Saturday, October 16, 2010

Warring Tribes

When Paul Stern became CEO of Nortel back in the late 1980s, he offended many people in Northern Telecom and BNR by referring to us as "warring tribes". Perhaps his observation has come home to roost as Nortel's bankrupt estate is fought over by separate geographic units, and ex-employee groups.

What a sad eulogy for a once magnificent company that inspired the world to go digital and optical and helped put Canada on the map as a leader in research and development and especially in telecommunications technology

The UK pension fund is trying to grab a large share of the estate using a British law that holds a parent company responsible for pension trusts regardless of what country it calls home. Never mind that Nortel found itself responsible for all the STC pension obligations that were let slide by the UK before they were taken over by Nortel. In fact the UK claim alone, is as big as the total USA and Canadian pension trust funds combined. Does that make any sense?

The Canada and the US pensioner and ex-employee groups are suspiciously eyeing one another as they look at the estate pot, thinking that their share could be impacted by the claims of the other. The IRS has its claws into the carcass, as does the CRA, and banks and bondholders in both countries are pushing to ensure that they get paid at the expense of the pensioners in Canada who have no protection unlike those in the USA and the UK.

The Nortel Canada disabled employees are opposing the Canadian pensioners in terms of distribution of the Health and Welfare fund claiming that they should have it all since they were left out in the cold by Nortel who failed to establish a proper trust fund to protect these vulnerable employees. One set of victims fighting to leave another set of victims out of any share, whilst the real villain walks away.

And to cap it all, John Roth, a former CEO has placed a one billion dollar claim on the US estate, citing the possibility that he may get sued for letting the company go down the tubes. Rationalize that one if you can.

Whilst all this in-fighting is going on, the lawyers are cleaning up, charging exorbitant fees and sucking the cash blood out of what's left of Nortel, with the approval of the courts. That's the normal modus operandi of these vultures who know their way around the bankruptcy courts. It doesn't matter that they are eating into the funds that rightfully belong to the ex-employees, disabled employees, and pensioners. They get first pick and they are not shy at grabbing large sections of the money to satisfy their greed.

When we look back on this period of our lives it will be with anger at, and embarrassment for a once proud company and country. Canada could have stepped in and stopped this disaster like it did in supporting GM. Canada could have stepped in and enacted laws to protect disabled employees and pensioners suffering from the bankruptcy of the company they helped build. But Canada turned aside and ignored their plight. It's a stain on Canada's reputation as an honorable and caring country who once prided herself on her concern for the weak and the elderly.

Who now will speak for them, and for us?

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