BT chief loses £4-mn in pay over accounting scandal at Italian operations

BT chief executive Gavin Patterson will take a £4-million cut to his pay packet after the company scrapped bonus payments following the £530-million accounting scandal at its Italian operations.

Patterson will take £1.34 million for the year to the end of March, mostly consisting of his annual salary of £993,000, a 74 per cent reduction on the £5.28 million he received for 2015-16.

BT will also cut 4,000 jobs from its 102,000 global workforce, which will save it £300 million over two years, which, according to the company will ''offset market and regulatory pressures and support investment''.

The cuts, on which BT has taken a £300-million restructuring charge, will come from areas including its troubled Global Services division, which was home to the Italian operation and triggered a profit warning in January over slow public sector and corporate IT sales.

According to BT, the division was now under strategic review with the goal of making it a ''more digital business''. There had been speculation that it might be sold off, though BT had said it wanted to try to turn it around before considering a sale.

Meanwhile, the company confirmed plans to offload its network assets abroad, including in Italy, and shift focus of Global Services to providing corporate IT and connectivity services over the internet.

''As with any part of the business we review assets over time as to whether they still fit with our strategy or whether they are better owned by someone else,'' said Patterson. ''Global Services is part of that [process].''

Patterson said,"Technology trends mean we can now be less dependent on owning physical local network assets around the world, giving us the opportunity to transform Global Services into a more focussed digital business that can deliver using cloud-based services.''

Investigations into the scandal revealed that BT, listed in New York and London, had failed to meet its accounting obligations under the Sarbanes-Oxley Act. According to BT, following detailed reviews of its operations in seven countries it was confident that the wrongdoing, which involved improper sales, purchase, factoring and leasing transactions, were confined to Italy.