BT compensates whistle-blowers

British Telecom has paid out a six-figure sum to two whistle-blowers who accused the telecoms giant of an Enron-style financial scandal in which managers are alleged to have covered up a £1.5m fraud surrounding questionable payments to consultants.

The pair accused BT bosses of exaggerating returns on investments in order to support projects deemed to be of no or very little benefit to the company. Rosemary Greaves, 53, from Ilkley, West Yorkshire, and John McGlone, 59, from Ripon, West Yorkshire, who worked for BT for a total of 40 years, allege that because they raised the concerns they were bullied and forced out of the company.

Both were involved in assessing potential revenue generation for BT's "new wave" products, focusing on the need to replace revenue from declining residential sales opportunities.

In evidence submitted to a Leeds employment tribunal, They said they became particularly worried about a proposal to purchase Alba Management Consultants for £1.5m. Ms Greaves said: "It did not appear that BT would receive a proper return for this money. This was in clear breach of protocol and compliance."

They disclosed their concerns to line managers in 2002, saying they were worried about a potential fraud, which in their view mirrored many Enron issues.

Their lawyer, Arpita Dutt, from Russell Jones & Walker, said: "This is an important case of a publicly quoted company with seemingly stringent policies, internal audit functions and corporate governance procedures being unable to protect two senior employees after having disclosed what they believed to be serious breaches in good faith as part of their jobs."