- Three former Tesco executives on trial for fraud over £250 million accounting black hole in 2014. They deny the charges.
- A court heard that a senior accountant secretly prepared a document allegedly uncovering the inflated profits.
- The document was eventually handed to Tesco CEO Dave Lewis, who was said to be shocked by its contents.
- The trial is expected to last between 10 and 12 weeks.
LONDON — A document prepared secretly by a senior Tesco accountant in 2014 exposed a £250 million profit overstatement that wiped billions from the retailer’s value when its contents were made public, a court heard on Tuesday.
Opening the case for the prosecution for a third day, Sasha Wass QC told a jury at Southwark Crown Court that Amit Soni, a senior accountant at Tesco, secretly prepared a report on payments from suppliers that Tesco had “pulled forward” from future accounting periods in order to cover up an accounting black hole.
An email Soni wrote colleagues on September 3, 2014 — weeks before Tesco released the trading update that wiped billions from its stock market value — was read out in court and contained the line: “The whistle is about to blow.”
“It has consumed my life in the last four to five weeks,” Soni’s email read. “Collecting information in secret, getting my team to understand what I want, and doing it in a subtle way, and only on my desktop [computer].”
“The fight starts now. It’s the fight I have to have if Tesco has to become better.”
- READ MORE: ‘It has broken me’: Tesco accounting scandal ‘compromised’ staff and sparked resignations
Three former Tesco executives are standing trial for fraud by false accounting and fraud by abuse of position. They were charged last year after Tesco was found to have inflated its profits by nearly £250 million ($US331 million) in 2014.
She recognised a hand grenade when she saw one
The jury was told that Soni’s report was sent to the defendants in the hope that they would raise the issue with the newly-appointed CEO Dave Lewis.
When they did not, the jury heard that Soni sent the paper to Kay Majid, a member of Tesco’s legal team.
Wass told the court: “She recognised a hand grenade when she saw one, because she forwarded the paper to the [rest of the] legal team.”
The secret paper was later sent to Lewis, to whom Wass said the contents were “a complete shock.” He commissioned internal and external auditors, and issued a trading update which made Tesco’s true financial position clear, Wass said.
Former Tesco UK managing director Christopher Bush, former UK finance director Carl Rogberg, and former food commercial director John Scouler are each standing trial for fraud by false accounting and of fraud by abuse of position.
The trio were formally charged by the Senior Fraud Office last year. Lawyers acting for the trio have already pleaded not guilty. Bush, Rogberg, and Scouler were part of the so-called “Cheshunt Eight,” a group of senior Tesco employees who all left the company following the 2014 scandal.
The trial continues.