Ex-Tesco bosses are charged in UK over missing £263m
Ben Chapman
THREE former Tesco executives have been charged with fraud and false accounting as part of an investigation by the Serious Fraud Office (SFO) into a £263m accounting scandal at the supermarket chain. Carl Rogberg, former finance director, Christopher Bush, former managing director, and John Scouler, the former commercial director for food, have been charged with fraud by abuse of position relating to alleged activity that took place between February and September 2014, according to the SFO. All three have been ordered to appear at Westminster Magistrates’ Court on September 22.
The trio, who worked under former chief executive Philip Clarke, have been questioned over their role in the scandal, after it emerged that Tesco had overstated its profits by £263m in 2014.
The retailer’s auditors found that the company had booked rebates that it had not yet received from suppliers. If found guilty, the men face up to 10 years in prison. All three were suspended from their roles in November 2014 after Tesco had ordered an internal investigation by Deloitte.
Tesco said in a statement: “We note the decision of the SFO to bring a prosecution against former colleagues in relation to historic issues and acknowledge that the investigation into the company is ongoing.
“Tesco continues to co-operate with the SFO’s investigation, but given that this is an ongoing legal matter, we are unable to provide any further comment at this time.”
Clarke has also reportedly been questioned by the SFO as part of the probe. The former boss, who left the retailer in September 2014, oversaw a string of profit warnings and a slump in market share as Tesco came under pressure from discount rivals Aldi and Lidl.
Mr Bush’s solicitor, Ross Dixon of Hickman and Rose, said his client “is extremely disappointed by this decision. He is not guilty and from the outset has fully co-operated with both Tesco and the SFO in their investigations.” Mr Dixon added his client will “vigorously contest” the allegations. The SFO, which opened its investigation in November 2014, said its inquiries into Tesco “remain ongoing”.
Mr Scouler is now commercial director at telecoms company TalkTalk. In a statement the company said: “We are aware of the SFO’s announcement, but as this is an ongoing investigation unrelated to TalkTalk we cannot comment further.”
Last week, Tesco’s former chief financial officer Laurie Mcilwee was cleared by the accountancy watchdog, the Financial Reporting Council (FRC), over his role in the scandal. Mr Mcilwee resigned in April 2014, and the FRC said it had ended the investigation because there was “no realistic prospect” that a tribunal would make an adverse finding in relation to his conduct.
PwC, which audited Tesco’s accounts from 1983 until it was axed by the supermarket in January 2015, remains under investigation by the FRC for its role in the scandal. The alleged fraud did not come to light until a whistleblower alerted the board to the scale of the problem.
In January, the supermarket watchdog found that Tesco deliberately and repeatedly withheld money owed to suppliers to boost its sales performance artificially, in a serious breach of supermarket regulations.
The UK Groceries Code Adjudicator also said that the supermarket would encourage suppliers to give it extra cash in return for more control over where products appeared on shelves or to avoid losing out to rivals.
In the weeks leading up to Tesco’s results presentations to the City and investors, buyers were also encouraged to push suppliers even harder to accept payment delays in order to flatter the sales figures, according to the findings.