Britain’s Serious Fraud Office has charged three former senior Tesco (TSCO.L) executives with fraud in its investigation into accounting practices at the country’s biggest supermarket chain.
A 250 million pound overstatement of Tesco’s first-half profits in August 2014, due to booking deals with suppliers too early, led to the suspension of eight senior members of staff in the following months.
None of them commented at the time.
When Tesco revealed the overstatement, which was later raised to 263 million pounds, it plunged the firm into the worst crisis in its near 100-year history and led to a 4 billion pound drop in the company’s stock market value.
Carl Rogberg, Christopher Bush and John Scouler have been charged with one count of fraud by abuse of position and one count of false accounting, the SFO said in a statement on Friday, giving no further details of the charges.
Bush, 50, who was managing director of Tesco UK, Rogberg, 49, who was finance director UK and Scouler, 48, who was UK food commercial director have been asked to appear at a London court on Sept 22, the SFO said.
Hickman & Rose Solicitors, which is representing Bush, said he was “extremely disappointed” by the SFO’s decision.
“He is not guilty … he will vigorously contest these allegations and is confident he will be cleared of any wrong doing,” it said.
Norton Rose Fulbright, which is representing Carl Rogberg, said “Our client, Carl Rogberg, has always denied any wrongdoing. He will be vigorously contesting the charges to prove his innocence.”
Lawyers for Scouler, who is the commercial director of telecoms company TalkTalk (TALK.L), were not immediately available for comment.
The SFO, which launched its criminal investigation in October 2014, said the alleged activity occurred between February and September of that year. The SFO’s statement said its investigation into Tesco is ongoing.
Under SFO rules, if Tesco cooperates with the ongoing inquiry, can show it has put measures in place to prevent any further wrongdoing and agrees to terms, it could qualify for a suspended prosecution, or deferred prosecution agreement (DPA).
The Tesco probe is seen as a key case for the SFO, an agency established to deal with the most serious and complex fraud cases, that has had a chequered record in securing white collar convictions over its 28-year history.
The convictions of three former Barclays traders in London’s third, high-profile Libor trial in July after a bitterly-fought case have helped silence some of its critics.
The SFO’s statement also made no mention of Tesco’s former chief executive Philip Clarke who was sacked in July 2014.
Clarke, who has not commented since leaving Tesco, was interviewed under caution last year as part of the SFO’s investigation.
Tesco said it has introduced a programme of extensive change in the two years since Dave Lewis took over as CEO and could not comment further.
Tesco agreed to pay $12 million in November 2015 to settle a U.S. lawsuit brought by holders of the company’s American depository receipts, alleging breaches of federal securities laws in connection with the overstatement of commercial income.
The Financial Reporting Council (FRC), which polices accountants, is still investigating accountants PwC into how the firm audited Tesco’s accounts in the run up to the scandal. PwC declined to comment.