BT takes legal action against former execs over Italy accounting scandal

BT is looking to distance itself further from last years’ accounting scandal, filing a criminal complaint against executives who oversaw the saga, according to a Reuters report.

In the complaint, BT accuses several former Italy executives and other employees of breaking corporate governance rules and unlawful conduct. BT said “We cannot comment on the ongoing investigation,” when asked by Telecoms.com, though the move is consistent with moves by the telco to put some air between itself and the scandal.

Earlier this month, it was reported several BT execs had been flown out to Milan to discuss how the  troublesome Italian business could be jettisoned. This would appear to be a move to preserve some sort of credibility, as it would not seem to be financially very beneficial to BT. The Italian unit is currently a loss-maker, and combined with the scandal, it is hardly a pristine asset for potential acquirers. It does look like a case of out-of-sight out-of-mind.

Reuters initially uncovered the complaint, and following an investigation, found several BT employees exaggerated revenues, faked contract renewals and invoices, while also inventing a bogus supplier transactions in order to meet bonus targets and hide the poor performance of the business. Although the scandal was only unearthed a matter of months ago, this practise has been claimed to be traced back to 2013.

During a period when telcos are struggling to maintain profit margins, and the fluidity of customers is seemingly becoming more obvious, such an association could be pretty bad news. A pessimist might conclude the criminal charges might resemble a PR move with BT putting forward the message of ‘it wasn’t us, and now we’re going after the bad guys’.

Amongst those in the firing line, is former CFO for the Italian business Luca Sebastiani, who was dismissed following the scandal. Sebastiani has claimed his dismissal was ‘completely unjustified’ as he was only appointed to the position in May 2016, and therefore cannot be held responsible for dodgy accounting practises prior to this point. This is true, though Sebastiani held senior finance positions in BT Italy prior to this appointment which might shed some doubt on his plea of ignorance.

Former CEO Gianluca Cimini is another who faces accusations of violating corporate governance rules, as well as using intimidating behaviour towards staff, while former COO Stefania Truzzoli manipulated results that were used to award staff bonuses, BT claims.

BT will undoubtedly recover from the financial spanking, but whether the tarnished reputation can be buffered up in the foreseeable future remains to be seen.