BT insists Italian scandal is under control as profits plunge

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Telecoms group’s chief refuses to say if he will hand back any of his bonuses as it is confirmed Europe head has resigned. BT’s chief executive has sought to reassure angry investors that an accounting scandal in Italy that wiped £8bn off the company’s market value is under control, but refused to discuss whether he should pay back some of the bonuses he received during the period of mismanagement.

Announcing a 37% slump in third-quarter profits, the company confirmed that its European head, Corrado Sciolla, was to leave in the wake of the scandal.

“Corrado is leaving the business, this happened on his watch,” the company said.

Gavin Patterson, the chief executive, said shareholders had a right to be angry at the scandal but maintained that the rest of the business, which accounted for 90% of profits, was doing well.

“Frankly, I am angry that the integrity of BT has been undermined by the wrongdoing of a few individuals in one part of the business,” he said. “Many shareholders are angry. They have a right to be. What happened in Italy was completely unacceptable. The situation is now under control.”

On Tuesday, the company revealed the mismanagement in Italy was worse than it had originally thought when it told investors about the scandal in October, and said it would now cost £530m rather than £145m.

Patterson would not be drawn on whether he felt he should take some accountability by giving back any bonus payments.

BT’s remuneration committee has launched an investigation into whether leading executives, including Patterson, should have any bonus payments clawed back for missing targets after the company delivered profit warnings for the next two years.

“That is a matter for the remuneration committee,” he said. “What we are doing today is focusing on fixing the issues in Italy. Ninety percent of the business is doing well. We are focused on managing the business and [the] remuneration [question] is not for today. We will cross that bridge when we get to it.”

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