The sheer scale of supermarket firm Tesco meant the financial picture could change “overnight”, a court has heard.
Nicholas Purnell QC, for the defence, gave the example of March 2014 when the finance team forecast a monthly sales shortfall of £108m versus internal targets for the UK food business – only for that figure to be reduced by £32m some 24 hours later.
“I’m simply pointing out it can move overnight from £108m to £75.6m,” said Purnell. “I’m pointing out what can happen in a business as complex as Tesco.”
Carl Rogberg, the former finance director of Tesco UK, John Scouler, the former commercial director for food, and Christopher Bush, the former managing director of Tesco UK, have all been charged with one count of fraud by abuse of position and one count of false accounting. The three men deny any wrongdoing and have pleaded not guilty.
The case relates to an alleged hole in Tesco’s accounts revealed by the grocer in September 2014. The supermarket admitted it had previously overestimated profits by about £250m. The Serious Fraud Office launched a criminal investigation into accounting practices at Tesco in October 2014.
Purnell was questioning Amit Soni, the whistleblower who alerted the grocer’s most senior management to a £250m profits misstatement in 2014. His warning prompted the company to make a statement to the London Stock Exchange that wiped £2bn from the value of the business.
Referring to the altered forecast Soni explained: “More information was available ... that suggested the gap to budget was going to be lower.”
Purnell suggested the change in the numbers was the “hangover” or “legacy” of something that happened at every period end as events “just before the close and the clean-up immediately after” were taken into account.
The trial continues.
