BT execs in UK ‘knew about Italian aggressive accounting’, says report

24 April 2019 | Alan Burkitt-Gray

Cover

BT’s senior executives in the UK knew about efforts to inflate the performance of the company’s Italian business, the Reuters news agency is reporting.

The agency says that Italy’s Guardia di Finanza – the financial police – has uncovered evidence that senior employees pressed BT Italia to boost the reports in the accounts.

The Guardia di Finanza is conducting an enquiry into the circumstances behind the alleged fraud that led the group to write off £530 million in 2017. At the time BT said it was “inappropriate behaviour” in BT Italia, part of BT Global Services.

Luis Alvarez quit as CEO of BT Global Services in 2017. Bas Burger, former head of BT in the US, took over and has begun a comprehensive restructuring of the business.

BT would not comment on the Guardia di Finanza investigation to either Reuters or Capacity. Reuters said it had seen a 353-page report from the financial police and reported that BT said: “We cannot comment on ongoing legal proceedings.” A BT official told Capacity: “I’m afraid … that we don’t have any comment to make on that one.”

Reuters reports that the Guardia di Finanza has seized emails from senior executives of BT in London and senior executives of BT Italia. The emails, said the Guardia di Finanza, as quoted by Reuters, contained “‘insistent’ requests by the leadership of the parent company aimed at achieving ambitious economic targets, even using aggressive, anomalous and knowingly wrong accounting practices”.

According to the report, 23 individuals are being investigated, including three BT executives.

The news agency says that “Italian prosecutors allege that a network of people at the unit exaggerated revenues, faked contract renewals and invoices and invented bogus supplier transactions in order to meet bonus targets and disguise the unit’s true financial performance”.