Two former managers of Tesco PLC (LON:TSCO) have gone on trial over accusations of fraud relating to the supermarket’s 2014 accounting scandal.
Chris Bush, Tesco’s former UK managing director, and John Scouler, the former UK food commercial director, have been accused of knowing that income was being wrongly included in the FTSE 100 firm’s financial records in order to meet targets and make the company look financially healthier than it was.
In August 2014, Tesco said that it expected profits for the first half of the year to be around £1.1bn, however, a few weeks later under the new chief executive Dave Lewis the firm said profits had been overstated by around £250mln (although it was later revealed that profits had been overstated by £284mln).
The ensuing stock market reaction caused around £2bn to be wiped off the supermarket’s value in September that year.
A third defendant, former UK finance chief Carl Rogberg, is charged with the same offences but is not well enough to stand trial.
All three deny the charges.
The prosecutor, Sasha Wass QC, told the jury at Southwark Crown Court that Bush and Scouler were “generals”, with those working below them serving as “foot soldiers”, who she said were “pressurised and coerced” into carrying out the offences.
Equal pay pressure
The accounting wrangle isn’t the only legal tussle Tesco has found itself in, with thousands of its workers having recently launched a multi-million claim over allegations that its female staff have been underpaid.
The Tesco Action Group, comprised of both current and former Tesco staff, have accused the supermarket of paying store workers, which are mostly women, up to £3 less an hour than warehouse and distribution centre workers who are predominantly men.
The claim is being supported by workplace rights body Pay Justice, which has previously launched claims against two other members of the ‘big four’, J Sainsbury plc (LON:SBRY) and WM Morrison Supermarkets PLC (LON:MRW).
The group estimates that current and former workers across the UK’s four largest supermarkets could be entitled to a potential total payout of up to £10bn.