Three former Tesco executives were “cooking the books” and bullied staff who objected before the chain announced a £250m overstatement of profits in 2014, a court has heard.
A jury at Southwark Crown Court heard that Carl Rogberg, Chris Bush and John Scouler were involved in a “white collar crime” plot amounting to “colossal fraud” that sent shock waves through the stock market in September of that year.
The scandal wiped £2bn off the supermarket’s share value, said prosecutor Sasha Wass QC.
At the opening of the trial of Tesco’s former finance chief, managing director and food commercial head, she told the court the defendants, failed to correct income figures that had been recorded inaccurately.
She said a practice known as “pulling forward”, which brings forward income from the future to artificially inflate the figures of the present, was used to make it look as though targets were being met.
The three men deny charges of fraud by abuse of position and false accounting between February and September 2014.
Ms Wass said: “The prosecution case in a nutshell is that all three defendants were aware that income was being wrongly included in the financial records of the company, which were used to inform the stock market.
“Each of the defendants was aware that this would lead to the company looking financially healthier than it actually was and it would result in Tesco’s trading profits being overstated.”
Image: The profit overstatement led to almost £2bn being wiped off the chain’s market value
“This, say the prosecution, was clearly dishonest”.
Ms Wass said the case “boiled down in its essence” amounted to “cooking the books, or what lawyers called false accounting”.
She added: “These defendants encouraged the manipulation of profits and indeed pressurised others working under their control to misconduct themselves in such a way that the stock market was ultimately misled.”
The jury heard that Rogberg was “directly responsible” for authorising, what the prosecution said, were falsified figures at a time when Tesco faced “challenging trading conditions” and “failure was not looked on kindly”.
Targets were set “aggressively high”, she said.
Ms Wass said: “Each defendant would have had a very personal interest in keeping the share value of the company high, because a lot of their renumeration package included shares.”
The prosecution said the alleged fraud came to light when an “explosive” document called ‘the legacy paper’, produced by other members of staff, exposed a growing black hole in the accounting process.
The trial is scheduled to last up to 12 weeks.
Source: Sky