GMG executive to stay on board of Tesco

Tesco last night insisted it would put no pressure on Carolyn McCall, one of its non-executive directors, to stand down from its board, despite its legal row with The Guardian newspaper, which is owned by the company she runs.

Ms McCall was appointed as a non-executive director at Tesco in April 2005 and was paid £62,000 by the supermarket group last year, according to its annual report. However, she is also chief executive of Guardian Media Group, owner of The Guardian newspaper.

Tesco has filed a High Court writ against The Guardian and its editor, Alan Rusbridger, over a front-page story the paper ran earlier this year alleging that the retailer used an offshore structure to avoid £1bn in tax. The retailer has rejected the claims and says it is losing business following the story because angry customers are boycotting its stores.

Despite the apparent conflict of interest, however, Tesco said it would stand by Ms McCall. "Carolyn has absented herself from any board discussions on this issue," a spokesman for the retailer said. "As to whether she will be forced to stand down, she will not be by us – we believe she has a valuable contribution to make."

A spokesman for Guardian Media Group, also said that Ms McCall had been very careful to avoid any conflict.

"Since The Guardian first published a story on this, Carolyn McCall has absented herself from all Tesco discussions and decisions on the issue," he said.

Ms McCall was unavailable for comment last night and spent part of the day out of the office picking up the Veuve Clicquot Businesswoman of the Year award.

Sally Warmington, brand director of Veuve Clicquot, said: "Carolyn McCall has successfully led her company through a vast range of development and growth and puts her success down to a forward-thinking attitude, positively embracing innovation."

Tesco also faces battles on other fronts. Yesterday, Piper Jaffray, the retail analyst, warned its Fresh & Easy venture, launched last year as the company's first big expansion in America, was being aggressively targeted by the supermarket giant Wal-Mart, which has launched a similar range of smaller stores trading under the Marketside brand.

Mike Dennis, a senior research analyst at Piper Jaffray, said: "Poor weekly Fresh & Easy sales rates could be compounded by Wal-Mart's opening of its new... convenience stores."