BT lines up new Europe boss after Italy accounting scandal

After suffering the worst day since it listed on the stock exchange, BT is to turn to one of its most trusted executives to fill the void in its European leadership.

The company's present boss in Europe, Corrado Sciolla, will leave the company 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 (Other OTC: SNIRF - news) 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.

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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.

The Milan prosecutor's office has started an investigation, which is likely to be led by Fabio De Pasquale, the official in charge of economic investigations.

Mr De Pasquale is a veteran of high-profile investigations, including a long-running inquiry into the former Italian Prime Minister Silvio Berlusconi.