Where there's smoke, there's fire
The notion that there's something terribly wrong at Nortel continues to gain momentum. If the audit committee looking at its financial statements for the past four years discovers something serious, it could mean serious trouble for CFO Doug Beatty, controller Michael Gollogly and, most important, CEO Frank Dunn - who was Nortel's CFO from 1999 to 2001.
It's strange that Beatty and Gollogly look like they're taking the fall, while Dunn quietly hides behind the curtain - hoping this controversy disappears soon.
On the other hand, if the audit committee only finds minor accounting issues, then you could accuse Nortel and Dunn of over-reacting with the decision to give Beatty and Gollogly the boot - at least temporarily - and spooking investors.
Ultimately, Dunn has to stand up and take responsibility for what's happened. From what I can tell, it looks like the board is trying to protect Dunn by keeping him out of the fray. The question is how long they can pull off this strategy.
