Attention: Please take a moment to consider our terms and conditions before posting.

Every Little Helps.... Tesco suspends four executives over £250m accounting scandal

Every little helps as they say , i couldn't quite believe this when i heard this, i wonder how much of this goes on in the business world?



Tesco, Britain's biggest retailer, has suspended four senior executives after uncovering a "serious issue" with its accounts that means profits for the last six months have been overstated by £250m.
Tesco has suspended Chris Bush, its UK boss, Carl Rogberg, its UK finance director, John Scouler, its food commercial director, and Matt Simister, the head of food sourcing.

Mr Bush is the company's most senior executive in the UK after Dave Lewis, the chief executive, and was only appointed to the role last year. He has worked at Tesco for 32 years and previously ran the company's operations in Thailand.

John Scouler oversees Tesco's deals with food suppliers in the UK. He and Mr Bush run Tesco's trade briefing with suppliers, which is due to be held in April at Wembley and allows suppliers to hear the latest news on Tesco's strategy.

Tesco has appointed Robin Terrell, its multichannel director, as the UK chief executive. Mr Terrell worked for Amazon and House of Fraser in online roles, but has no experience of running physical stores. Jason Tarry, head of clothing, will step into Mr Scouler's role.
The dramatic statement from Tesco, which is its third profits warning in a matter of weeks, shocked investors, with shares plunging 11.8pc after trading opened. The update means that profits for the first half will be almost 25pc lower than expected, which were already well below initial expectations.

The retailer has brought in Deloitte to lead an investigation, alongside its lawyers Freshfields, and has delayed the publication of its interim results by three weeks to October 23.
The black hole relates to the recognition of revenues and costs on contracts with suppliers in the UK. Analysts have accused Tesco of booking revenues early and paying suppliers later.
Dave Lewis, who became chief executive on September 1, said the discovery was a "serious issue".

He added: "This is out of the ordinary, even the auditors didn't spot it."

The problem was brought to the attention of Tesco by an "informed" member of staff, who told the general counsel. Mr Lewis was then informed and the company spent the weekend identifying the scale of the problem. The Financial Conduct Authority has been informed.
Mr Lewis is already battling against tough trading conditions in the UK and abroad, with Tesco sales falling at the fastest rate for a generation. He was brought into Tesco a month earlier than planned after a slump in trading prompted another profit warning in August.

Sir Richard Broadbent, chairman of Tesco, insisted he would not resign despite the the profit warning suggesting that the company's internal governance systems have failed.
"Things are always unnoticed until they have been noticed," he said.
"Shareholders will have to decide whether I am part of the problem or part of the solution. This is not a welcome event. No one here is having a good day today."
Mr Lewis added: "The board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear."


He insisted that the four members of staff who had been suspended were not disciplined but had been asked to step aside to "facilitate the fullest and deepest investigation possible".
Clive Black, analyst, at Shore Capital said he was "flabbergasted".
He added: "Such an announcement is not the stuff of a well operated FTSE-100 organisation. Clearly there can be no suggestion of impropriety on behalf of the new CEO to our minds, who has been in the job less than a month.
"However, this development may raise, indeed must raise, much more fundamental questions over the chairman's position and the nature, composition and extent of the board, which to our minds has been lop-sided between executives and NEDs for far too long; such matters, of course, are for shareholders to decide."
"These are serious times for Tesco and its shareholders. We are flabbergasted by this development."


http://www.telegraph.co.uk/finance/newsbysector/epic/tsco/11113243/Tesco-suspends-four-executives-over-250m-accounting-scandal.html
«1

Comments

  • I'm not surprised really. Tesco is coming apart at every nail.
    (It all started when they stopped stocking Branston Baked Beans.) A case of "never mind what the customer wants, let's just make sure we screw the supplier" - trouble was in this case the supplier who is owned by Mitsubishi who are big enough and ugly enough to tell Tesco to feck off so some 70 of their products got taken off the Tesco shelves.) Tesco of course lost shed loads of customers who had to seek out their favourite products elsewhere. thegrocer.co.uk/channels/supermarkets/tesco/tesco-delists-70-princes-products-in-mystery-dispute/350435.article
    Meanwhile, Tesco's main board is currently made up of ONE executive director and NINE non-executive directors*. This is not a good way of running a proverbial whelk stall let alone a major company.
    I sold my shares a year ago after The Grocer ran that article. Frankly I left it a year too late.

    *What's the difference between a shopping trolley and a non-exec director? A shopping trolley has a mind of its own but you can get more food in a non-exec director.
  • Every little helps as they say , i couldn't quite believe this when i heard this, i wonder how much of this goes on in the business world?



