Fraud case against former Tesco di­rec­tors collapses

Business Day - - International Companies - James Davey Lon­don

Two former di­rec­tors of Tesco were ac­quit­ted on Thurs­day of fraud and false ac­count­ing at Bri­tain’s big­gest re­tailer fol­low­ing a 2014 scan­dal.

Christo­pher Bush, who was MD of Tesco UK, and John Scouler, who was UK food com­mer­cial di­rec­tor, had been ac­cused of cook­ing the books to sup­port the shares and se­cure huge com­pen­sa­tion pack­ages.

How­ever, judge John Royce told a jury at Lon­don’s South­wark crown court that the men had been ac­quit­ted by the court of ap­peal on Wed­nes­day after it up­held his rul­ing that the prose­cu­tion case was too weak for the case to con­tinue. “I con­cluded in cer­tain cru­cial ar­eas the prose­cu­tion case was so weak it should not be left for a jury’s con­sid­er­a­tion,” he said.

Bush and Scouler were charged in Septem­ber 2016 with one count of fraud by abuse of po­si­tion and one count of false ac­count­ing. A first trial was aban­doned in Fe­bru­ary, shortly be­fore the jury was due to re­tire to con­sider its ver­dict.

The re­trial had been run­ning since Oc­to­ber.

The case stems from an over­state­ment of Tesco’s profit fore­cast. On Septem­ber 22 2014, the group is­sued a state­ment to the Lon­don Stock Ex­change say­ing that dur­ing its fi­nal prepa­ra­tions for an in­terim re­sults an­nounce­ment, it had iden­ti­fied a £250m over­state­ment of its ex­pected profit for the half-year, mainly due to book­ing com­mer­cial deals with sup­pli­ers too early. In the fol­low­ing weeks, Tesco sus­pended eight se­nior mem­bers of staff, in­clud­ing Bush and Scouler. Its shares tum­bled and the re­tailer was plunged into the worst cri­sis in its nearly 100year his­tory.

The profit fore­cast over­state­ment, iden­ti­fied three weeks after Dave Lewis took over as CEO from Philip Clarke, was raised to £263m. The fore­cast re­lated to guid­ance pub­lished by Tesco in an up­date on Au­gust 29, 2014, down­grad­ing its out­look.

The ver­dict is a huge blow for Bri­tain’s Se­ri­ous Fraud Of­fice, which launched its Tesco in­ves­ti­ga­tion in Oc­to­ber 2014.

Tesco has said it is a dif­fer­ent com­pany now, hav­ing trans­formed its busi­ness since 2014 un­der Lewis.

Ac­quit­ted: Former Tesco ex­ec­u­tive Christo­pher Bush ar­rives at South­wark crown court in Lon­don on Thurs­day.

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