BT Group plc (LON:BT.A) boss Gavin Patterson has reportedly faced calls by a top shareholder to step down following an £530mln accounting scandal at the telecom giant’s Italian division.
BT was forced to pay out £225mln to avoid a court battle with Deutsche Telekom and Orange after the company uncovered improper accounting irregularities.
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The German and French telecoms firms became shareholders after BT accepted a £12bn cash and shares deal to buy mobile group EE in 2015.
Deutsche Telekom and Orange were issued a warranty as a protection against a plunge in BT’s performance as part of the deal.
The fraud caused a £530mln write-down, which caused BT's market value to fall by almost £8bn in January.
BT, whose share price remains 26% lower than it was a year ago, said its payout to the two shareholders represented a “full and final settlement in respect of these issues” and was necessary to avoid legal action.
Patterson is now being urged to resign over the incident by a shareholder, the Daily Mail reported without providing any names.
The scandal has already resulted in the chief executive’s pay being cut by around £4mln last year and a restructuring with the loss of about 4,000 jobs.
It also hit the group’s first quarter pre-tax profits, which dropped 42% to £418mln from the same time a year ago, which also included the cost of a £342mln bill in fines and compensation for abuses at its network subsidiary Openreach.
The UK's Financial Reporting Council is investigating the auditing of BT's financial statements for the years 2015 to 2017.