back to article Shocked, I tell you. BT to write off £530m over 'improper' Italian accounts practices

BT is to write off £530m following an accounting scandal in its Italian business, saying it was "deeply disappointed" with the improper practices uncovered. The firm had previously expected the sum to be £145m, but has today revised that figure upwards after the investigation began last October. BT said the behaviour in its …

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  1. Anonymous Coward
    Anonymous Coward

    A corrupt Italian business

    And this is news?

    1. Voland's right hand Silver badge

      Re: A corrupt Italian business

      Just a thought... Does BT have a anything in Greece?

      1. katrinab Silver badge

        Re: A corrupt Italian business

        Yes, http://www.globalservices.bt.com/mea/en/whybt/contact-bt

        I'm not sure why they have put Greece in their Middle East and Africa division.

        1. CrazyOldCatMan Silver badge

          Re: A corrupt Italian business

          I'm not sure why they have put Greece in their Middle East and Africa division.

          Similar levels of income and business probity?

      2. Anonymous Coward
        Anonymous Coward

        Re: A corrupt Italian business

        "Just a thought... Does BT have a anything in Greece?"

        What about the Greeks in BT? High up in Finance too...

    2. Tim Jenkins

      Re: A corrupt Italian business

      *shrugs*

      *orders caffè latte*

      *flirts with barista*

      1. Anonymous Coward
        Anonymous Coward

        *orders caffè latte*

        Sorry, an Italian would rarely order "caffé latte" in a bar - it could be usually what you get at breakfast at home (it's what you get when you simply pour some coffee into a cup of milk, and is usually written caffelatte). An Italian would order a "cappuccino" or, if it should be more milk than coffee, a "latte macchiato".

        1. Commswonk

          Re: *orders caffè latte*

          You forgot the <pedant> </pedant> tags.

          See me.

          1. Anonymous Coward
            Anonymous Coward

            Re: *orders caffè latte*

            Unless things over there have really gone downhill, Italians rarely take milk in their coffee when ordering in a bar. A caffe corretto, on the other hand, can be an excellent way to start the day before driving to work - err, allegedly.

            1. Anonymous Coward
              Anonymous Coward

              "Italians rarely take milk in their coffee"

              Wrong. A "caffé macchiato" is pretty common, and you usually see a small pot with cold milk on bar counters, if you want to add yourself it (you can also ask for a "caffé macchiato caldo" - where hot milk is added like in a cappuccino).

              Cappuccino itself is coffe with milk. "Marocchino" too has milk, adding cocoa also.

              A "caffé corretto" (usually with brandy or grappa, but other liquors can be used) is usually an after dinner, but it's not uncommon to see people getting it in the morning, especially in some areas...

              1. Anonymous Coward
                Anonymous Coward

                Re: "Italians rarely take milk in their coffee"

                Most Italians I know have a ristretto in the morning...

  2. Anonymous Coward
    Anonymous Coward

    No prosecutions then?

    No prosecutions then?

    1. Dan 55 Silver badge

      Re: No prosecutions then?

      They'll probably walk into jobs at Telecom Italia.

      1. macjules
        Coat

        Re: No prosecutions then?

        Could be worse. I recall when PowerGen set up their Italian offshoot. Unfortunately for them nobody realised that the website URL was www.powergenitalia.it until too late.

        1. Dan 55 Silver badge
          Headmaster

          Re: No prosecutions then?

          Yes and no...

          http://www.snopes.com/business/names/powergen.asp

          1. Kane

            Re: No prosecutions then?

            "Yes and no..."

            More importantly, No.

          2. Ogi

            Re: No prosecutions then?

            > http://www.snopes.com/business/names/powergen.asp

            I love it how the snopes link on the register references the register in its debunking. Specifically: http://www.theregister.co.uk/2003/06/18/powergen_denies_ties_with_powergenitalia/

            1. Anonymous Coward
              Anonymous Coward

              Re: No prosecutions then?

              I love it how the snopes link on the register references the register in its debunking. Specifically: http://www.theregister.co.uk/2003/06/18/powergen_denies_ties_with_powergenitalia/

              But life imitates art: Powergen were bought by E.ON, and E.ON went on a mongo acquisition spree including a load of Italian assets. Almost all had to be sold at fire sale prices, with a huge writeoff for investors. So ultimately there was a a right cockup involving power in Italy.

              You really, really wouldn't want to be on the long-suffering investors in E.ON. Every single major strategic decision by their board has been an epic failure.

