BT beefs up top team to fight fraud scandal
A TOP regulator has been recruited by BT as boss Gavin Patterson fights back over criticism of his handling of its Italian fraud scandal.
Cathryn Ross, the chief executive of water regulator Ofwat, is understood to be taking charge of the telecom company’s regulatory affairs division – a key role which will oversee the way the firm behaves.
Her appointment comes after a bruising year for BT.
The legal separation of its network and cables arm, Openreach, has begun but is being closely scrutinised by telecoms watchdog Ofcom.
Meanwhile, Patterson is also juggling a massive cost- cutting drive, the fallout of a £530m Italian accounting scandal and a £14bn pensions deficit.
In January, BT was forced to write down the value of its Italian business by £530m after years of ‘inappropriate behaviour’ in a major embarrassment for the company and Patterson.
BT found evidence of improper accounting practices that had resulted in ‘the overstatement of earnings in our Italian business over a number of years’.
The head of BT Europe, Corrado Sciolla, and BT Italy chief executive Gianluca Cimini lost their jobs over the scandal. But Patterson is also under huge pressure to prove that he is capable of putting the company back on track.
Ross’s appointment will beef up the boardroom before new chairman Jan du Plessis takes over from Sir Michael Rake in November.
A spokesman for BT last night confirmed that chief strategy officer Sean Williams, who currently handles regulatory affairs, was leaving but would not confirm Ross’s appointment. Ofwat chairman Jonson Cox said only that Ross was leaving for a private sector role, adding: ‘We are sorry to see her go and wish her every success in her new role.’
Ross was yesterday called a ‘transformational leader’ after pushing for major changes in the water industry, going into battle with companies over pricing and introducing competition from smaller firms.
Her experience at the regulator will be valuable to BT as it prepares to lock horns with Ofcom in the coming year.
BT caved to pressure from the watchdog in March to separate Openreach from the rest of its business, but is due to retain ownership of the new company and will still set its overall budgets – stopping short of giving it full independence.
The arrangement sets the stage for further clashes about the future roll-out of broadband.
Openreach is consulting with BT’s rivals – such as Sky, TalkTalk and Vodafone – after long-standing criticism that it has favoured BT and relied too heavily on its slower network of copper wires rather than investing in cuttingedge fibre cables.
It was handed a record £42m fine earlier this year for a ‘serious breach’ of industry rules after it cut compensation payouts to providers for delays in installing high-speed lines.
Alongside its boardroom shakeup, BT has responded to the accounting scandal at BT Italia by vowing to replace PwC as auditors and bringing in KPMG to lead an investigation.