BT facing criminal inquiry over Italy accounting scandal 

It is being led by Fabio De Pasquale – a veteran of high-profile investigations, including a long-running inquiry into the former Italian Prime Minister Silvio Berlusconi.

The announcement was made a day after the group suffered its worst ever one-day share price fall on revealing a massive uplift in the cost of its problems in Italy and downward revisions to its profit forecasts.

The company’s present boss in Europe, Corrado Sciolla, will leave BT in the near future.

Sky News understands he is presently finalising the terms of his departure, but has relinquished any involvement in the running of the company.

His responsibilities will now be assumed by Spaniard Luis Alvarez, who is BT’s chief executive of global services and one of the company’s most trusted executives.

Mr Alvarez joined BT in 2012 and reinvigorated its global division after a period of underachievement.

Senior sources at the company have been at pains to say that Mr Sciolla is not considered to have any involvement in, or knowledge of, the corruption scandal at BT’s Italian operation, but that he took “executive responsibility”.

Mr Sciolla offered his resignation after accepting that his position was no longer tenable.

BT announced on Tuesday morning that an investigation by forensic accountants from KPMG had uncovered a series of “improper” transactions that were going to cost the company over £500m.

The company’s shares fell by around a fifth in the coming hours – the most ruinous days BT has seen since it first listed in 1984.

The investigation into the irregularities first began in the summer, after a whistleblower approached BT’s management in London.

The wrongdoing is said to date back years and involve a network of complicated and obscure transactions.

In particular, auditors have been looking at allegations of widespread invoice fraud, involving payments to non-existent companies posing as normal suppliers.

Sky News has been told this was “a highly sophisticated exercise designed to avoid detection”.

The senior management team who led BT in Italy have now left the business.

A new leader for BT Italia is also being appointed, and is also likely to be a company insider with experience of the European market.

KPMG is still continuing with its forensic audit and has produced an interim set of recommendations concerning management of the Italian business.

PwC, the firm responsible for auditing BT’s accounts in Italy, has made no comment so far but BT is likely to review that relationship, and will demand to know how such a big hole in the accounts could have been overlooked.