Ex-Lucent Brass Can Breathe Easier Today

Canadian rival Nortel (NT) has become the subject of several investigations into the company's books and recent financial restatements. Nortel, which fired its CEO and most of its top finance executives, has said that the focus of the audits has been on the treatment of accruals or pay installments from sales contracts.

Nortel has also been criticized for setting up some $50 million worth of bonuses for top management based on controversial declarations of profits in 2003.

Lucent, which helped kick off the era of tech accounting scandals with its January shocker three years ago, says it has tentatively agreed to settle the SEC's investigation into $679 million worth of credits, discounts and fictitious sales improperly booked in 2000.

Critics point to some of the aggressive business practices fostered under former CEO McGinn as the source of the company's self-inflicted wounds. Under McGinn's leadership, for example, Lucent issued as much as $8 billion in financing commitments to its customers. These so-called vendor financing deals put Lucent on the hook for massive loans to feeble companies. Lucent promised outfits such as failed telco Winstar $2 billion in financing, while teetering wireless shop Leap got a $1.3 billion commitment.

Lucent has since lowered its customer loan exposure to less than $500 million.

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