Type of Claim: Investigating
Claim Period: 10 May 2013 – 23 January 2017
Defendants: BT Group Plc / PwC
Governing Law: English law
Limitation: 25 October 2022
BT Group, formerly known as British Telecom, is a provider of communication services and solutions serving customers in 180 countries.
On 26 October 2016, BT Group announced that it had to take a write-down of £145m due to “certain historical accounting errors” at its BT Italy division. This announcement came on the back of an internal investigation that had been initiated following allegations by a whistle-blower of inappropriate conduct.
On 24 January 2017, just before the announcement of its third quarter results, BT Group announced that it would be increasing the write-down to £530m. BT Group stated that its investigations had revealed that “the extent and complexity of inappropriate behaviour in the Italian business were far greater than previously identified” and had revealed “improper accounting practices and a complex set of improper sales, purchase, factoring and leasing transactions”, resulting in the “overstatement of earnings in our Italian business over a number of years”.
On this news, the value of BT Group shares plummeted, causing a market capitalisation loss of over £8bn.
BT Group’s directors deny any knowledge of the Italian scandal. Currently the Guardia di Finanza is conducting an investigation and has raided BT Italy’s offices. Recent press reports indicate that the Guardia di Finanza has produced a report alleging that top executives at BT Group were aware of the fraud and that bosses in London urged staff in Italy to use ‘aggressive, anomalous and knowingly wrong accounting practices’.
On the back of the press reports a fourth amended complaint has been filed in the US Class Action by holders of BT Group American Depositary Receipts.
The Financial Reporting Council is investigating BT’s auditor, PwC, and that investigation is ongoing.
Stewarts is monitoring the situation to determine whether shareholders may have a claim against BT Group and/or its auditors, PwC.
In the United States a fourth amended US Class Action complaint has been filed along with motions to dismiss. The current timetable with regards the motions to dismiss is:
- Plaintiffs to file opposition to motions to dismiss by 22 November 2019
- Defendants reply to opposition by 23 December 2019.
Expect the Opinion and Order from the judge on the motions to dismiss in the first half of 2020.
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