'We need to start doing things in a different way': Tesco executives discussed the need for 'cultural change' months before £250 million accounting scandal broke

  • Tesco’s former UK finance director Carl Rogberg is one of three former Tesco executives standing trial for fraud in relation to their alleged involvement in overstating the firm’s profits in 2014, which wiped billions from the retailer’s value.
  • An email sent to Rogberg nearly a year before the scandal broke suggested the firm needed “cultural change about doing the right thing.”
  • Rogberg said references to terms such as “pull-forward” challenges were a sign of financial health, rather than “internal jargon used … to describe the falsification of figures” as the prosecution alleges.

LONDON – A Tesco executive suggested the firm’s management “need[ed] to start doing things in a different way” nearly a year before the supermarket chain admitted it overstated profits by nearly £250 million in 2014, a court heard on Wednesday.

Former UK finance director Carl Rogberg, 50, is one of three former Tesco executives on trial for fraud at Southwark Crown Court. All three deny the charges.

Defending Rogberg, barrister Nicholas Purnell showed the jury an email sent on November 14, 2013 to Rogberg by John Fearne, a former senior member of Rogberg’s finance team who faces no charges of wrongdoing.

Fearne said in the email that Tesco’s management “needs cultural change about doing the right thing and not always following others,” singling out the marketing team specifically.

Asked by Purnell what the comment meant, Rogberg said it suggested “we need[ed] to start doing things in a different way.”

The defendants are charged with abusing their position by dishonestly concealing the true nature of Tesco’s financial accounts.

The prosecution previously alleged that the executives commissioned employees to “pull forward” income from future accounting periods to disguise a black hole in its existing accounts, and used “jargon” terms like “legacy challenge” to “describe the falsification of figures and the problems this created.”

Purnell highlighted in emails sent to Rogberg “repeated” references to terms including “pull-forward income” and “legacy,” and asked if such references had concerned him.

Rogberg told the jury: “Not at all. I would almost say on the contrary.”

“Legacy was about making sure that we had a really good stock of inventory, not full of old stock, and making sure that we accounted for it in a proper way,” he said.

Tesco’s disclosure of a £247 forecast profit overstatement in September 2014 wiped billions of pounds from its stock market value and plunged the supermarket giant into crisis.

The overstatement was identified three weeks after current chief executive Dave Lewis replaced Phil Clarke.

Former Tesco UK managing director Christopher Bush, former UK finance director Carl Rogberg, and former food commercial director John Scouler are all charged with fraud by false accounting and of fraud by abuse of position.

The trial began on September 29, and is expected to last until January.

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