BT Said Poised to Name Switzerland Head to Lead Italian UnitBy and
Andrea Giovanni Bono said set to take over BT Italia on Feb. 1
BT disclosed "inappropriate behavior" at Italian business
BT Group Plc is close to naming company veteran Andrea Giovanni Bono to lead its Italy business after the U.K. phone carrier disclosed a deeper accounting scandal in the unit, people familiar with the matter said.
Bono is expected to formally take charge on Feb. 1, said the people, asking not to be identified because the nomination isn’t public. He currently heads BT’s businesses in Switzerland, the Nordics, central and eastern Europe and Russia. Former BT Italia chief Gianluca Cimini was suspended in September with local operating chief Stefania Truzzoli. Both have since left the company.
Corrado Sciolla, the president for continental Europe who led the Italy division for more than a decade, is under pressure and may leave the company, another person said.
Prosecutors in Milan have opened a criminal probe into allegations of false accounting and embezzlement at BT, following disclosure of a 530 million-pound ($666 million) writedown over the accounting irregularities. The investigation isn’t focused on any specific individual at this time, prosecutor Fabio De Pasquale said Wednesday.
A BT spokesman declined to comment on the appointment. On Tuesday, BT said it had named a new head for Italy that it didn’t identify, effective Feb. 1.
Bono studied in Milan and was previously an executive at BT in Italy. He has worked at BT since 2000, according to his LinkedIn profile.
The former British phone monopoly on Tuesday suffered a 21 percent stock drop after lowering its profit outlook because of the worse-than-expected accounting debacle in Italy and weaker performance in its U.K. government and international corporate businesses. BT cited “inappropriate behavior” and “improper accounting practices” going back several years in Italy, meaning a business it had said was profitable had long been losing money.
The Italian scandal and profit warning challenged BT’s credibility in the eyes of analysts and investors, representing a blow to the leadership of Chief Executive Officer Gavin Patterson, who took the helm in 2013. The writedown was more than triple the original 145 million-pound estimate when the company disclosed an internal probe in October.
BT on Tuesday also said the outlook for its U.K. public-sector and international corporate businesses had deteriorated, which will hurt Ebitda and cash flow through the fiscal year ending in March 2018. That led Moody’s on Thursday to lower its outlook on BT’s Baa1-rated debt to negative, signaling a possible cut to the rating.
Luis Alvarez, the head of BT’s global services division, is another executive in focus after the accounting revelations. Reuters reported this week that Alvarez is set to take direct control of the Europe business.
Alvarez sold a large chunk of BT stock in December, as the investigation by KPMG was under way. He sold 674,500 pounds worth of BT shares on Dec. 2, BT said in a Dec. 6 filing, a transaction reported earlier Thursday by the Times.
A BT spokesman told Bloomberg News on Thursday that the stock sale was approved by management including CEO Patterson, as Alvarez didn’t have any insider knowledge and the transaction took place during a normal trading period. The sale was done to pay for a property in London, a spokesman said.
“The share sale by Mr. Alvarez was wholly unconnected to the internal investigation into BT Italy,” BT said in a statement. “Such share transactions are subject to senior management approval, and comply with all relevant rules on insider trading. He continues to significantly exceed his shareholding requirement.”