BT’s stock market value fell by £8bn as an accounting scandal at its Italian office deepened.
The telecoms group saw its value plummet after the scale of the scandal was a lot worse than first realised.
To make matters worse the company is seeing a slowdown in some of its other operations due to UK government departments cutting back on spending and the Brexit Vote. As a result profits were down by 300m.
BT’s remuneration committee will now meet to determine if bonus payments previously made to executives were justified. This includes Gavin Patterson, BT’s CEO. The bonus payments were based on targets that may not have been true figures. It is possible that BT may look to get previous bonus payments repaid from Italian executives. Many were suspended in wake of the scandal and have now left the business.
Prosecutors in Italy were opening their own investigations into BT Italia over alleged embezzlement and false accounting.
Italian Scandal Intensifies
Last October following revelations by a whistleblower, BT announced that it had inappropriate management behaviour in its Italian division which would cost the company £145m. The cost to the business has been discovered to be much worse, and now the total cost has been put at £530m.
BT boss Patterson earned £5m last year. One million was bonus payments, and £3 million came from share awards.
With the revelation of the Italian scandal and possible false accounting, the bonus and share awards come into questions for all BT staff that received them.
BT saw a massive fall in its share price when it fell by 20% to 302p. This is the biggest fall in one day it has ever experienced and the lowest price since June 2013. A number of US law firms who specialise in shareholder class action suits are now looking into BT dealings to see if they violated federal laws.