304000105/http://ismymoneysafe.org/pdf/SystemicFailureofEmployerSponsoredDisabilityInsurance.pdf |archive-date=March 4, 2016 |url-status=dead }}</ref>
As of March 1, 2012, Northern Trust continues to act as the paying agent for Canadian [[Nortel Retirees and former employees Protection Canada|Nortel pensioners]].<ref>{{cite web |url=http://www.kmlaw.ca/Case-Central/Overview/Status-Of-Case/?rid=107 |first=Koskie |last=Minsky LLP |title=Nortel Networks Corporation&nbsp;– Developments |publisher=Kmlaw.ca |access-date=May 26, 2012 |archive-url=https://web.archive.org/web/20111205225957/http://www.kmlaw.ca/Case-Central/Overview/Status-Of-Case/?rid=107 |archive-date=December 5, 2011 |url-status=dead }}</ref>

=== Bookkeeping irregularities ===
In 2007, both the [[U.S. Securities and Exchange Commission]] and the [[Ontario Securities Commission]] laid charges against former senior financial officials from Nortel including Frank Dunn who was fired from Nortel in 2004. Frank Dunn was promoted from [[chief financial officer]] to replace John A. Roth as [[CEO]] in November 2001. According to the SEC, Dunn and three other financial officers began to fudge revenue by misusing "[[bill and hold]]" transactions starting "no later than September, 2000". The SEC said that at least a year's worth of the alleged misconduct took place while John Roth was still CEO of Nortel, though no charges were laid against him.<ref>{{cite news | url=https://www.theglobeandmail.com/report-on-business/ex-nortel-ceo-john-roth-says-hes-cleared/article87339/ | location=Toronto | work=The Globe and Mail | first=Boyd | last=Erman | title=Ex-Nortel CEO John Roth says he's cleared&nbsp;– The Globe and Mail | date=March 13, 2007 | access-date=August 22, 2017 | archive-date=August 28, 2016 | archive-url=https://web.archive.org/web/20160828203836/http://www.theglobeandmail.com/report-on-business/ex-nortel-ceo-john-roth-says-hes-cleared/article87339/ | url-status=live }}</ref><ref>{{cite news|url=https://www.theglobeandmail.com/servlet/story/RTGAM.20070312.rnortelroth0312/BNStory/Front |title=Unknown |work=The Globe and Mail |date=March 12, 2007 |access-date=March 12, 2011 |location=Toronto }} {{Dead link|date=September 2013|bot=RjwilmsiBot}}{{subscription required|date=May 2012}}</ref>

=== Treatment of Nortel pensioners ===

On June 23, 2010, the [[The News & Observer|News and Observer]] published a story criticizing treatment pensioners have been receiving from their former employer, Nortel. According to the article, Nortel has asked a federal court to terminate medical coverage, prescription drug coverage, long-term disability, and life insurance of 4,000 retirees and dependents, claiming the benefits are costing the company $2 million per month. Nortel blamed the company's creditors for this decision.<ref name="Triagle">{{cite news
 |title       = Nortel wants to dump retirees
 |work        = News and Observer
 |date        = June 23, 2010
 |url         = http://www.newsobserver.com/2010/06/23/546757/nortel-wants-to-dump-retirees.html
 |url-status     = dead
 |archive-url  = https://web.archive.org/web/20100626042359/http://www.newsobserver.com/2010/06/23/546757/nortel-wants-to-dump-retirees.html
 |archive-date = June 26, 2010
}}
</ref>

=== Ex-CEO as creditor ===

In the middle of the decade several class-action lawsuits were filed against [[John Roth (businessman)|John Roth]] and others, by former employees who felt that their 401K company plans were depleted due to misrepresentation by the defendants. They claimed they were duped into investing in Nortel stock, when those who encouraged them to do so allegedly knew that the company was ailing. John Roth left Nortel in 2001 with more than {{CAD|130}}{{nbsp}}million.

In 2009, Roth filed a claim for {{CAD|1}}{{nbsp}}billion, aiming to become a creditor to the assets of Nortel along with all other Nortel employees, in case the class action lawsuits against him succeeded.<ref>{{cite news|url=https://www.cbc.ca/news/canada/ottawa/former-nortel-exec-seeks-1b-protection-from-lawsuits-1.851553#ixzz17Fo2R8fU|title=Former Nortel exec seeks $1B protection from lawsuits|date=December 17, 2009|work=CBC News Ottawa|url-status=dead|archive-url=https://web.archive.org/web/20100317143902/http://www.cbc.ca/canada/ottawa/story/2009/12/17/nortel-john-roth-lawsuits.html|archive-date=March 17, 2010}}</ref><ref>{{cite web|title=John Roth Wants Nortel's Help! |first=Mark |last=Evans |date=December 18, 2009 |url=http://www.allaboutnortel.com/2009/12/18/john-roth-wants-nortels-help/ |access-date=December 6, 2010 |url-status=dead |archive-url=https://web.archive.org/web/20110707113446/http://www.allaboutnortel.com/2009/12/18/john-roth-wants-nortels-help/ |archive-date=July 7, 2011 }}</ref>

=== Conflicts of interest ===

During Nortel's 2002 annual [[shareholders' meeting]] held in [[Halifax Regional Municipality|Halifax]], [[Nova Scotia]], several [[shareholder]]s (including [[J Robert Verdun|Robert Verdun]]) complained about non-arms-length relationships with service providers such as director [[Yves Fortier (lawyer)|Yves Fortier]], who provided legal services to Nortel while sitting on its board, and Nortel's auditors, [[Deloitte & Touche LLP]], who were paid $15 million for non-auditing services.<ref>{{cite web |url=http://www.lightreading.com/document.asp?doc_id=14491 |title=Shareholders Blast Nortel&nbsp;– Telecom News Analysis |publisher=Light Reading |access-date=May 26, 2012 |archive-url=https://web.archive.org/web/20120619051841/http://www.lightreading.com/document.asp?doc_id=14491 |archive-date=June 19, 2012 |url-status=dead }}</ref>

=== Headquarters bugging ===
In 2013 workers preparing the former Nortel headquarters for the [[Department of National Defence (Canada)|Department of National Defence]] discovered electronic eavesdropping devices.<ref>{{cite web |title=Was Nortel's Ottawa Campus bugged? |url=https://www.infosecurity-magazine.com/news/was-nortels-ottawa-campus-bugged/ |archive-url=https://web.archive.org/web/20200804185734/https://www.infosecurity-magazine.com/news/was-nortels-ottawa-campus-bugged/ |url-status=dead |archive-date=August 4, 2020 |website=infosecurity-magazine.com |publisher=Infosecurity Magazine |access-date=14 June 2019 |date=October 3, 2013 }}</ref> The bugs found were older and non-operational leading Canadian intelligence to draw the conclusion that the former tenant Nortel and not the future tenant MND was the target.<ref>{{cite web |last1=Pugliese |first1=David |title=ottawacitizen.com |url=https://ottawacitizen.com/news/national/defence-watch/the-mystery-of-the-listening-devices-at-dnds-nortel-campus |website=ottawacitizen.com |publisher=Ottawa Citizen |access-date=14 June 2019 |date=October 18, 2016 |archive-date=June 26, 2019 |archive-url=https://web.archive.org/web/20190626092347/https://ottawacitizen.com/news/national/defence-watch/the-mystery-of-the-listening-devices-at-dnds-nortel-campus |url-status=live }}</ref>