BT Italian accounting scam had connection to London

A criminal investigation over accounting fraud carried out inside British Telecom’s Italian branch has revealed the scam was linked to senior executives in London.

Emails seized by the police from current finance director at BT wholesale Brian More O’Ferrall, revealed the claims from Italian prosecutors who said top BT UK employees were a central part of the problem and were not oblivious to the issue as they purported to be, reported Reuters on Tuesday.

“A series of emails between the top financial executives of BT Plc and managers of the (Italian) unit 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,” Italy’s financial police said in a 353-page report seen by Reuters.

At the time of the emails, O’Ferrall was (CFO) for BT Europe, the European part of Global Services, one of the company’s biggest businesses.

In the past, BT blamed former executives in Italy for the bookkeeping irregularities and said the company itself was a victim of any fraud found to have taken place.

Apparently, as new information comes to light, these top executives were involved in artificially inflating financial results for BT’s Italian business.

In one email included in the Italian police report, O’Ferrall states Cameron wanted to boost operating profit by €700,000 and asks top BT bosses to use an accounting method known as capitalisation to spread labour costs over an extended period of time.

“All, I have an urgent request from Richard to find another €700k,” O’Ferrall wrote in the email seen by Reuters. “Please can you look at all opportunities and come back to me and Simon asap. Labour capitalization?”

Italian prosecutors are currently investigating three top BT executives among an expanded list of 23 suspects allegedly involved although O’Ferrall was not on that list since he was not involved with the Italian board at that time. O’Ferrall was appointed chairman of BT Italy in February 2017.

All three bosses have since left the company.

BT stock was down 0.86% to 229p on Tuesday at the time of writing.