Exclusive: Bullying, bonuses and a red flag that BT missed in Italy - sources

Thu Mar 30, 2017 8:15am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Emilio Parodi

MILAN (Reuters) - Three employees of BT Group's Italian unit warned their Madrid-based supervisor in November 2015 about possible accounting problems at BT Italy, one of the three said, a year before the phone company revealed financial irregularities at the division.

The source's disclosure, on condition of anonymity because Italian prosecutors are investigating the matter, raises questions about how promptly BT began investigating an accounting scam that has cost it 530 million pounds ($670 million) and hit its share price.

BT, one of Britain's oldest companies, said last October it had discovered "inappropriate management behavior" and "historical accounting errors" at its Italy unit, taking a 145 million pounds 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 530 million pounds.

BT Chief Executive 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 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, the source said.

They also complained to Cavestany of bullying by local management, especially then BT Italy Chief Executive Gianluca Cimini, and of pressure to meet tough bonus targets, the source said. The source added that the sales chief had replied that the three should help him to steer Cimini "in the right direction".

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".   Continued...

FILE PHOTO: The logo of BT is seen outside the headquarters in Milan, Italy January 24, 2017.  REUTERS/Stefano Rellandini/File Photo