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Nortel administrators respond to criticisms

Alex Scroxton
Nortel administrators Ernst & Young have responded to criticisms levelled at them following the sudden and uncompensated redundancies of 228 Nortel staff at three UK sites in March.
 
In a prepared statement, the administrators said it acted completely within the law.
 
"In Administration, redundant employee claims are treated in accordance with insolvency law, which sets out a priority of payments. Redundancy, pay in lieu of notice and other benefit claims are unsecured and these claims must be treated equally with the claims of other unsecured creditors as specified by UK legislation.

"The Redundancy Payments Service has paid the statutory element of claims for non-payment of notice and redundancy claims."
 
The statement continued: "No consultation took place as it was not reasonably practicable to do so; and employment legislation recognises that there are situations in which swift action needs to be taken and it is not reasonably practicable to consult."
 
As reported by MicroScope, Nortel staff have reacted angrily to the redundancies, with protests at Westminster and the picketing of a channel partner event both drawing attention. Another protest is planned at Nortel's Maidenhead offices this week, according to the Maidenhead Advertiser.
 
The focus of the Nortelers' anger has centred on the fact that while the 228 affected were not offered severance packages, Nortel has still found the funds to pay multi-million dollar bonuses to key executives, a question raised with Gordon Brown by Alasdair McDonnell MP, who represents the Belfast South constituency close to Nortel's Northern Ireland facility.
 
These questions have also been taken up in Nortel's native Canada, where Mike Zafirovski, Nortel's under-fire CEO, was last week asked to appear before parliament to explain why Nortel paid out bonuses when it was canning long-serving employees left right and centre.
 
Zafirovski initially refused the request on the grounds it would be inappropriate when the company was still mired in restructuring, but the Canadian government has since ordered him to attend.
 
Speaking to the Canadian press, New Democratic Party MP Thomas Mulcair said "The fact that there are legal proceedings involving its [Nortel's] insolvency has nothing to do with their inability to testify. It was a transparent attempt to avoid having to avoid explaining why they voted ... millions of dollars in bonuses for themselves when people were being denied their severance."
 
Zafirovski's grilling is scheduled for tomorrow.

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