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Former Tesco directors charged with fraud over accounting scandal Former Tesco directors charged with fraud over accounting scandal
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Three former senior directors at Tesco have been charged with fraud in relation to a £263m-plus accounting scandal at the supermarket chain.Three former senior directors at Tesco have been charged with fraud in relation to a £263m-plus accounting scandal at the supermarket chain.
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, have all been charged with one count of fraud by abuse of position and one count of false accounting.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, have all been charged with one count of fraud by abuse of position and one count of false accounting.
A statement from the Serious Fraud Office said the alleged activity occurred between February 2014 and September 2014.A statement from the Serious Fraud Office said the alleged activity occurred between February 2014 and September 2014.
The three men have been summoned to appear at Westminster magistrates court on 22 September 2016. The three men have been summoned to appear at Westminster magistrates court on 22 September 2016 and could face up to 10 years in jail if found guilty of fraud by abuse and seven years for false accounting.
The SFO said its investigation into Tesco remained ongoing. The SFO said its investigation into Tesco remained ongoing and it is still possible that further individuals could face action. However, it is understood that former chief executive Philip Clarke, who was questioned under caution by the SFO, will not be charged.
Tesco said in a statement that it continued 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.”Tesco said in a statement that it continued 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.”
This is a breaking news story, please check back for further updates The SFO launched a criminal investigation into accounting practices at Tesco in October 2014 after the company admitted it had overstated profits by £263m because it had incorrectly booked payments from suppliers, relating to issues such as marketing costs or reaching sales targets.
The scandal came to light after a whistleblower alerted new chief executive Dave Lewis, who took over in September 2014. A team of forensic accountants from Deloitte then established that Tesco had artificially inflated an estimate of first-half profits given to the City in August 2014. They also found similar practices had been in place in prior reporting periods. In April 2015, Tesco said it had found a further £60m in mis-statements from previous years, mostly as a result of an audit of its Irish operations.
Clarke, who left the company when Lewis arrived, was questioned by the SFO in relation to the scandal which wiped millions of pounds off the supermarket’s value. However, a source said he had been told he would not face charges.
Rogberg and Scouler left Tesco in November 2014. The two men, and Bush, were all members of the so-called “Cheshunt Eight” – named after the location of Tesco’s Hertfordshire head office – who were suspended when the profits overstatement first came to light.
Bush’s legal representative issued a statement saying he was “extremely disappointed” by the SFO’s decision to charge him. “He is not guilty and from the outset has fully co-operated with both Tesco and the SFO in their investigations. He will vigorously contest these allegations and is confident he will be cleared of any wrongdoing,” said the representative in a statement.
Scouler joined internet provider TalkTalk as commercial director in February last year but is understood to be on sabbatical. The company said it was aware of the SFO’s announcement but could not comment on “an ongoing investigation unrelated to TalkTalk.”
It emerged last week that the Financial Reporting Council, the accountancy watchdog, had dropped an investigation into Laurie McIlwee, the former Tesco chief financial officer. McIlwee has been interviewed by the SFO, but only as a witness, and it is understood he is not being considered for prosecution. The FRC continues to investigate Tesco’s former auditor, PwC.
A third investigation by the grocery market watchdog in January led to Tesco being ordered to make “significant changes” in the way it deals with suppliers, after finding that the supermarket, Britain’s biggest, had deliberately delayed payments to maximise profits.
The SFO has said it wants to wrap up the Tesco case by the end of this year – although it did originally expect to finalise the investigation in 2015. It was rumoured to be pushing for a new type of deal which would let Tesco avoid a criminal prosecution. A “deferred prosecution agreement” (DPA), which requires high court approval, would involve fines and other undertakings, if the company co-operates.
City analysts have warned that the scandal could cost Tesco a £500m fine.
The charges against Tesco executives come after the SFO asked the government for an extra £21m to help it keep pursuing complex cases, as it struggles with a string of investigations into high-profile cases and complex financial dealings including Libor and Euribor rigging. It is currently investigating allegations concerning Tata Steel, Airbus GlaxoSmithKline, Rolls-Royce and Barclays.