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Three more directors suspended as Tesco scandal inquiry continues

 

Simon Neville
Wednesday 15 October 2014 00:57 BST
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Three more Tesco directors were suspended yesterday as part of the £250m accountancy scandal at the UK’s biggest supermarket.

Dan Jago, director of beers and wines, William Linnane, director of impulse purchases, and Sean McCurley, director of convenience, were all asked to step aside. Yesterday, The Independent revealed such suspensions were imminent.

Tesco has now suspended eight directors and executives as Deloitte accountants and Freshfields lawyers pore over thousands of emails to work out how an extra £250m was added to Tesco’s profits. The Financial Conduct Authority is also keeping a close eye on proceedings and is understood to be liaising with the internal investigators.

The latest trio to be suspended were responsible for negotiating deals with some of the biggest suppliers in the world, including Diageo, InBev, Cadbury’s, Mars and Nestlé.

Tesco has so far confirmed that the accounting irregularities were due to the commercial department booking huge supplier payments into the wrong accountancy period.

One source suggested some suppliers had been told to make payments as much as three years in advance. However, with Tesco sales plummeting, suppliers have been refusing to make payments in full.

Mr Jago has been with Tesco since 2006 and was promoted to director of wines, beers and spirits for the entire group last month. Mr Linnane was previously fresh food buyer for Tesco Ireland and Mr McCurley was formerly director of dairy.

Tesco said: “We have asked three employees to step aside to facilitate the investigation into the potential overstatement of profits in UK food for the first half of the year.”

Steve Dresser, a retail analyst at Grocery Insight, said: “It’s worrying that they found more evidence of wrongdoing and the concern for investors and the company is you need people in place to run multimillion-pound accounts.”

The scandal, which unfolded last month, has already resulted in the suspensions of Chris Bush, UK chief executive; Carl Rogberg, UK finance director; Kevin Grace, commercial director; John Scouler, food commercial director; and Matt Simister, head of sourcing.

The investigation is expected to last several more weeks and is unlikely to be finished before next week’s delayed financial results from the supermarket.

However, Dave Lewis, the new chief executive, is expected to give a formal account of what happened and how much will be wiped from the company’s profits.

As news of the latest suspensions emerged, shares dropped 0.8p to 179.8p yesterday – putting more pressure on Richard Broadbent, the chairman, to step aside as the scandal took place on his watch.

Mr Broadbent has remained in position with investors suggesting privately he should resign once the investigation is concluded.

He has attempted to shore up the board with more retail experience, appointing the former Ikea boss Mikael Ohlsson and Compass’s chief executive, Richard Cousins, as the first non-executives with senior retail experience.

External headhunters have also been hired. Ken Hanna, the non-executive who chairs the audit committee, is reportedly the most likely to leave.

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