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Red Wilson, Nortel Networks' chairman, on Wednesday apologised to shareholders for the problems that have engulfed the Canadian telecoms equipment maker over the past year.

Addressing Nortel's first annual meeting in more than two years, Mr Wilson defended the company's directors.

He said that no board could have uncovered the accounting irregularities that led Nortel to restate financial results for three years, and to dismiss its chief executive, chief financial officer and eight other executives.

About 300 shareholders, retired staff and employees attended Wednesday's carefully orchestrated annual meeting.

Several expressed strong criticism of the board and management, pointing, among other things, to numerous restatements of financial results, generous compensation to directors and the dismal performance of Nortel shares.

Bill Owens, chief executive, said Nortel's priority was to build cash reserves, contain costs and boost revenues.

He predicted a “very good year” in 2005, based on higher revenues and a recent improvement in orders. He made no mention of profits.

Nortel reported a first-quarter loss of $49m mainly as a result of higher expenses and $21m in one-off charges.

Among Nortel's business priorities, Mr Owens singled out voice-over-internet (VoIP) technology, construction of large telecom networks, and joint ventures in South Korea, China and India. “Every board has as its cornerstone trust in the senior management of the company and transparency in its financial reporting and disclosure,” said Mr Wilson, who retired from the board yesterday. He added that the audit committee was not made aware of any “concerns or issues” in repeated meetings with external and internal auditors, the former chief executive, chief financial officer and controller. The company is still the subject of criminal and regulatory investigations in the US and Canada.

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