British Telecom executives are embroiled in an accounting scandal after a criminal probe was opened by Italy’s financial police.
Investigators claim that email correspondence between BT executives and managers of the company’s Italian division point to increasing pressure to achieve ambitious economic targets by resorting to questionable accounting practices.
The email exchange involves BT’s wholesale business finance director, Brian More O’Ferrall, who asked his Italian employees to inflate profits. At the time, O’Ferrall was BT’s chief financial officer for BT Europe.
By October 2016, BT was forced to admit that the company had overstated its Italian operations’ profits by £147 million. BT said in January 2017 the overstatement profits of its Italian unit reached £530 million, which led to a 27% hit to the company’s stock value.
BT’s former CEO, Gavin Patterson, denies top management knew anything about false accounting. In 2017, Patterson admitted that BT’s integrity had been undermined by “the wrongdoing of a few individuals,” suggesting London had been kept in the dark.
Italian prosecutors have already named three top BT executives among a list of 23 suspects allegedly embroiled in the scandal, but O’Ferrall was not on that list. BT now faces class-action lawsuits by shareholders and has already paid out over £225 million to its shareholders Deutsche Telecom and Orange.