Nortel Networks placed its chief financial officer and controller on paid leave yesterday as part of an accounting inquiry.

The news sent shares in the Canadian networking equipment maker down 14 per cent by the afternoon.

The company said the action was necessary while its audit committee completed "an independent review" of the circumstances that led to the company's decision to restate results from 2000 through the first half of 2003.

Investors and analysts said it was unclear why the officials were being put on leave. A Nortel official would not rule out further senior management changes relating to the audit.

The official would also not say why the two were being placed on leave now rather than when the restatements were first revealed. Nor could the official say when the internal audit would be completed.

The announcement was the latest in a trickle of bad news from the Canadian group.

Nortel's shares fell 7 per cent last Thursday after it said it would probably restate results for the second time in six months.

The company warned that it would need to delay filing documents with US securities regulators.

Nortel said in October that it would restate earnings from 2000 to the first half of 2003, mainly because it took larger-than-needed liability provisions at a time when it was busy slashing about two-thirds of its staff.