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'Staff flagged BT scandal a year before scam probe'

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The logo of BT is seen outside the headquarters in Milan, Italy

The logo of BT is seen outside the headquarters in Milan, Italy

REUTERS

The logo of BT is seen outside the headquarters in Milan, Italy

Three employees of BT's Italian unit warned their supervisor about possible accounting problems - a year before the phone company revealed financial irregularities at the Italy division, one of the three has said.

The source's disclosure 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 last October it had discovered "inappropriate management behaviour" and "historical accounting errors" at its Italy unit, taking a £145m (€169m) write-down.

In January, it said in a statement it had identified improper accounting at BT Italy and expanded the write-down to a total of around £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 how it believed managers were involved in this deception. Reuters was unable to verify BT's allegation.

The source, speaking on condition of anonymity because Italian prosecutors are investigating the matter, told Reuters that he and two BT Italy colleagues had met the head of European sales, Jacinto Cavestany, on the sidelines of a company gathering in Munich in November 2015.

The three told the sales chief that they were worried something was wrong with the unit's financial results, though they did not provide evidence.

BT said in response to questions by Reuters that it began an internal investigation after receiving allegations in late summer 2016 of "inappropriate behavior" at BT Italy - almost a year after the Munich meeting. It did not specify the allegations or say exactly when the probe began.

Contacted by Reuters, Cavestany referred questions to BT. The company said in an email that "Jacinto has no recollection of these issues being raised with him at the conference".

Gianluca Cimini, in an email to Reuters, denied allegations of bullying. In relation to alleged financial irregularities, he said he knew of no illegal behavior and that BT Italy's accounts were verified by head office during his time as CEO.

BT declined to say when it uncovered irregularities. (Reuters)

Irish Independent