Vodafone has launched a probe into possible tax fraud at Spain’s largest cable company ONO prior to its acquisition by the British firm.

The allegation is ONO ran a network of off-the-books subsidiary companies that traded in call packets, and did not declare Value Added Tax (VAT) worth €60 million on an estimated €250 million of operations.

Four employees – who took voluntary redundancy- are said to have carried out the operation but questions remain on whether higher management knew.

The Spanish tax authorities had been investigating ONO “for months” and reportedly notified the Spanish communications company of the investigation in June, as Vodafone was waiting for permission from the European Commission to go ahead with the multi-billion euro acquisition operation, finally given by the beginning of July.

It is alleged ONO did not inform Vodafone of the existence of the tax investigation and may have even used the off-books network to boost the acquisition price during negotiations with the British company.

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