Jan 24, 2017
BT faces mounting clean-up cost of Italian scandal
BT's chief executive Gavin Patterson faces his biggest test since taking the helm of the former British monopoly in tackling the fallout of a widening scandal at its Italian business that sent shares to their worst day's trading since privatisation. Richard Marwood, senior fund manager at Royal London Asset Management, a BT shareholder, said that the Italian issue was an "Unwelcome addition" to the growing list of investor concerns given the company's huge pension deficit and ongoing battle with regulator Ofcom. KPMG was brought in to oversee the investigation at BT Italia, which has led to a much higher cost estimate of £530m placed on the scandal. Corrado Sciolla, head of BT Europe and a former BT Italia chief executive, was reported by the BBC to be on the verge of resigning. Simon Lowth, who joined BT as finance director last year from BG Group, said that the KPMG investigation had uncovered that BT Italia management was artificially depressing its cost base to appear more profitable that it actually was.
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