Analysis of Unethical Business Practices at BT Group: A Case Study

This report analyzes the unethical business practices that occurred at BT Group plc, specifically focusing on the accounting scandal within its Italian unit. The scandal involved exaggerated revenues, fake contract renewals, and bogus transactions, driven by a desire to meet bonus targets and conceal the company's true financial performance. The report details the involvement of key executives, the negative impact on the company's reputation and revenue, and the resulting job cuts and employee insecurities. It also examines the relevant legislation and regulations designed to promote ethical behavior in business, such as employment law, consumer protection, and competition law. The report concludes by highlighting the importance of ethical conduct and the legal frameworks that aim to ensure fair and responsible business practices.

Running head: BUSINESS ETHICS
Business Ethics
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The unethical business practice that took place at BT Group plc was the accounting
scandal that had severe consequences for the company. The accounting scandal took place at
Italian unit of that of British telecom and the bookkeeping fraud damaged the reputation of the
company. There was a network of people within the BT Italy who had involved themselves in
exaggerating the revenues and faking the contract renewals (Ft.com 2019). They had faked the
invoices and carried out the invention of bogus supplier transaction that proved to be fatal for the
fortunes of the company. The unethical act was carried out so that it could meet the bonus target
and hide the true financial performance of the firm.
The group executives of BT Group were involved in the scandal that had negative
consequences for the fortune of the company. The press charges were brought against the
suspects that had a negative effect on the revenue earned by the company. The prosecutors of the
case were Luis Alvarez along with Richard Cameron who were the former chief executive and
that of former chief financial officer within BT Global Services. Corrado Sciolla was the head of
that of continental Europe was also among the suspect in the scandal (Bbc.com 2019). They had
set high business target that had compelled them to take up the wrong steps that had fatal
implications for the future of the company. The top managers who were in London were unaware
about the incident that prevented the detection of the problem at an earlier period of time. The
accounting debacle had negative impact on the profit that would be earned by the company and it
made the people lose the faith in the company. The inappropriate behavior on the part of the
management had paved the path for the unethical business issue at BT Group Plc. The
management in the BT Italia Group were taking the loans so that it can help in settling the
creditor bills. They took recourse to “factoring” and the loans were not booked with the help of
the balance sheet (Theguardian.com 2019). The unwinding of the loans along with capitalization

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of costs was reflected in the write-off that was more than that of five times size of overall profit
of Italian business.
The accounting fraud at BT Group Plc has cut the number of jobs over a course of three
years. It signaled that 12 % of that of workforce would lose their jobs that would raise
insecurities on the part of employees of the company (Reuters.com 2019). The employees of the
organization would have to live in perpetual fear that would have a negative effect on their
performance within the organization. It would cut down on the management along with the back
office roles that can cost the company. The company would have to move out of the central
London headquarters into that of the smaller premises that would result in inconvenience on the
part of employees of the company.
There are various kinds of legislations along with the regulations that can help in the
promotion of the ethical behavior in the business. There are various kinds of legislations that
have an effect on business- employment law, consumer protection along with the competition
law. The employment law helps in promotion of health along with the safety of the employees.
The consumer protection laws help in ensuring that the products along with the services that are
offered by a company does not harm the quality of life of the consumers. This laws helps in
taking care of the fact that the business act in a fair manner towards the people. The Sale and
Supply of Goods Act helps in taking care of the fact that the goods that are produced of a
company are of satisfactorily quality that works for the benefit of the people
(Uk.practicallaw.thomsonreuters.com 2019). There is also the Trade Description Act that
ensures that the goods along with the services should perform in a manner that has been
advertised by the business. The Consumer Credit Act on the other hand helps in offering
protection to consumer in the event of borrowing the money or buying the things that is on the

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credit. This helps in ensuring the fact that the business in UK works along the ethical lines
(Legislation.gov.uk 2019). The firms in UK who involve themselves in anti-competitive
behavior have to face the risk of being fined upto that of 10 % of that of the global turnover. It
can cause the companies in UK to the damage actions that can hurt the reputation of the
company.

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References
Bbc.com (2019). BT cuts 13,000 jobs to slash costs. [online] BBC News. Available at:
https://www.bbc.com/news/business-44065422 [Accessed 9 Jun. 2019].
Ft.com (2019). BT faces mounting clean-up cost of Italian scandal | Financial Times. [online]
Ft.com. Available at: https://www.ft.com/content/64b33606-e22c-11e6-8405-9e5580d6e5fb
[Accessed 9 Jun. 2019].
Legislation.gov.uk (2019). Legislation.gov.uk. [online] Legislation.gov.uk. Available at:
http://www.legislation.gov.uk/ [Accessed 9 Jun. 2019].
Reuters.com (2019). Exclusive: British Telecom's Italian job had London roots, say.... [online]
U.S. Available at: https://www.reuters.com/article/us-bt-italy-exclusive/exclusive-british-
telecoms-italian-job-had-london-roots-say-investigators-idUSKCN1RZ0IQ [Accessed 9 Jun.
2019].
Theguardian.com (2019). BT shares plunge 20% as Italian accounting scandal deepens – as it
happened. [online] the Guardian. Available at:
https://www.theguardian.com/business/live/2017/jan/24/bt-shares-profits-italy-accountig-
scandal-sterling-public-finances-live [Accessed 9 Jun. 2019].
Uk.practicallaw.thomsonreuters.com (2019). [online] Uk.practicallaw.thomsonreuters.com.
Available at:
https://uk.practicallaw.thomsonreuters.com/Document/Id4aecb3f1cb511e38578f7ccc38dcbee/
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contextData=(sc.Default)&transitionType=Default&firstPage=true&comp=pluk&bhcp=1
[Accessed 9 Jun. 2019].