Senior executives at BT Group PLC (LON:BT.A) were allegedly involved in accounting fraud at the Italian division despite asserting they knew nothing about the misconduct, a criminal probe has revealed.
A report by Italy’s financial police, seen by Reuters, claims that a series of emails between BT’s top executives and managers of the Italian division “point to the existence of insistent requests by the leadership of the parent company aimed at achieving ambitious economic targets, even using aggressive, anomalous and knowingly wrong accounting practices”.
The 353-page report, which has not been made public, contains emails from BT’s wholesale business finance director, Brian More O’Ferrall, in which he asked staff in Italy to adjust accounts to inflate profits.
O’Ferrall was chief financial officer for BT Europe, the European part of Global Services, at the time.
He did not respond to Reuters’ requests for comment.
In January 2017, BT wrote down the value of its Italian unit by £530mln after revealing it had found evidence of improper accounting practices, leading to "the overstatement of earnings in our Italian business over a number of years". The announcement led to a 27% plunge in BT's share price.
BT is contesting class-action lawsuits by shareholders who claim the group failed to disclose the irregularities in a timely manner.
BT’s former chief executive, Gavin Patterson, has said top managers in London were unaware of the accounting blunder so were unable to alert shareholders sooner.
In February, Italian prosecutors named three top BT executives among a list of 23 suspects allegedly involved in the scandal but O’Ferrall was not on that list.