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Tesco executives plead not guilty to £326m fraud charges

The three men are alleged to have hidden a huge hole in the company's accounts.

Ben Chapman
Thursday 22 September 2016 14:36 BST
Tesco inflated its income figures by hundreds of millions
Tesco inflated its income figures by hundreds of millions (Pascal Terjan/Flickr)

Three former Tesco executives have denied charges in relation to the £326 million accounting scandal at the supermarket.

Carl Rogberg, 49, Chris Bush, 50, and John Scouler, 48, are charged with fraud by abuse of position and false accounting.

The trio, who respectively held the positions of finance director, former managing director, and John Scouler, commercial director allegedly failed to correct inaccurately inflated income figures for the supermarket, which were then published to auditors, other Tesco employees and the wider market.

All of the defendants' lawyers entered not guilty pleas to the two charges they each face at Westminster Magistrates' Court on Thursday.

The supermarket's former finance chief, managing director and food commercial head were investigated for their alleged role in an accounting scandal in which Tesco was found to have inflated its profits by £326 million in 2014.

The Serious Fraud Office said the investigation into Tesco “remains ongoing”.

Rogberg, of Chiselhampton, Oxfordshire, Bush, of High Wycombe, Buckinghamshire, and Scouler, of St Albans, Hertfordshire, were released on bail and ordered to appear on October 20 at Southwark Crown Court for a plea hearing.

Scouler, wearing a dark suit, light blue shirt and navy tie, Rogberg, dressed in an open collared light blue shirt and a fleece, and Bush, wearing a dark suit, light blue shirt and red stripy tie, spoke only to confirm their names, ages and addresses.

The first charge of abuse by position was read to them by the court clerk.

The charge alleges: “Mr Christopher Bush, Mr Carl Rogberg, and Mr John Scouler.

“Between first day of February and September 23rd, 2014, you abused your position as senior employees of Tesco PLC and Tesco Stores Ltd, in which you were expected to safeguard but not act against the financial interests.

“You did so dishonestly and intending to make a gain for yourself, or expose another to a loss.”

They are also said to have concealed “the true financial position from auditors” and from “other persons employed by Tesco PLC”.

Lawyers for the three men indicated not guilty pleas for both counts.

District Judge Vanessa Baraitser told the trio: “Your cases are not suitable to be heard in this court, and I am therefore going to send you to the Crown Court for your trial - in any case, that is the Southwark Crown Court, the next date being October 20th.

“I am going to remand each of you on unconditional bail. There are no restrictions on your liberty.”

Bush, of High Wycombe, Bucks, Rogberg, of Chiselhampton, Oxford, and Scouler, of St Albans, Herts, were granted unconditional bail.

They are due to appear at Southwark Crown Court on 20 October.

The Serious Fraud Office launched a probe into accounting practices at Tesco in October 2014, after the firm admitted it had overstated profits by £326 million.

An investigation by the Serious Fraud Office into Tesco remains ongoing.

Accounting scandal

Earlier this month, Tesco's former chief financial officer Laurie Mcilwee was cleared by the accountancy watchdog, the Financial Reporting Council (FRC), over his role in the scandal.

Mr Mcilwee resigned as chief financial officer of Britain's biggest supermarket in April 2014, and the FRC said it had ended the investigation because there was “no realistic prospect” that a tribunal would make an adverse finding in relation to his conduct.

Accountancy firm PwC, which audited Tesco's accounts from 1982 until it was axed by the supermaket in January 2015, remains under investigation by the FRC for its role in the scandal. The alleged fraud did not come to light until a whistleblower alerted the board to the scale of the problem.

In January the supermarket watchdog found that Tesco deliberately and repeatedly withheld money owed to suppliers to boost its sales performance artificially, in a serious breach of supermarket regulations.

The Groceries Code Adjudicator also said that the supermarket would encourage suppliers to give it extra cash in return for more control over where products appeared on shelves or to avoid losing out to rivals. In the weeks leading up to Tesco’s results presentations to the City and investors, buyers were also encouraged to push suppliers even harder to accept payment delays in order to flatter the sales figures, according to the findings.

Additional reporting by AP and SWNS

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