A lawyer for former Nortel Networks Corp. chief executive officer Frank Dunn says he was surprised by how aggressively company investigators questioned his client at a meeting a month before he was fired in 2004.
In a rare move, prominent Bay Street legal veteran Thomas Heintzman testified Tuesday at Mr. Dunn's Toronto fraud trial after receiving a subpoena from the Crown compelling him to appear as a witness at the long-running hearing.
Although lawyers typically do not testify against their clients because they are protected by solicitor-client privilege, the Crown received court approval in a pretrial motion to call Mr. Heintzman in this case.
The trial also heard Tuesday from Abbey (Junior) Sirivar, a younger lawyer who worked with Mr. Heintzman, and is scheduled to hear from lawyers representing former Nortel chief financial officer Douglas Beatty.
Mr. Heintzman was Mr. Dunn's lawyer in March, 2004, when the then-CEO was called to a meeting with investigators hired by Nortel's board to probe concerns about accounting irregularities at the company.
Mr. Heintzman testified he was surprised that the meeting – held on a Sunday afternoon at his law firm's offices in downtown Toronto – became quickly hostile. "It was much more aggressive and accusatory than I had expected," he said.
He said U.S. investigator William McLucas interjected to make aggressive comments during the session, while another lawyer working with him asked pointed questions.
"She was civil, but it was as though she had her own view of the world that she was putting to Mr. Dunn. … The tone of the meeting was very aggressive and accusatory."
The Crown has called Mr. Heintzman and other lawyers because it wants to enter evidence at the fraud trial about what Mr. Dunn and Mr. Beatty said when interviewed about Nortel's accounting decisions.
Lead Crown attorney Robert Hubbard said the Crown initially wanted to call investigators from U.S. law firm Wilmer Cutler Pickering Hale and Dorr LLP to testify about their meetings with Mr. Dunn and Mr. Beatty and about the report they prepared for the board about accounting issues at Nortel.
But a judge ruled in pretrial motions that the report could not be used, and said the U.S. investigators could not be called because they refused to hand over their original notes used to prepare their report. The Crown cannot subpoena the notes because the lawyers are based outside Canadian jurisdiction in the United States.
Mr. Hubbard said the only avenue left to the Crown to enter evidence about the interviews was calling the other people present in the room – the lawyers for Mr. Dunn and Mr. Beatty.
The trial heard Tuesday, however, that Mr. Dunn's lawyers will not provide the notes they took at the 2004 meeting because they say they are subject to "litigation privilege," which means they were prepared with the idea they would be used in the numerous lawsuits and legal matters that emerged at that time.
Mr. Heintzman testified he doesn't remember a lot of what was said at the meeting, and it was not recorded. He said he does not believe he made any notes of the proceedings but isn't certain.
Mr. Sirivar testified he took notes, but is not confident they were an accurate reflection of what happened at the meeting because people spoke quickly, referred to documents he could not see and used terminology he didn't know.
Trial judge Frank Marrocco has not ruled yet on the admissibility of the notes. Once he rules on the notes, the lawyers will be questioned in more detail about what was said at the meeting.
In testimony Tuesday, Mr. Heintzman listed the many lawsuits and regulatory matters that emerged involving his client after the meeting in 2004. He said he was concerned about those sorts of litigation matters during the questioning on March 21.
But Mr. Hubbard asked Mr. Heintzman if the notes of the meeting have ever been used in any of the litigation matters that followed.
Mr. Heintzman said they have not specifically been used, but said he advised Mr. Dunn on how to proceed in part based on what he heard at the meeting.
"They factored into my advice to Mr. Dunn about what he should do going forward," Mr. Heintzman said.
Mr. Sirivar said he used the notes to prepare a chronology of events in preparation for the various legal matters involving Mr. Dunn.