    Tesco, Britain's biggest retailer, has suspended four senior executives after uncovering a "serious issue" with its accounts that means profits for the last six months have been overstated by £250m.
    Tesco has suspended Chris Bush, its UK boss, Carl Rogberg, its UK finance director, John Scouler, its food commercial director, and Matt Simister, the head of food sourcing.

    Mr Bush is the company's most senior executive in the UK after Dave Lewis, the chief executive, and was only appointed to the role last year. He has worked at Tesco for 32 years and previously ran the company's operations in Thailand.

    John Scouler oversees Tesco's deals with food suppliers in the UK. He and Mr Bush run Tesco's trade briefing with suppliers, which is due to be held in April at Wembley and allows suppliers to hear the latest news on Tesco's strategy.

    Tesco has appointed Robin Terrell, its multichannel director, as the UK chief executive. Mr Terrell worked for Amazon and House of Fraser in online roles, but has no experience of running physical stores. Jason Tarry, head of clothing, will step into Mr Scouler's role.
    The dramatic statement from Tesco, which is its third profits warning in a matter of weeks, shocked investors, with shares plunging 11.8pc after trading opened. The update means that profits for the first half will be almost 25pc lower than expected, which were already well below initial expectations.

    The retailer has brought in Deloitte to lead an investigation, alongside its lawyers Freshfields, and has delayed the publication of its interim results by three weeks to October 23.
    The black hole relates to the recognition of revenues and costs on contracts with suppliers in the UK. Analysts have accused Tesco of booking revenues early and paying suppliers later.
    Dave Lewis, who became chief executive on September 1, said the discovery was a "serious issue".

    He added: "This is out of the ordinary, even the auditors didn't spot it."

    The problem was brought to the attention of Tesco by an "informed" member of staff, who told the general counsel. Mr Lewis was then informed and the company spent the weekend identifying the scale of the problem. The Financial Conduct Authority has been informed.
    Mr Lewis is already battling against tough trading conditions in the UK and abroad, with Tesco sales falling at the fastest rate for a generation. He was brought into Tesco a month earlier than planned after a slump in trading prompted another profit warning in August.

    Sir Richard Broadbent, chairman of Tesco, insisted he would not resign despite the the profit warning suggesting that the company's internal governance systems have failed.
    "Things are always unnoticed until they have been noticed," he said.
    "Shareholders will have to decide whether I am part of the problem or part of the solution. This is not a welcome event. No one here is having a good day today."
    Mr Lewis added: "The board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear."


    He insisted that the four members of staff who had been suspended were not disciplined but had been asked to step aside to "facilitate the fullest and deepest investigation possible".
    Clive Black, analyst, at Shore Capital said he was "flabbergasted".
    He added: "Such an announcement is not the stuff of a well operated FTSE-100 organisation. Clearly there can be no suggestion of impropriety on behalf of the new CEO to our minds, who has been in the job less than a month.
    "However, this development may raise, indeed must raise, much more fundamental questions over the chairman's position and the nature, composition and extent of the board, which to our minds has been lop-sided between executives and NEDs for far too long; such matters, of course, are for shareholders to decide."
    "These are serious times for Tesco and its shareholders. We are flabbergasted by this development."


    http://www.telegraph.co.uk/finance/newsbysector/epic/tsco/11113243/Tesco-suspends-four-executives-over-250m-accounting-scandal.html

    I suspect this overstatement of profits has been driven by an executive bonus culture. They all know it's Charlie Rap really but nobody wants to be the one to kill the goose who lays the golden egg.

    Nothing to worry about though. Think of all those innocent minimum wage cashiers, shelf stackers and trolley collectors that can be laid off to pay for it.

    We can all rest easy in our beds.
  • Anyone else think that the last bloke was called Matt Sinister when they initially saw his name?
  • Given the alleged contents of their meat shelves one would expect a bit of horse sense from Tescos when it comes to declaring profit.

    A relative of mine is probably having a quiet chuckle having been the victim of an apparently acrimonious redundancy sometime ago.
  • Although I have no sympathy at all with the executives, I understand that a lot of their shares were bought by employees, and a share of Tesco's size and market sector will feature very heavily in (even low risk) pension funds.

