Three former Tesco directors were repeatedly warned by their juniors that the UK chain was facing a multimillion-pound hole in their profits and yet they carried on “conniving and manipulating figures” rather than admitting to the problem, a court has heard.
Carl Rogberg, the former finance director of Tesco UK, John Scouler, the former commercial director for food, and Christopher Bush, the former managing director of Tesco UK, have all been charged with one count of fraud by abuse of position and one count of false accounting.
The allegations relate to Tesco’s accounting records after a public announcement to the stock market on 22 September 2014, stating that it had previously overestimated profits by about £250m. The announcement sent “shockwaves” through the market, Southwark crown court in London has heard.
Sasha Wass QC, a lawyer for the Serious Fraud Office, told the court that members of Tesco’s UK finance and commercial teams had repeatedly made clear that the they were going to fall short of expected profit targets as they faced a competitive market.
By the end of June 2014, Wass said the hole in the accounts was “spiralling out of control and yet [the three directors] were refusing to deal with it”. She said: “Attempts to persuade them to lower the targets had been unsuccessful and the defendants carried on conniving and manipulating the figures.”
Wass said the defendants “must have been fully aware of the damaging effect this practice was having on the financial health of the company and, more particularly, its shareholders”. But she said they had become “like a little hamster running around on a wheel” as the problems “snowballed in size each year”.
Wass said that it was clear Rogberg was a “major driving force” together with Bush in…