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BT phone calls fraud could lead to charges for staff
THE full scale of a multi-million-pound fraud committed by BT staff – which could lead to prosecutions – is exposed today by the Yorkshire Post.
It has already been revealed that a former BT president believed the company had covered up staff making millions of false calls to ensure the telecommunications giant met targets laid down within a 1bn contract with the Ministry of Defence (MoD).
Now the Yorkshire Post can disclose that:
Fears were raised within BT that the company may have committed corporate fraud
A senior manager suggested a senior director awarded an MBE for his role in helping to secure and run the contract should be "moved on" after the fraud was uncovered
The Serious Fraud Office has been considering a probe
The Crown Prosecution Service is considering whether to launch prosecutions after receiving a file from the MoD Fraud Squad
BT delayed disciplinary action against employees until after the company's shareholders annual general meeting. It had agreed with the MoD it was "prudent" to do so.
The Yorkshire Post last week revealed that the former president of technology and operations at BT Global Services, Sinclair Stockman, believed there had been a cover-up of the fraud, which was able to continue unchecked for six years.
The phone fraud involved four BT call centres in Wakefield, St Helens, Dumbarton and Kettering which were set up to handle calls out of military bases. This involved connecting callers to an outside line or providing an operator service, directory inquiries service or answering emergency calls. The phone service was one part of the 1bn contract.
The scam began in 1999 and in 2004 a whistleblower tipped off the MoD which in turn contacted BT to investigate. Instead of the scam unravelling at that point, BT's internal inquiry found nothing was wrong.
The scale of the fraud and BT's attempts to manage the potential company crisis when – or if – it became fully known is evident from a series of internal communications that the Yorkshire Post has obtained. Many of these are drawn from a BT steering group made up of a small number of senior managers set up to handle the fallout, called Operation Trenale.
An email from Robin Armstrong, who managed Trenale, sent to four senior managers, including Jeremy Stafford, the senior BT director responsible for all UK government contracts, reveals that BT delayed beginning disciplinary action against the managers it had decided would be held responsible for the fraud until after the company shareholders AGM on July 12 last year. The email, sent on June 20, said it had been agreed with the MoD it was "prudent" to do so.
Other e-mails refer to the involvement of the Serious Fraud Office and an investigation by the MoD Fraud Squad which led to a file being sent to the Crown Prosecution Service (CPS).
Last night, a CPS spokesman confirmed: "The fraud prosecution service within the CPS is still looking at the file that the MoD Police have sent and will be making a decision in due course."
A spokesman for the MoD Police said: "MoD Police can confirm its Fraud Squad carried out an investigation into alleged irregularities involving a service contract between BT and the MoD. This investigation started in May 2006 and inquiries were completed in August 2007.
"Consultation has taken place with BT, the MoD and the CPS and at this time no criminal charges have been brought."
A potential criminal prosecution could influence the outcome of negotiations between BT and the MoD over how much money will be paid in compensation – a sum which will run into millions of pounds.
An MoD spokesman said it was now in the final stages of a review of the scale of the reparation payments for what it described as "the artificial inflation" of calls.
BT said: "It would be inappropriate for us to comment on any confidential matters between us and the MoD. No criminal charges are pending against BT or any of its employees."
The company has sacked five relatively junior managers for their involvement in the fraud and suspended one other. At an employment tribunal last week, Joseph Hewson, a manager sacked from the Wakefield centre, freely admitted he and other managers had instructed staff to make false calls but said the order had come from more senior management.
Read more: Scam that was 'just another part of the job'
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Saturday 11 February 2012
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