    The rise and fall of the biggest retailer the UK has ever seen... I can't really see them coming back now...
  • When I think of Tescos the poor quality of their fresh produce and their miserable stores come to mind. I loath the way they constantly shave a few grams off items to maintain the illusion of stable prices too. No wonder Aldi and Lidl are ripping them a new one, good riddance.
  • No sympathy for Tesco but no one should think Lidl undercut them on price by being nicer to suppliers or employees. Furthermore Lidl have another trick which Tesco doesnt play. Ever noticed all those products in Lild which seem to be familiar brands but on closer inspection are not? That's a Lidl speciality. There is a legal phrase which covers this called "passing off" but it is damned difficult to prove in court. Everywhere I go in Europe bloody Lidl are there. They are the Ryanair of food retailing.
  • Stopped going there years ago. Over staffed and over priced.

    They ignored what Aldi and Lidl are doing and now they are paying the price.
  • bbc.co.uk/news/business-29821061

    I'm sure the Tesco execs will enjoy pitching up to the oh so hospitable Serious Fraud Office building in Elm St for their taped interviews!

  • It's a pity, Tesco is a very good company, tens of thousands work there, millions shop there, but it seems to have got out of control with senior managers cooking the books to show false profits. This is one symptom of capitalism's weakness,: last year 'we' made £1 billion profit, this year it's a mere £999,999,999, heads must roll, the share price tumbles, the world is coming to an end. There must be a vanishing point, a saturation level where growth, that is REAL growth and not balance sheet growth, must stop.
    Also, in my youth (eons ago), Marks and Spencer was the epitome for many of middle class style, a classy yet affordable store chain, millions shopped there, especially women. M&S became unfashionable in a rush. Perhaps to add to Tesco's woes, the same thing is happening there. Aldi, Lidl, Waitrose, Next, they are the new fashionable stores, Tesco for all its virtues, may nowadays be perceived by many as old hat. M&S has made a partial recovery, I am sure that Tesco will do the same
  • Sponsored links:


  • It wouldn't surprise me if one of the Major supermarkets went out of business.
  • I have seen a brief description of what they are accused of, and for someone that works with rebates and costs etc, it seems such a basic accounting error that I would be surprised if there isn't some sort of actionable fraud here.
  • I used to type up those taped interviews at the SFO.
  • Mosscat said:

    I used to type up those taped interviews at the SFO.

    Ahh, the joys of the "back pedal" on the Neal Transcriber foot control!!!
  • Huskaris said:

    I have seen a brief description of what they are accused of, and for someone that works with rebates and costs etc, it seems such a basic accounting error that I would be surprised if there isn't some sort of actionable fraud here.

    So, it's fair to say the 'CO' in the Tesco acronym must stand for Criminal Organisation.
  • "It's almost like the financial institutions themselves and the governments at the time and since want to pretend that there was never any fraud involved and no one gained personally for fear that it might upset the markets..."

    Think its more the case that if all the culprits were nailed there wouldn't be anyone around to operate the markets. You would jail the investment bankers, mortgage brokers, Credit Reference Agencies and the Regulators. Selling a pup that had an AAA rating from Standard & Poors is a pretty good defence for those at the bottom of the food chain. The fact is that many practices, however immoral, were simply not illegal as they had not been thought of by the Regulators. They can't be convicted for being immoral, greedy, taking advantage of the incompetent or having bad judgement. Unfortunately, the alleged activities of some Tesco executives are well covered by law and they have the misfortune of being easy prey and political currency to show how tough the new FCA is.
  • Think its more the case that if all the culprits were nailed there wouldn't be anyone around to operate the markets. You would jail the investment bankers, mortgage brokers, Credit Reference Agencies and the Regulators.

    You say that as if it was a bad thing!

  • Rizzo said:

    Think its more the case that if all the culprits were nailed there wouldn't be anyone around to operate the markets. You would jail the investment bankers, mortgage brokers, Credit Reference Agencies and the Regulators.

    You say that as if it was a bad thing!

    No, but a bad thing for the culprits doesn't equate to good outcomes for us.
  • The "rebates" behind the scandal are an example of the moral bancruptcy of modern commerce. Small companies sign contracts to supply Tesco at a set price, the orders flow in and other sales suffer. Once the enterprise is fully reliant on Tesco they demand a "loyalty" rebate of say £10k or orders will stop. The demands keep coming until margins are eroded to nothing and the business is barely viable.
  • Sponsored links:


  • "It's almost like the financial institutions themselves and the governments at the time and since want to pretend that there was never any fraud involved and no one gained personally for fear that it might upset the markets..."

