BT pays out £1.3m in phone fiddle

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They fiddled the figures to help the telecoms giant avoid fines for not answering calls quickly enough as part of a £3 billion-plus Private Finance Initiative (PFI) deal to operate the armed forces' telephone system.

The scam was exposed in a report by public spending watchdog the National Audit Office, which said it showed the need for better monitoring of the way such projects are being run.

BT sacked some of the "small number of staff" involved and paid £1,021,000 in service payments, the £122,000 cost of investigating the fraud and the £197,000 cost of the sham calls.

The call centre involved, in Kettering, Northamptonshire, is no longer in operation.

Tory MP Edward Leigh, who chairs the Commons public accounts committee, said the attempt to rip off the taxpayer was "a real-life Whitehall farce".

"It says a lot about the MoD's oversight of its contractors that the Department's systems failed to spot a serious fraud," he said.

The National Audit Office (NAO) report said the scam was not spotted immediately because it did not have enough impact on the phone service to spark complaints by users and require an investigation.

It eventually came to light within BT - which is now required to provide more detailed reporting and undergo regular detailed checks of the integrity of its reporting system.

Overall, the NAO painted a positive picture of the MOD's 50 PFI projects finding all but two of the eight it examined had been "delivered satisfactorily, on time and on budget".