      2. Anonymous Coward
        Anonymous Coward

        "They'll probably walk into jobs at Telecom Italia"

        For Stefania Truzzoli would be a come back.... but she was also in the MPS bank board... a bright career, indeeed...

    2. Anonymous Coward
      Anonymous Coward

      Re: No prosecutions then?

      Did BT filed a lawsuit against them? Or just preferred to do the laundry internally, so some upper executive(s) who should have controlled won't be charged either?

      1. Mark 85

        Re: No prosecutions then?

        Did they get their severance bonus? That seems pretty standard amongst the execs.....

      2. Tom 7

        Re: No prosecutions then?

        Not sure if its common practice* but one company I worked for used its foreign arms to remunerate top level staff in off-shore accounts and then feigned shock when the foreign arms accounts could only have been passed by Goldman Sachs.

  3. Anonymous Coward
    Anonymous Coward

    BT are an incompetent bunch of buffoons that make Talktalk look professional..

    1. BebopWeBop
      Thumb Down

      I think that is a little harsh. They are not great (see customer service and others).. BUT the sheer incompetence of the sainted Didi and others at TalkTalk - laughing all the way to the bank, takes a lot of beating in the UK ISP industry

      1. Anonymous Coward
        Anonymous Coward

        I think that is a little harsh.

        I don't. My office is one of several in a technical park. Whenever BT (or one of their trusted outsource providers) arrive on site, terror sweeps through all techies.

        In the past couple of years they've:

        1) Disconnected live pairs and reused them for someone else.

        2) Completely failed to find the pair they've jumpered in the cabinet down the road anywhere in our building (probably cut off some innocent house instead).

        3) Taken four visits to just install a single analogue phone line.

        4) Terminated ADSL services for the wrong company, and then insisted a new order (plus 6 week wait) would be required to turn it back on again (I believe an engineer's van was actually blocked in the car-park until that was resolved - impressively within a couple of hours).

        And these are just the ones I hear about!

        They really *do* have one job to do... Provide a telecoms service... And they're shockingly bad at it.

        I'm almost glad we have a direct fibre onto Virgin, although that has its own horror stories.

    2. This post has been deleted by its author

      1. Anonymous Coward
        Anonymous Coward

        @AC - Given that even Nigel Farage.........

        Downvoted for such woefully out of date commentardery, Sith Lord Nuttall now runs the darkside of things.

        Please, do keep up with current affairs.

    3. CrazyOldCatMan Silver badge

      BT are an incompetent bunch of buffoons that make Talktalk look professional..

      Actually, in my short and inglorious stint as a Network manager I found that BT, in most cases, were the least-worst of the big telcos to deal with. Mostly because the majority of the engineers had a Clue(tm)[1]. It was their back-office processes and management that seemed to have the most ability to completely muck things up..

      [1] Mind you, this was about 10 years ago so most of those engineers have probably been sacked, made redundant or quit in disgust.

  4. Tony Paulazzo

    Well at least we know why BT are putting up their prices now, their shareholders probably lost a penny on their stock options. Gotta get it back somehow! /s

    1. IDoNotThinkSo
      Mushroom

      A bit more than a penny.

      Shares down close to 20% last time I looked.

      These people shouldn't be "leaving the business", they should bankrupted and in jail.

      1. Tom 7

        Re: A bit more than a penny.

        Na - they give themselves a bonus for having to work through interesting times.

  5. Haku

    Is this why BT infinity bills are going up by £2.50/month?

    /cynic

    1. Roger Greenwood

      Re: Is this why BT infinity bills are going up by £2.50/month?

      You assume that the left hand is conversing with the right and that they can co-ordinate their actions?

      Big assumption.

      /cynic

      1. littlejohnny

        Re: You assume that the left hand is conversing with the right

        I see an alternative here. When the chest is enjoying the gravity and the high-speed impact with the ground both hands move in the same direction in a semi-coordinated fashion. Telco business is all about high-speed, right?

        /curious

  6. Inventor of the Marmite Laser Silver badge

    Being naughty?

    Its not as if BT have previous phorm. is it?

  7. Hass

    yep, you're lucky, the shysters want £6 from me and I only signed a renewal 30 days ago!

  8. Anonymous Coward
    Anonymous Coward

    BT NextGenitalia.

    You have to ask how you don't notice £530 million going missing, even for a company the size of BT.

    To put that in perspective, the contract to upgrade the whole of Wales to FTTC was £200 million. You don't lose this sort of money without serious corruption in ALL aspects of the business.

