Tesco finance team "falling apart" in 2014, court told

Updated: Thu, Oct 05, 2017
11:37 pm
Reuters
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A senior accountant at Tesco said his team was falling apart in 2014 when Britain`s biggest retailer ended a tough first half trading period but bosses refused to reduce targets for the second half, a London court heard on Thursday.

Amit Soni was giving evidence for a second day at the trial of three former senior Tesco executives who are accused of fraud and false accounting in 2014.

Christopher Bush, 51, who was managing director of Tesco UK, Carl Rogberg, 50, who was UK finance director, and John Scouler,49, who was UK food commercial director, all deny any wrongdoing and have pleaded not guilty.

The case follows Tesco`s announcement in September 2014 thatits profit forecast had been overstated by 250 million pounds ($328.03 million) mainly due to booking commercial deals with suppliers too early.

Tesco`s shares tumbled following the disclosure and plunged the company into the worst crisis in its near 100-year history.

Soni, who is described as a whistleblower by the prosecution, has told Southwark Crown Court that the accounting teams had been instructed to "pull forward" future income from suppliers by booking it in advance to mask a growing accounting gap.

Lead prosecutor Sasha Wass asked Soni during the court hearing how he felt after Tesco`s UK commercial directors failed to get their targets cut by Bush at an Aug. 21 meeting.

"I got more worried than I was before the meeting," he told the court. "All of us had seen how difficult half one had been."

Soni said his team was feeling the pressure.

"I could clearly see part of my team was beginning to give up, if not the entire team," he told the court.

"It was getting to the point that they could see the future was not looking any better ... I could see them falling apart."

Soni told the court two of his team resigned and he was worried more would follow.

The court had heard from Wass on Tuesday that two members of Tesco`s financial team resigned in 2014 because they were concerned their professional integrity was being compromised by what they were being asked to do by their bosses.

Soni told the court that after the Aug. 21 meeting he commissioned a detailed report, "the legacy paper", which made it clear around 250 million pounds had incorrectly been included in figures Tesco had presented to the stock market.

"It was my idea to put the paper together," he told the court. He also said neither Bush or Scouler were involved in its commissioning.

The court has heard that the paper eventually came to the attention of Tesco`s new chief executive Dave Lewis, which prompted a corrective statement to the stock exchange.

Wass asked Soni why he did not tell the company`s auditors PwC about his concerns. "I did think long and hard about it but in the end decided it was for Carl (Rogberg) to bring up with PwC," he told the court.

The trial is expected to last until Christmas.

($1 = 0.7621 pounds)

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)

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