£8bn wiped off BT value after £530m Italy scandal

ALMOST £8billion was wiped off the value of BT yesterday after it revealed that an accounting scandal has left a £530million hole in its finances.

In a blow to BT’s almost one million small investors, shares plunged by almost 21 per cent.

Markets were stunned by the group’s admission that ‘inappropriate behaviour’ had caused it to exaggerate its profits in Italy for a number of years.

This included ‘improper accounting practices’ and a ‘complex set of improper sales, purchase, factoring and leasing transactions’.

The Financial Reporting Council said it is now considering launching its own investigation.

The scandal first emerged last summer, but yesterday BT admitted the problems were ‘ far greater than previously identified’. It said the scandal has forced it to write down the value of its Italian business by £530million – as opposed to its initial estimate of £1 5million.

The announcement – which was accompanied by a profits warning for this year and next – sparked a wave of panic selling, leading to the share slump.

Last night BT confirmed that a number of BT Italia senior executives have been suspended, including former chief executive Gianluca Cimini and chief operating officer Stefania Truzzoli.