Investigators demand all Tesco buyers’ email traffic

Ratings agency calls for transparency   as new chief promises culture change

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The Independent Online

Deloitte investigators trying to get to the bottom of Tesco’s £250m profit shortfall have demanded full access to the email accounts of every single one of the company’s hundreds of buyers, The Independent has learned.

The accountants are trying to establish exactly how the company has been treating the payments Tesco demands from its suppliers in  return for certain performance criteria.

It is thought that the company’s buyers have been wrongly booking revenues from suppliers before they should, artificially bumping up profits. The hope is that email trails and attachments will provide details of the dates of payments agreed with suppliers which can be cross-checked with when Tesco marked them in as revenue.

Meanwhile, new chief executive Dave Lewis wrote to the company’s 500,000 UK staff, calling for a “change in our culture”, adding: “We want to work in a business which is open, transparent, fair and honest. We all expect Tesco to act with integrity and transparency at all times.”

Credit ratings giant Fitch demanded just such transparency from Tesco and other European grocers, demanding they reveal publicly how much revenue they make through the tills, and how much from payments from suppliers. Fitch said the payments could average 8 per cent of total turnover – or roughly the same as their annual profits.

It pointed out that, possibly as the result of a series of scandals in the early 2000s, US supermarkets now have to make such disclosures under Securities and Exchange Commission laws. Such a change here would have to be enshrined in new European legislation.

It has emerged that Tesco cancelled plans for a £3bn refinancing deal shortly before Monday’s alert over the missing profits – such credit deals rely heavily on a  company’s rating by the likes of Fitch.

Email trawling has become a common source of information for corporate investigators, and has thrown up some of the most memorable  interchanges in previous scandals such as the Libor fixing affair.

But another supplier who sells millions of pounds a year of products to Tesco said: “In my experience, they’re too shrewd to commit anything dubious to email.”

Shares in Tesco ended the week down another penny at 191.5p, meaning it has lost nearly £3.1bn of its paper value since Friday’s disastrous admission that it had overstated profits by £250m.

Fitch said accounting for supplier income is difficult as the contract terms and targets sometimes do not match up with the companies’ reporting periods.