The former UK national phone company BT announced that it's writing down the value of its Italian operation by £530m because it has been committing accounting fraud for years, triggering a mass sell-off of its shares, wiping £5.5b off the company's valuation.
The company had earlier signalled that it might need to write down the Italian division by £145m over the fraud, but admitted that it had dramatically underestimated the extent of the wrongdoing.
BT has fired a bunch of its Italian execs (it's not clear whether these disgraced managers were given big payouts on their way out the door).
Investors worry that the accounting scandal will spread to other BT divisions, resulting in more write-downs.
BT group chief executive Gavin Patterson said: "We are deeply disappointed with the improper practices which we have found in our Italian business."We have undertaken extensive investigations into that business and are committed to ensuring the highest standards across the whole of BT for the benefit of our customers, shareholders, employees and all other stakeholders."
BT said it had suspended a number of BT Italy's senior management team who have now left the business. These include former chief executive Gianluca Cimini and chief operating officer Stefania Truzzoli.
It has appointed a new chief executive of BT Italy who will take charge on 1 February. The company said that the new chief executive would review the local management team and "will work with BT Group ethics and compliance to improve the governance, compliance and financial safeguards in our Italian business".
