U.S. Grand Jury Subpoenas Nortel Records

TORONTO (Reuters) – A U.S. grand jury has subpoenaed records from Nortel Networks Corp., North America’s largest maker of telecommunications equipment, as part of a criminal investigation, the company said on Friday.

Nortel, which last month fired its chief executive during a probe of accounting problems, said the documents include financial statements and corporate, personnel and accounting records from the start of 2000 to the present.

“The company has been advised that the materials sought are pertinent to an ongoing criminal investigation being conducted by the U.S. Attorney’s Office for the Northern District of Texas, Dallas Division. The company will fully cooperate with the authorities in this matter,” it said in a statement.

Shares of the one-time stock market darling fell more than 6 percent as the market opened, dropping 34 Canadian cents to C$4.97 in Toronto before recovering somewhat in heavy trade. In New York, Nortel sank 25 cents to $3.55.

Nortel said last month it expected to restate results for a second time to halve 2003 earnings, but reduce losses in previous years. It reported an unaudited 2003 profit of $732 million in January.

That announcement sent its shares plunging as investors speculated that an accounting review begun last year was developing into a full-blown financial scandal.

Canada’s top securities regulator, Ontario Securities Commission, launched an investigation into Nortel’s accounting problems in March but only disclosed it last month.

The U.S. Securities and Exchange Commission has also launched a formal probe into Nortel’s finances, giving its officials the power to subpoena witnesses and documents.