    Think its more the case that if all the culprits were nailed there wouldn't be anyone around to operate the markets. You would jail the investment bankers, mortgage brokers, Credit Reference Agencies and the Regulators. Selling a pup that had an AAA rating from Standard & Poors is a pretty good defence for those at the bottom of the food chain. The fact is that many practices, however immoral, were simply not illegal as they had not been thought of by the Regulators. They can't be convicted for being immoral, greedy, taking advantage of the incompetent or having bad judgement. Unfortunately, the alleged activities of some Tesco executives are well covered by law and they have the misfortune of being easy prey and political currency to show how tough the new FCA is.

    I think a reasonably straightforward case of fraud by false representation under the Fraud Act 2006 would cover most of what went on, without dipping into any finance specific legislation. I don't think there's much of a defence when the offenders resubmited their products back to the credit reference agencies with a threat to take their business elsewhere unless it was upgraded either.

    But as you say, the will has to be there in the first place...
  • The "rebates" behind the scandal are an example of the moral bancruptcy of modern commerce. Small companies sign contracts to supply Tesco at a set price, the orders flow in and other sales suffer. Once the enterprise is fully reliant on Tesco they demand a "loyalty" rebate of say £10k or orders will stop. The demands keep coming until margins are eroded to nothing and the business is barely viable.

    Quite right. I touched on this topic on the "ridiculous supermarket offers" thread charltonlife.com/discussion/comment/1747703#Comment_1747703 back in February. It now all becomes very clear. Presumably Mitsubishi - which owns many grocery brands incl. Branston - were big enough and ugly enough to tell Tesco it could just go do one. Now, we get this story about manufacturers' rebates.

    Meanwhile the good news is that Branston Beans are back in Tesco supermarkets. (Although on an almost unreachable shelf.) Next thing, they'll be re-introducing Thursday as an early closing day I expect.......
  • cafcfan said:

    .

    Meanwhile the good news is that Branston Beans are back in Tesco supermarkets. (Although on an almost unreachable shelf.) Next thing, they'll be re-introducing Thursday as an early closing day I expect.......

    Charlton leads, Tesco follow.
  • cafcfan said:

    The "rebates" behind the scandal are an example of the moral bancruptcy of modern commerce. Small companies sign contracts to supply Tesco at a set price, the orders flow in and other sales suffer. Once the enterprise is fully reliant on Tesco they demand a "loyalty" rebate of say £10k or orders will stop. The demands keep coming until margins are eroded to nothing and the business is barely viable.

    Quite right. I touched on this topic on the "ridiculous supermarket offers" thread charltonlife.com/discussion/comment/1747703#Comment_1747703 back in February. It now all becomes very clear. Presumably Mitsubishi - which owns many grocery brands incl. Branston - were big enough and ugly enough to tell Tesco it could just go do one. Now, we get this story about manufacturers' rebates.

    Meanwhile the good news is that Branston Beans are back in Tesco supermarkets. (Although on an almost unreachable shelf.) Next thing, they'll be re-introducing Thursday as an early closing day I expect.......
    I too can confirm that @harveys gardener is absolutely right, and it isn't confined to Tesco UK or the suppliers of goods for the shelves. I'm going to show the comment to some friends here who are victims of the same practice. They are planning revenge, mind. A bit of whistle blowing.

    By the way I d expect Dave Lewis to try his best to change this sort of behaviour, but it's heavily embedded in the company culture.

  • I wonder if this explains why Hovis has been usurped by Kingsmill in my local supermarket.
  • Stig said:

    I wonder if this explains why Hovis has been usurped by Kingsmill in my local supermarket.

    Quite possibly. Hovis is owned by Premier Foods ( the previous owners of the Branston brand) and they also have a history of having products "delisted" by Tesco. Here's an old article. telegraph.co.uk/finance/8684844/Premier-Foods-crumbled-by-Tesco-bust-up.html

    Allied Bakeries, meanwhile, seem to be selling a lot of bread - but at what profit margins one wonders?
  • Tesco de list loads of brands all the time for ridiculous reasons normally and all to push their bulk buy price down

    Don't shop there or sainsbury any longer

  • Tesco de list loads of brands all the time for ridiculous reasons normally and all to push their bulk buy price down

    Don't shop there or sainsbury any longer

    But if instead you go to Lidl you are supporting a different but equally shameful type of buying regime.

    Can't quite see you in the Farmers Market :-)
  • You would be surprised, I have a local green grocer a posh bakers and use the local butcher, but my main shopping items are bought in smithfields meat market

    Beans and staples are bought from Asda or the Co op
  • You would be surprised, I have a local green grocer a posh bakers and use the local butcher, but my main shopping items are bought in smithfields meat market

    Beans and staples are bought from Asda or the Co op

    Walmart (asda) must be one of the worst though.
Sign In or Register to comment.

Roland Out!