This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/business/2017/sep/29/tesco-executives-court-christopher-bush-carl-rogberg

The article has changed 7 times. There is an RSS feed of changes available.

Version 0 Version 1
Former Tesco executives pressured others to falsify figures, court told Former Tesco executives pressured others to falsify figures, court told
(about 2 hours later)
Three former Tesco directors were the “generals” who “bullied and coerced” employees to massage profits and mislead the stock market, a court has heard.Three former Tesco directors were the “generals” who “bullied and coerced” employees to massage profits and mislead the stock market, a court has heard.
Carl Rogberg, the former finance director of Tesco UK, John Scouler, the former commercial director for food, and Christopher Bush, the former managing director of Tesco UK, 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, John Scouler, the former commercial director for food, and Christopher Bush, the former managing director of Tesco UK, have all been charged with one count of fraud by abuse of position and one count of false accounting.
The three men, who appeared together at Southwark crown court in London for the opening of the case on Friday, could face up to 10 years in prison if found guilty of fraud and seven years for false accounting. They deny any wrongdoing and have pleaded not guilty.The three men, who appeared together at Southwark crown court in London for the opening of the case on Friday, could face up to 10 years in prison if found guilty of fraud and seven years for false accounting. They deny any wrongdoing and have pleaded not guilty.
The Serious Fraud Office (SFO) lawyer Sasha Wass QC told the jury: “This case amounts to what’s called cooking the books.The Serious Fraud Office (SFO) lawyer Sasha Wass QC told the jury: “This case amounts to what’s called cooking the books.
“The three defendants on trial are not the foot soldiers. The defendants in this case are the generals in a position of trust and had huge compensation packages to safeguard the financial health of Tesco.”“The three defendants on trial are not the foot soldiers. The defendants in this case are the generals in a position of trust and had huge compensation packages to safeguard the financial health of Tesco.”
Wass said they “encouraged the manipulation of profits and pressured others under their control to misconduct themselves in such a way that the stock market was ultimately misled.”Wass said they “encouraged the manipulation of profits and pressured others under their control to misconduct themselves in such a way that the stock market was ultimately misled.”
She said they had pressed, “bullied and coerced” those under them to falsify figures so that income was recorded when it should not have been.She said they had pressed, “bullied and coerced” those under them to falsify figures so that income was recorded when it should not have been.
The allegations relate to accounts records at Tesco which the company eventually said left a hole of up to £326m. The SFO launched a criminal investigation into accounting practices at Tesco in October 2014.The allegations relate to accounts records at Tesco which the company eventually said left a hole of up to £326m. The SFO launched a criminal investigation into accounting practices at Tesco in October 2014.
The charges allege that they dishonestly falsified Tesco’s digital accounting records and its draft interim accounts by the “inputting of and/or reliance upon commercial income figures which gave a false account of the financial position of Tesco”. The charges allege that the defendants dishonestly falsified Tesco’s digital accounting records and its draft interim accounts by the “inputting of and/or reliance upon commercial income figures which gave a false account of the financial position of Tesco”.
Wass said an internal report at Tesco that revealed to the board of directors the extent of the misreported profits “was like a hand grenade had been thrown into the company”. Wass said Rogberg had withheld critical information from Tesco’s auditors PricewaterhouseCoopers, which had been “misled and lied to”, and knowingly entered false figures into Tesco’s computerised accounting system. She said Bush had confirmed the figures knowing they were false, while Scouler knew income had been incorrectly pulled forward from future years creating a hole in the accounts.
She added that the problems at Tesco had started in 2013 when the company faced increasing competition and performance began to slow. She said the company’s response was to set “aggressive and unrealistic” profit targets which employees where then expected to meet. The failure to meet targets was “camouflaged by falsely representing the true position” and it became “difficult to see which figures were real and which not real”.
By early 2014, during the period the SFO alleges fraud occurred, Wass said the defendants were aware that bad practices had developed that were overstating profits and “jeopardising the financial health of the company”.
Wass made clear that the prosecution would be relying on a report prepared by Amit Soni, an employee in the finance department of Tesco who reported to Rogberg. Soni, and one of his team, had prepared what they called “the legacy paper” which identified the scale of misreporting at Tesco at about £250m.
She said it provided “clear evidence that each of the defendants had connived over the manipulation of targets to conceal their failure and keep their salary and bonuses”.
Wass said when Soni’s report was presented to the Tesco board of directors, the extent of the misreported profits it revealed “was like a hand grenade had been thrown into the company”.
When the board decided they had to make a public announcement revealing they had misinformed the market, “not only did Tesco shares fall by nearly 12%, wiping over £2bn off the total share value, but the credibility of Tesco itself and indeed the credibility of the stock market had been undermined,” Wass said.When the board decided they had to make a public announcement revealing they had misinformed the market, “not only did Tesco shares fall by nearly 12%, wiping over £2bn off the total share value, but the credibility of Tesco itself and indeed the credibility of the stock market had been undermined,” Wass said.
She said losses had been suffered not only by those investing in the stock market, but by all of those holding Tesco shares, including pension funds and people simply saving up.She said losses had been suffered not only by those investing in the stock market, but by all of those holding Tesco shares, including pension funds and people simply saving up.
The Tesco investors Barclays and L&G will give evidence alleging that the mis-statement to the stock market led to losses for shareholders.
The jury was told it was not possible to know precisely what motivated the three men, but all were likely to have wanted to keep their jobs.
Rogberg received over £1m, Bush nearly £3m and Scouler £1.5m at the time, much of that in Tesco shares. Wass said they had a personal interest in keeping the share price up because much of their remuneration package was in shares.
The trial, expected to last 13 weeks, continues.The trial, expected to last 13 weeks, continues.