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Danny MCance 14 Feb 2019 12:54pm

PwC Italy partner named in BT criminal investigation

Andrea Alessandri is under “preliminary criminal investigation” for his role in the £530m BT Italy accounting scandal, according to reports

The PwC Italy partner led the team responsible for auditing BT Italy’s accounts during the period in question and has been accused by Italian prosecutors of falsifying the audit.

In 2017 BT revealed inappropriate behaviour in its Italian business, causing the company’s market value to plummet almost 20%.

An initial internal investigation estimated that historical accounting errors at BT Italy would cost the group £145m, however this was revised up to £530m following an independent review from KPMG.

Alessandri was named in a document, seen by Reuters, concluding a preliminary investigation into the accounting scandal.

The prosecution document also alleges that three BT group executives were aware of bookkeeping fraud, naming them on a 23-person suspect list for the case.

Former chief executive of BT Global Services Luis Alvarez, former chief financial officer of BT Global Services Richard Cameron – both based in London – and the former head of continental Europe Corrado Sciolla were all named by prosecutors.

They were accused of complicity in false accounting at BT Italy and of setting unrealistically high business targets.

Sciolla resigned from his role as head of Europe immediately after the scandal broke – Alvarez and Cameron followed suit later in 2017.

PwC, which had audited BT since the company’s listing on the London Stock Exchange in 1984, was replaced by KPMG in June 2017.

The Financial Reporting Council opened an investigation into PwC’s audit of BT in June 2017, which related to the financial statements produced for BT for the years ended 31 March 2015 to 2017 inclusive.

The US watchdog, the Public Company Accounting Oversights Board, followed suit in July 2017.

BT Italy also been placed under investigation and is no longer named as a damaged party, as under Italian law the company can be held responsible for the actions of its top executives.

This document is the final step in the case before prosecutors charge those involved – under Italian law suspects have three weeks to explain why they shouldn’t be charged.

“It would be inappropriate for us to comment on an ongoing criminal investigation,” a BT spokesperson said.

PwC declined to comment.

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