    UK plc seriously needs to separate Openreach, take back control of the local loop and marginalise the power of this corrupt company, that has its messy fingers stuck well up Ofcom and the CMA aswell.

    VW, Samsung, BT and Theresa May (Trident mishap memory lapse). These multinationals/political parties seem to be recruiting from outside the gates of Winson Green.

    1. juice

      Re: BT NextGenitalia.

      That's a wee bit unfair. This wasn't BT, this was a subsidiary *in another country, with a (presumably) very different and complex regulatory process* who appears to have been cooking the books. I'm guessing it was more a case of inflated numbers and stuff being rapidly shuffled between divisions and/or bank accounts to make things look good and keep bonuses high.

      I've no doubt that people will be running around within BT doing damage limitation, but this situation is absolutely nothing to do with BT's practices in this country, nor does it have anything to do with the politics of Openreach and Ofcom.

      Also, it's worth noting that BT's employees in the UK - including in subsidiary companies - have to undertake a mandatory set of annual training courses which make it clear that equivalence has to be maintained and things like bribery and corruption are completely unacceptable. Which may not stop people, but at least they can't claim that they haven't been explicitly warned.

      You have to wonder if other large-scale companies follow the same best-practice. Such as Tesco, with their £326m accounting scandal...

      [ObDisclaimer: I worked for BT, about a decade ago. I don't have any shares in them, though, which may not be a bad thing at present!]

      1. Anonymous Coward
        Anonymous Coward

        Re: BT NextGenitalia (aka. Forward thinking C***ts)

        "You have to wonder if other large-scale companies follow the same best-practice. Such as Tesco, with their £326m accounting scandal..."

        Best Practice? Nothing to do with best accounting practice regards Tesco. Tesco has been shown (by SFO) to be the result of serious fraud at the boardroom level (trials of 3 are set for Sept 2017), but as always it's very difficult to get prosecutions to stick, such as former chief executive Philip Clarke, without a paper trail/evidence. Maybe he co-operated fully with the investigation, but while possible, it seems very unlikely he was fully unaware.

        At £530 (likely to be revised higher, Tesco estimates went up £63m from an initial £264m estimate to £326m) is still £204 million more than Tesco, which is still more than the total value of the whole of the Welsh FTTC Contract. (A contract taking years not weeks to undertake).

        "I'm guessing it was more a case of inflated numbers and stuff being rapidly shuffled between divisions and/or bank accounts to make things look good and keep bonuses high."

        In my book what you have just written 'is' fraud/corruption. You seem to see this a "light touch" manipulation?

        If you look for comparisons between the two Tesco/BT, on a simplistic consumer level, we had schizophrenic blantant, deceiptful "yoyo" offers at Tesco during Philip Clark's Tenure. We have the same schizophrenic deceiptful "yoyo" offers at BT/plus.net taking place, just the same, with multiple increases in the same year.

        but as you say, "this situation is absolutely nothing to do with BT's practices in this country".

        Nothing to see here, move along.

        1. juice

          Re: BT NextGenitalia (aka. Forward thinking C***ts)

          "Best Practice? Nothing to do with best accounting practice regards Tesco."

          I'm pretty sure that unless you're working for the Mafia, best accounting practice never involves deliberate fraud. The point I was making was that BT makes it very clear at all levels that such activities are unacceptable and will lead to dismissal and possibly prosecution.

          I'll also (un)happily note that upper management can often have a different view on "unacceptable" when compared to the lower tiers of management - and often seem to get away with far more at a much lower cost than other employees would be allowed to do - but as I said above, in BT at least, everyone has to provide explicit annual proof that they're aware of the rules and regulations which pertain to their role. I may even still have some of my old printed certificate-of-completions hanging around somewhere!

          ""I'm guessing it was more a case of inflated numbers and stuff being rapidly shuffled between divisions and/or bank accounts to make things look good and keep bonuses high."

          In my book what you have just written 'is' fraud/corruption. You seem to see this a "light touch" manipulation?"

          No, it's still fraud and corruption. The point I was trying to make was related to the original poster's "how you don't notice £530 million going missing": it wouldn't have been a single lump sum which could be easily spotted by running =SUM(A1,A20) over an Excel spreadsheet. Instead, it'll have been lots of things overstated, understated, assigned the wrong depreciation rate, calculated using an incorrect exchange rate, unrecipted, double-charged and a dozen other things that will only be understood by a professional accountant with full access to the books and a thorough understanding of the company's processes and the applicable national/international legislation.

          Apologies if that wasn't entirely clear!

