Former executives ‘cooked the books’ in Tesco scandal

Three former Tesco executives are accused of “cooking the books” in a scandal which wiped £2bn (€2.25bn) off the super- market’s total share value and sent “shockwaves” through the stock market.

Carl Rogberg, Chris Bush, and John Scouler are alleged to have been involved in a “white-collar crime” 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 overestimated its profits by approximately £250m, Southwark Crown Court in London heard.

Counsel Sasha Wass told the jury: “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.”

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.”

The three defendants all deny the charges.

Ms Wass told the jury: “This fraud case when boiled down to its essence amounts — crudely speaking — to cooking the books, or what lawyers call false accounting.”

The court heard Mr Rogberg, who was “directly responsible” for authorising the falsified figures, received a remuneration package of more than £1m in 2014.

Mr Bush, who was in charge of the performance and “integrity” of Tesco at the time, received nearly £3m that year, and Mr Scouler, who allegedly directed those beneath him to falsify income figures, received around £1.5m.

The fraud came to light due to the contents of an “explosive” document called “the legacy paper”, which was put together “almost secretly” by two employees who worked underneath Mr Rogberg, the court heard.

The court heard the paper, which explained there was a £246m hole in the accounts, was “like a hand grenade” thrown into the first statement made by Tesco, exposing it as false.

The trial will continue on Monday.