Former Tesco directors Face Fraud Charges for Accounting Scandal

12 September 2016 -


Trouble rears its ugly head once again for the UK’s biggest supermarket

Jermaine Haughton

Three former Tesco executives have been charged with fraud by abuse of position and with false accounting by the Serious Fraud Office (SFO) for the £263m-plus accounting scandal at the British supermarket in 2014.

Carl Rogberg, the former finance director of Tesco UK, Christopher Bush, the former managing director of Tesco UK, and John Scouler, the former commercial director for food, will appear at Westminster Magistrate’s Court on September 22 to face the fraud charges.

A statement from the SFO said the alleged activity occurred between February 2014 and September 2014.

The announcement is the first major move since the SFO’s probe began into an alleged profit overstatement of more than £260m by the UK’s biggest retailer, and the regulator has confirmed the investigation is still ongoing.

According to the Financial Times, Tesco may be a candidate for a American-style plea deal known as the deferred prosecution agreement (DPA) with the SFO, as it has openly co-operated with the probe.

However, even if a DPA is agreed by the SFO with a company, the agency still needs to build a case to prosecute, which a judge officially signs off on and defers.

Tesco has released a statement, which reads: “We note the decision of the SFO to bring a prosecution against former colleagues in relation to historic issues and acknowledge the investigation into the company is ongoing.

“Tesco continues to co-operate with the SFO’s investigation. The last two years have seen an extensive programme of change at Tesco, but given this is an ongoing legal matter, we are unable to provide any further comment at this time.”

Back in 2014, with its profits being squeezed by German discounters Aldi and Lidl, and by upmarket rivals Sainsbury’s and Waitrose, it’s big out-of-town supermarkets were failing to capture enough of the public’s pound coins.

And just weeks after a trading update predicted the retail chain’s first-half profit for 2014 would be £1.1bn, down from £1.6bn a year earlier, chief executive Dave Lewis told investors that a whistleblower had alerted its most senior lawyer to over-optimistic accounting for payments from suppliers and business costs totalling multi-millions of pounds.

Shares fell, customer numbers dropped and sales slumped. By 2015, Tesco had recorded an annual deficit of £6.3billion.

Since the scandal, current chief executive Lewis has started to turn Tesco’s fortunes around by stabilising its finances and winning back customers.

Rigorously cutting costs and selling many of the retailer’s assets such as the coffee shop brand Harris & Hoole, it’s American outlets and the Giraffe restaurant group, Lewis has refocused the brand on being a UK grocery business rather than a global retail conglomerate.

Earlier this spring, Tesco returned to profit with pre-tax earnings of £162million for the 12 months to the end of February and its first quarter of sales growth in three years.

Tesco celebrated the achievement by awarding its 300,000 employees with a one-off ‘turnaround bonus’ of around 5% of their annual salary.

But these latest headlines of fraud from some leading, albeit former, execs will once again pile the pressure on the supermarket and Lewis.

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