The boss of BT's Continental European operation is to resign after the firm was forced to write down the value of its Italian unit by £530m after years of "inappropriate behaviour".
BT's shares plunged 21% after revealing the Italian scandal would cost far more than the £145m initially anticipated.
It also warned it would affect its results for the next two years.
The investigation of BT's Italian business, which included an independent review by accountancy firm KPMG, found improper accounting practices and "a complex set of improper sales, purchase, factoring and leasing transactions".
It added: "These activities have resulted in the overstatement of earnings in our Italian business over a number of years."
From 2006, Mr Corrado was chief executive of BT Italy before his remit expanded in 2011 to include France.
In January 2013, he was appointed as president of BT's Continental Europe operation, where he reported to Luiz Alvarez, the chief executive of the company's global services business.
In addition to its problems in Italy, BT also said the outlook for the UK public sector and international corporate markets had "deteriorated".
As a result, BT now expects operating profit for the current financial year to be £7.6bn, compared to previously guidance of £7.9bn, and revenue to be flat. It also forecasts that both sales and profit will be flat for the year to March 2018.
BT's shares dropped sharply as soon as trading began, and by midday were down 18% at 313.55p.
BT has an estimated one million small shareholders after becoming one of the first state-owned business to be privatised under Margaret Thatcher's government.
George Salmon, equity analyst at Hargreaves Lansdown, said: "With the group's net debts pushing £9.6bn following the acquisition of EE, and a review of the how to fund the £9.5bn pension deficit coming up in June, there were already a few jitters around the stock, so this was the last thing the group needed."
Allegations of "inappropriate behaviour" at BT's Italian operation first emerged last summer before the company began conducting an investigation in October.
BT group chief executive Gavin Patterson said: "We are deeply disappointed with the improper practices which we have found in our Italian business.
"We have undertaken extensive investigations into that business and are committed to ensuring the highest standards across the whole of BT for the benefit of our customers, shareholders, employees and all other stakeholders."
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