Fastweb fraud exposure E81m
April 13, 2010
Swisscom expects the total exposure of its Italian subsidiary Fastweb to a complex fraud and tax evasion investigation in Italy to be no more than E81 million, according to the Swiss company's chief executive. Carsten Schloter, who took over temporarily as chief executive of Fastweb this month, said Swisscom had been aware since it acquired the Italian company in 2007 that the fraud investigation had been going on and had earmarked E70 million at the time to meet any liabilities arising from it. It has since set aside a further E11 million to cover any illegal profit the activities behind the alleged fraud may have generated, taking its total exposure to E81 million.
Schloter said the “real risk” to Swisscom's E4 billion investment in Fastweb had been the threat that the Italian company might have been placed in administration because of the allegations, which surfaced at the end of February. Fastweb and Sparkle, the wholesale broadband unit of Telecom Italia, were accused by prosecutors in Rome of offering services to offshore companies that were used to launder money and evade tax. The prosecutors alleged that the fraud, which they estimated had involved E2 billion of revenues, was one of the largest ever in Italy.