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Italy Accounting Scandal Makes BT File Criminal Complaint: Reuters

Italy Accounting Scandal Makes BT File Criminal Complaint: Reuters
British Telecom dispatched its head of compliance to Milan to give evidence and has filed a criminal complaint with Italian prosecutors over an accounting scandal at its Italian unit, reported Reuters.
Several former Italy executives and other employees are accused of breaking company rules and unlawful conduct in the complaint that was filed by BT on March 21. It was just five months ago that BT took the first of two write-downs totaling 530 million pounds ($680 million) after the phone company first revealed financial irregularities at BT Italy.
A network of people in BT Italy had disguised the unit's true financial performance, invented bogus supplier transactions in order to meet bonus targets, faked contract renewals and invoices and had exaggerated revenues according to the complaint which has reportedly been seen by Reuters. Current and former staff have said that all of these practices had been going on since at least 2013. BT is itself a victim of any fraud found to have taken place, the BT complaint asserts to prosecutors, who began investigating the unit's accounting problems in January.
two sources with knowledge of the investigation told Reuters that in the second half of February, the company's director of ethics and compliance, Gareth Tipton, met Italian magistrates in Milan. The sources said that in late summer of 2016, an internal investigation by BT at its Italian unit had confiscated computer records which were also handed over to the prosecutors. "We cannot comment on the ongoing investigation," BT spokeswoman Gemma Thomas said in a statement.  
Though it does not make a specific criminal accusation against any of them, misconduct against three former senior executives of BT Italy and two former employees are alleged in the complaint.
Allegations of using intimidatory behavior when dealing with staff and grave violations of corporate governance rules in relation to contracts and suppliers by BT Italy chief executive Gianluca Cimini have bene made in the complaint. former chief operating officer Stefania Truzzoli manipulated data that was communicated to BT Europe during the internal presentation of results and she also manipulated results that were used to award staff bonuses. Cimini and Truzzoli declined to comment for this article. Truzzoli said she would respond to the allegations to the relevant authorities.
Former chief financial officer Luca Sebastiani induced an employee responsible for invoicing at BT Italy, Giacomo Ingannamorte, to issue fake invoices and failed to report financial irregularities to his managers, BT further alleges in the complaint. BT's rules in the manner in which he chose suppliers and for receiving a payment from an agent of BT Italy, were violated by Luca Torrigiani, formerly responsible for government clients and other large accounts in Italy, according to the complaint. Cimini, Truzzoli, Sebastiani, Ingannamorte and Torrigiani were all sacked, the complaint said.
His client "strongly disputed" BT's allegations and was suing the company for unfair dismissal, said Torrigiani's lawyer, Riccardo Chilosi, to Reuters.
BT had paid taxes on income that did not exist and because the inflated results at BT Italy meant that it had paid bonuses to staff who did not merit them the company suffered financially from unlawful conduct, BT said in its complaint.


Christopher J. Mitchell

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