The Canadian Press
April 30, 2008 - 5:44 p.m.

WASHINGTON - Three former executives with Nortel Networks Corp. (TSX:NT) have agreed to pay $75,000 each as part of a settlement by the U.S. Securities Exchange Commission related to financial fraud allegations.

The SEC said in a statement Wednesday that the three former vice presidents - Craig Johnson, James Kinney and Kenneth Taylor - agreed to settle the commission’s charges against them stemming from their alleged involvement in Nortel’s earnings management fraud during 2002 and 2003.

“Each has consented, without admitting or denying the Commission’s allegations against them,” the statement says.

As well as paying $75,000 each, Johnson will pay disgorgement in the amount of $66,845, while Kinney and Taylor will each pay $52,000, along with prejudgment interest of $21,186 and $16,481 respectively.

Each of the three former executives are also banned from acting as an officer or director of any public company for five years.

The SEC alleges that Johnson, Kinney and Taylor improperly maintained reserves during the fourth quarter of 2002, which “they knew, or were reckless in not knowing, were no longer needed.”

The complaint also alleges that the three, acting upon the orders of former Nortel corporate executives - Frank Dunn, Douglas Beatty and Michael Gollogly - manipulated Nortel’s earnings by setting up approximately $37 million in unnecessary reserves during the fourth quarter of 2002 “in order to suppress an unexpected profit and smooth Nortel’s consolidated pecuniary results.”

The SEC said its litigation against five other former Nortel executives involved in Nortel’s alleged accounting fraud is ongoing.