Three former Tesco executives are accused of "cooking the books" in a scandal which wiped £2bn (€2.27bn) off the supermarket's total share value and sent "shockwaves" through the stock market.
Carl Rogberg, 50, Chris Bush, 51, and John Scouler, 49, are alleged to have been involved in a "white-collar crime" plot in which they failed to correct inaccurately recorded income figures which were published to auditors, other employees and the wider market.
The supermarket's former finance chief, managing director and food commercial head, who are charged with fraud by abuse of position and false accounting between February and September 2014, were investigated after Tesco was found to have inflated its profits.
The supermarket made a public announcement to the stock market on September 22, 2014 which stated that it had previously over-estimated its profits by £250m (€283m), Southwark Crown Court in London heard.
Sasha Wass QC told the jury: "The prosecution case is that the second statement, which corrected the first statement, was the true one and, as you will hear, the second statement caused shockwaves to run through the stock market.
"Not only did Tesco shares fall by nearly 12%, wiping over £2bn off the total share value, but the credibility of Tesco's itself and indeed the credibility of the stock market had been undermined."
She went on: "The prosecution case in a nutshell is that all three defendants were aware that income was being wrongly included in the financial records of the company, which were used to inform the stock market.
"Each of the defendants was aware that this would lead to the company looking financially healthier than it actually was and it would result in Tesco's trading profits being overstated.
"This, say the prosecution, was clearly dishonest."
Rogberg, of Chiselhampton, Oxfordshire, Bush, of High Wycombe, Buckinghamshire, and Scouler, of St Albans, Hertfordshire, all deny the charges.
Ms Wass said the case, "boiled down in its essence", amounted to "cooking the books or what lawyers call false accounting".
She said employees in "relatively subordinate positions" had been involved in presenting the false figures in order to meet the profit targets set by Tesco.
But she added: "The three defendants who are on trial in this case are not the foot soldiers who misconducted themselves. The defendants in this case are the generals - those who are in positions of trust and who were paid huge compensation packages in order to safeguard the financial health of Tesco.
"These defendants encouraged the manipulation of profits and indeed pressurised others working under their control to misconduct themselves in such a way that the stock market was ultimately misled."
Ms Wass said those who objected to the practice within the organisation were bullied and forced to continue.
"It is not merely the fact that the defendants were aware that this was going on," she said. "Each of these three defendants used their managerial authority and actively encouraged those working beneath them to falsify the figures and, when those subordinate employees objected, the subordinate employees were bullied or coerced into carrying on with this practice."
The court heard that Rogberg, who was "directly responsible" for authorising the falsified figures, received a remuneration package of more than £1 million in 2014.
Bush, who was in charge of the performance and "integrity" of Tesco at the time, received nearly £3m (€3.4m) that year, and Scouler, who allegedly directed those beneath him to falsify income figures, received around £1.5m (€1.7m).
Ms Wass said Tesco was operating in "challenging trading conditions" and "failure was not looked on kindly".
"Each defendant would have had a very personal interest in keeping the share value of the company high, because a lot of their remuneration package included shares," she said.
"And, of course, any failure to meet targets could have resulted in not only the share prices going down, but indeed the credit rating of the company being downgraded."
Ms Wass said figures were "window-dressed" to make it look as if targets were being met.
She told the jury about the practice of "pulling forward", which she said was "Tesco shorthand" for bringing forward income from the future to artificially inflate the figures of the present.
"It really should have been obvious to anybody, let alone a highly responsible and highly paid executive, that if income is not guaranteed and it hasn't been earned, it shouldn't be included in the current year accounts.
"The prosecution say that not only is the recording of income that doesn't exist dishonest, but you can see that if you are going to include the first month of next year into your earnings you are going to start the following year with a month short."
Ms Wass said the trial would hear from witnesses working within Tesco that pulling forward income in the way that was being done at the supermarket was something they had never come across in any other organisation they had worked in.
"And some individuals that you will hear from felt so compromised by what they were being asked to do that they felt their professional integrity was being put at risk and they resigned from their prestigious jobs rather than remain involved," she said.
Ms Wass highlighted the peril of the practice, saying: "You can see that the problem, as time passes, just spirals out of control."
She said Tesco had a name to conceal the failure of pulling forward, referring to it as "the legacy".
The court heard about an "explosive" document called "the legacy paper" which was put together "almost secretly" by two employees who worked underneath Rogberg.
Ms Wass said: "It was the legacy paper that exposed and identified the size of the hole in the accounts, or the extent to which it had reached by September of 2014."
She said the paper was "like a hand grenade" thrown into the first statement made by Tesco, exposing it as false.
"It was because of the legacy paper that this fraud came to light," she said.
Ms Wass said the paper, which explained the size of the hole in the accounts was £246m (€279.11m), was presented to the three defendants.
She said their reaction is "the clearest indication of their guilt", adding: "They were not shocked at all. They knew that the hole in the accounts was out of control."
She said they did not alert the Tesco board to this "huge error" and did nothing to ensure the supermarket's first statement was corrected.
She said Scouler tried to get one of the employees who helped compile it to "tone down" the legacy paper before anyone else saw it.
Ms Wass said the legacy paper demonstrated "complex, clever and disguised methods used to falsely represent Tesco's accounts and to conceal the real financial health of the company from the company's auditors".
She described the difference between the first and second sets of accounts as "large" and "unjustifiable".
She told the jury: "We will ask you to draw the inference - that is to say come to the common sense conclusion - that there has been such a colossal fraud, such a huge falsification of these accounts, and that it was the defendants who were the controlling minds behind it."
The court heard Tesco's targets were set "aggressively high" at the beginning of the financial year, amid falling sales and new competition in the market.
Ms Wass said Bush could have agreed the targets were "unachievable" or alternatively, keep the targets and "conceal his failure" from auditors, the stock market and shareholders.
She said: "He could do this by window dressing the accounts, massaging the figures and falsifying profits, or more accurately getting others working beneath him to do exactly that.
"Each of the defendants was aware that as the months passed on that year, the financial year 2014/2015, the hole in the account was getting bigger and bigger and each of the defendants was warned of the consequences of the manipulation of those figures."