Ex-BT bosses named in investigation into alleged fraud in Italy unit

Three former BT executives, including two who were based in London, have been named in an investigation into alleged accounting fraud in the company’s Italian division, a scandal that forced it to write off £530m and claimed the scalp of its European chief.

In a document summing up their case, prosecutors in Italy alleged that a network of BT Italy employees fabricated contracts and invoices and invented fake transactions to hide the unit’s true financial position and hit bonus targets.

Under Italian law, the claims mark the beginning of a three-week period during which the people under investigation have the opportunity to explain why they should not be charged.

According to Reuters, which first reported the latest development in the BT Italy affair, prosecutors have named Luis Alvarez and Richard Cameron, respectively the former chief executive and former chief financial officer of BT Global Services – one of the biggest divisions of BT Group.

They also reportedly named Corrado Sciolla, the former head of continental Europe who left in the immediate aftermath of the scandal emerging, among an expanded list of 23 suspects.

Alvarez and Cameron were based in London, Sciolla in Milan. The executives have since left the company.

A BT spokesman said: “It would be inappropriate to comment on an ongoing criminal investigation.”

Shares in BT plunged 21% in January 2017, cutting its stock market value by £8bn in one day, after the company revealed that it expected the cost of the affair to reach £530m.

The three people named in the prosecutors’ report are accused of setting unrealistically high business targets and of complicity in false accounting at BT Italy, which formed part of the global services division, according to the document.

Reuters said it had been unable to reach their legal advisers for comment.

The document also reveals that an Italian partner of BT’s auditor, PricewaterhouseCoopers, is under investigation over the scandal.

In the document, prosecutors allege Andrea Alessandri, who led the PwC team in charge of auditing BT Italia’s accounts, falsified the audit.

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When the scandal broke in early 2017, BT’s then chief executive, Gavin Patterson, said the company could not have detected the problem sooner because top managers in London were unaware.

BT filed its own criminal complaint against several of BT’s Italian managers in 2017. It is contesting class-action lawsuits by shareholders who say the group misled investors and failed to promptly disclose the irregularities.

The prosecution have named BT Italy as a suspect in the investigation, having previously been named as an injured party.