          In the meantime, it looks like the knives have been sharpened and a few heads are starting to roll, starting with the head of BT's Continental Europe division (aka the ex-head of BT Italy). Though again, as per above, I'd guess his leaving statement will be phrased to handwave as much personal responsibility as possible away...

    2. John Miles 1

      Re: BT Needs Openreach

      No, BT needs OpenReach so that its fat predictable revenue stream can fill in for these occasional mega-lapses

  9. allthecoolshortnamesweretaken

    Given that the Italians pretty much invented modern accounting during the renaissance...

    Anyway, could be due to different rules of accounting. If so, not so much illegal practices by the subsidiary, but a big blunder by the parent company. (It is BT after all.)

    Example: when Mercedes Benz got ready to morph into DaimlerChrysler and to get listed at the NY stock exchange, they published two financial statements in parallel for that year; one drafted as per the German rules of valuation, one drafted as per the US rules. Version one: 2 Bn DEM profit. Version two: 0.5 Bn USD loss. No, accounting is not like engineering.

    "Next week on show and tell: California divorce law - how to hide your assets." -- (Christopher) Titus

  10. Dave 15

    Let me guess

    All those who left got a massive payout for the early termination of contract

    All those that left have massive pension pots (as well as bulging back pockets)

    All those that left still have their shares and share options

    All those that left are still on gardening leave for another year or so of notice paid for by BT

    None of those involved have coughed up a penny to cover the losses

    None of those involved will end up in court

    All of them already have shiny new jobs lined up on even larger pay?

    Oh for a life at the top where even if you are a lying, cheating, no good, two faced, bar steward you still get you dirty hands on more dosh than you can wave a stick at.

  11. Jove Bronze badge

    The buck stops here

    Clear a failing at the very top to allow such opportunity within the overseas operations. Given the size of the figure, further leading people will need to be invited to leave the business.

  12. kmac499

    I'm having a little trouble doing my self assesment tax form.

    Anyone know of a decent tax advisor cum auditor, Giovanni my BT Openreach mate says they use PWC.

    (BTW How he gets all his gear in the back of the Ferrari amazes me.)

    1. Anonymous Coward
      Anonymous Coward

      Are you sure BT use PWC as their tax advisor and not Don Corleone of the Genco Pura Olive Oil Company ?

  13. Anonymous Coward
    Anonymous Coward

    Bland bland bland bland bland

    Never mind that, the important question on everyone's minds is...

    Why does the girl in the stock photo you used for this story's thumbnail not have any glass in her, er, glasses?

    Now that I look at it, the whole photo is half-arsed crap. Is this the blandest and least convincing stock photo ever?

    Like the attempt to look more interesting with the "elves and the shoemaker" oversized fastening on her clothes. Like her hairstyle. Like the aforementioned glassless glasses.

    It's a contrived attempt to look interesting that fails because it looks both contrived and uninteresting- like they couldn't be arsed putting in the effort needed to *not* look contrived.

    Pose? "Just stand over there and hold your hands up like you're confused or something". Couldn't look more half-arsed and unconvincing if she'd tried. In truth- and to be fair- she comes across like someone inexperienced in posing for stupid stock photos. The real person to blame is whoever thought "meh, good enough, only ten minutes to lunch" with that not-smirky-enough-to-be-a-smirk-faced first attempt.

    All topped off with an exciting white background!

    At least the angry woman stock photo you use a lot is almost amusingly silly. Bring back Flaming Angry Woman!

    1. Anonymous Coward
      Anonymous Coward

      Re: Bland bland bland bland bland

      Because it is f*** shutterstock.

      Try to contribute there and see what do they bounce things for and what is accepted.

      Once it is accepted, for the rates you get, you can get only very cheap models and very cheap tat on them. In fact - cheap FAKE tat, because if anything on the model has an identifiable "origin" - glasses from a known high street manufacturer, visible logos, etc - they will bounce the photo.

      1. Anonymous Coward
        Anonymous Coward

        Re: Bland bland bland bland bland

        Ah, interesting response- thank you. I have to admit I was still thinking in terms of stock agencies taking their own pictures or having agencies and/or professionals who make a good living do it. I forgot we're now all living in a race-to-the-bottom-there's-always-ten-more people-who'll-do-it-cheaper buyer's market.

        It does at least make a whole lot more sense in that context and puts the photographer/arranger in a more sympathetic light, though it's still not a good photo.

  14. theModge

    Bursar!

    The dried frog pills please.

    (I still upvoted it though. I enjoy such silliness)

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