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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Tesco    TSCO   GB0008847096

TESCO

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Tesco : Former Tesco directors cleared of fraud over 2014 accounting scandal

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12/06/2018 | 08:56am EDT
Former Tesco executive Christopher Bush arrives at Southwark Crown Court in London

LONDON (Reuters) - Two former directors of Tesco have been acquitted of fraud and false accounting at Britain's biggest retailer after a 2014 scandal, dealing a major blow to the UK Serious Fraud Office.

Christopher Bush, 52, who was managing director of Tesco UK, and John Scouler, 50, who was UK food commercial director, had been accused of wrongdoing to support Tesco's share price and secure huge compensation packages.

The case, brought by the SFO, stemmed from an overstatement of Tesco's profit forecast of more than 250 million pounds ($318 million) in 2014.

However, on Thursday 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.

He said the Court of Appeal concluded that his judgment at the mid-point of the trial that the defendants had no case to answer was correct and refused the SFO permission to appeal.

"I concluded in certain crucial areas the prosecution case was so weak it should not be left for a jury’s consideration," Royce said, before discharging the jury.

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 re-trial had been running since October.

SERIOUS QUESTIONS

"While I am delighted that my innocence has finally been established, it is troubling that Mr Scouler and I were ever charged," Bush said in a statement.

"Put simply, these charges should never have been brought, and serious questions should be asked about the way in which the SFO has conducted this investigation. In my view, the SFO wholly failed to investigate this case thoroughly, independently or fairly from the outset."

Richard Sallybanks, Scouler's lawyer, also said his client should not have been charged, and the SFO should not have proceeded with the trial.

A third defendant, Carl Rogberg, 51, a former Tesco UK finance director, was not included in the second trial. The SFO said it was considering whether to pursue a retrial of Rogberg.

On Sept. 22, 2014, Tesco issued a statement to the London Stock Exchange saying that during its final preparations for an interim results announcement, it had identified a 250 million pound 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, Scouler and Rogberg. Its shares tumbled and the retailer was plunged into the worst crisis in its near 100-year history.

The profit forecast overstatement, identified three weeks after Dave Lewis took over as chief executive from Philip Clarke, was later raised to 263 million pounds.

The forecast related to guidance published by Tesco in a trading update on Aug. 29, 2014, downgrading its outlook.

Tesco has said it is a different company now, having transformed its business under Lewis. It declined to comment on Thursday.

(Reporting by James Davey, additional reporting by Kirstin Ridley; Editing by Stephen Addison and Keith Weir)

By James Davey

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Financials (GBP)
Sales 2020 65 120 M
EBIT 2020 2 446 M
Net income 2020 1 576 M
Debt 2020 1 558 M
Yield 2020 3,16%
P/E ratio 2020 15,58
P/E ratio 2021 13,64
EV / Sales 2020 0,40x
EV / Sales 2021 0,38x
Capitalization 24 494 M
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Number of Analysts 18
Average target price 2,76  GBP
Spread / Average Target 11%
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NameTitle
David John Lewis Group Chief Executive Officer & Director
John Murray Allan Non-Executive Chairman
Antony John Hoggett Chief Operating Officer
Alan James Harris Stewart Chief Financial Officer & Executive Director
Guus Dekkers Chief Technology Officer
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