Law firm Quinn Emanuel Urquhart & Sullivan is reported to be developing a claim against BT from shareholders and fund managers over the accounting scandal uncovered in its Italian business which saw the company issue a profits warning and resulted in a substantial drop in its share price
In October 2016 the telecoms giant said an initial internal investigation of accounting practices in its Italian business had identified ‘certain historical accounting errors and areas of management judgement requiring reassessment’. At that time, BT estimated the financial impact on the balance sheet at £145m.
Subsequently, BT said further investigation, including an independent review by KPMG of the accounting practices in its Italian operations and a comprehensive balance sheet review, put the losses much higher, at £530m.
At the end of last year, BT said it had found improper accounting practices and ‘a complex set of improper sales, purchase, factoring and leasing transactions’ which had resulted in the overstatement of earnings in its Italian business over a number of years.
Richard East, Quinn Emanuel London co-managing partner, has told the legal press that the firm is in preliminary discussions with both shareholders and a number of funders.
‘We are in contact with our clients and expect to form a group of substantial institutional investors. We have not decided whether this will be a funded case or whether we will bring this as a damage based agreement,’ East is reported to have said.
