Why BT ‘ignored’ Italy scam flag
‘Inappropriate management behaviour’ and ‘historical accounting errors’ were acknowledged in 2016
Milan — Three employees of BT Group’s Italian unit had warned their Madrid-based supervisor in November 2015 about possible accounting problems at BT Italy, one of the three said, a year before the phone company revealed financial irregularities at the division. The source’s disclosure, on condition of anonymity because Italian prosecutors are investigating the matter, raises questions about how promptly BT began investigating an accounting scam that has cost it £530m and hit its share price. BT, one of Britain’s oldest companies, said in October 2016 it had discovered "inappropriate management behaviour" and "historical accounting errors" at its Italy unit, taking a £145m write-down. In January, it said it had identified improper accounting at BT Italy and expanded the write-down to a total of about £530m. BT CEO Gavin Patterson told reporters at the time that BT could not have detected the problem sooner because Italian managers kept their London bosses in the dark. BT did not say...
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