Tesco profit overstatement prompted ‘tears and resignations’
Court hears about ‘stress and worry’ among employees
A number of senior Tesco staff resigned and “people were in tears” because they felt so “compromised” about being asked to “misreport” profits, a court has heard.
Carl Rogberg, 50, Christopher Bush, 51, and John Scouler, 49, are on trial over a £250m accounting scandal in which it emerged that Tesco had overinflated its profits and had to issue a correction to the stock market in September 2014.
The three men all deny charges of fraud and false accounting.
The trial has heard of increasingly frantic attempts to deal with the growing hole in Tesco’s accounts during the first half of 2014 caused by the practice of illegimately “pulling forward” unearned future income.
In August 2014, Amit Soni, a senior accountant at Tesco, was so concerned about the practice that he told Mr Bush, who was managing director of Tesco UK, that the hole in the accounts could reach £600m by the end of the second half, the trial heard.
A number of Tesco staff resigned by August 2014 because they “felt so compromised” — including one senior manager, Richard Parsons, who complained “it has broken me”.
Mr Parsons, a project manager who had worked at Tesco since 2003, became concerned in 2014 about the “goings on” at the retailer, which he did not consider good accounting practice and turned down a promotion to become a commercial director, Sasha Wass, QC, prosecuting claimed to the court.
In August 2014, Mr Parsons sent one email to his line manager speaking of his “stress and worry” and saying he was not “able to talk to anyone outside of Tesco about this, including my wife”.
At his company exit interview, Mr Parsons suggested that “others were too scared to speak out for fear of losing their jobs and paying their mortgage”.
The trial heard an accountant Aysen Nadiri quit without a job to go to because she became “felt compromised as a finance professional” and “felt she no longer wanted to be part of the company”.
Mr Parsons suggested that “people were in tears” and concerned about losing their CIMA accounting qualifications, the court heard.
Mr Soni had already raised his concerns with the three defendants “about the very serious problem of the hole in Tesco’s accounts” but by September 2014 Mr Soni began collating a report on the exact size of the hole in the accounts.
In an email to colleagues in September 2014, Mr Soni confided: “The whistle is about to blow.”
Mr Soni gave his work to the Tesco board in late September, which triggered an investigation.
In September 2014 Tesco had to put out a corrected statement to the stock market detailing the £250m hole in its accounts.
The three men on trial all held senior positions within Tesco. Mr Bush was managing director of Tesco UK, Mr Rogberg was UK finance director and Mr Scouler was UK food commercial director.
They deny wrongdoing. The trial continues.