Ex-Tesco Executives Concealed Investor Fraud, Prosecutor Says
(Bloomberg) -- Three former Tesco Plc executives deceived investors by conspiring with hundreds of suppliers to conceal a 250-million pound ($327 million) hole in the grocer’s accounts, part of a scandal that wiped 2 billion pounds from the U.K. chain’s market value, prosecutors said at the start of the trial of two of them.
Ex-U.K. chief Chris Bush and John Scouler, ex-U.K. commercial director, were charged in September 2016 following a two-year Serious Fraud Office investigation of Tesco’s accounting practices. Former U.K. finance head Carl Rogberg is unwell and isn’t on trial.
“It’s hard to imagine a more serious situation for a public limited company,” prosecutor Sasha Wass said in the London courtroom. “Both defendants and Carl Rogberg were well aware that Tesco’s profits were being manipulated to the stock market in order to improperly inflate the profit figure.”
Tesco’s board was alerted to the issue by one of Rogberg’s colleagues in 2014. The information “was like a hand grenade being thrown into the company,” Wass said. Bush and Scouler were aware of the shortfall but remained quiet, she said.
Bush, 52, and the 50-year-old Scouler were charged with two counts of fraud and false accounting. The men, who deny the allegations and have pleaded not guilty, “dishonestly falsified or concurred in the falsification” of digital-accounting records for Tesco, according to the SFO indictment.
The fraud took place with the help of hundreds of suppliers, who provided false invoices, Wass said.
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