2 former Tesco directors cleared in false accounting trial

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Tesco accounting scandal

Two former Tesco directors have been cleared of fraud and false accounting in relation to the retailer’s profits being overstated by £250 million.

This morning at Southwark Crown Court, Judge Sir John Royce instructed the jury to aquit Tesco’s former UK food commercial director John Scouler and former UK managing director Chris Bush.

Scouler and Bush had each been prosecuted by the Serious Fraud Office (SFO) on one count of fraud and false accounting arising from a £250 million profit overstatement.

Tesco’s shares nose dived by nearly 12 per cent, wiping £2 billion off its share value, when it announced in September 2014 that a trading statement the previous month had exaggerated profits to meet targets and to make it look like Tesco was financially healthier than it was.

Royce’s acquittal came after he dismissed the case brought by the SFO last Monday, bringing the trial to a halt after the prosecution presented its case.

The SFO went to the Court of Appeal regarding the dismissal, but its appeal was dismissed yesterday and the men were cleared by Court of Appeal judges.

The Court of Appeal also refused the SFO leave to appeal.

None of this could be reported until the jury was informed this morning.

During the trial, the jury was told the case was a retrial, and that a third man, former UK finance director Carl Rogberg, was charged with identical offences but was not currently well enough to stand trial.

A decision will be made in due course about what action should be taken in relation to Rogberg following the acquittals of Scouler and Bush.

Informing the jurors of the development, Royce acknowledged that they had given up more than two months of their lives attending the trial, which started on October 8.

“I concluded that, in certain crucial areas, one in particular, that the prosecution’s case was so weak that it should not be left for a jury’s consideration,” he said.

Royce added that the “real weakness” was the question of proving knowledge.

Richard Sallybanks, the lawyer who represented John Scouler said: “We are delighted that Mr Scouler leaves court today knowing that the judge, having heard the entirety of the prosecution evidence, reached the firm conclusion that he had no case to answer.

“That decision was obviously correct, yet the SFO chose to pursue an appeal which was rejected yesterday when the Court of Appeal refused even to grant leave.

“We have long argued that the SFO’s prosecution of Mr Scouler was fundamentally flawed, that he should not have been charged, and that the SFO should not have proceeded with this trial.

“Mr Scouler has maintained since the outset of this investigation that he was not guilty of fraud and false accounting, and those close to him always knew that to be the case.”

Their first trial of Bush, Scouler and Rogberg began in September last year following years of delays.

However, earlier this year Rogberg suffered a heart attack and was admitted to hospital, forcing the then-Judge Deborah Taylor to dismiss the jury, stating his illness could prejudice their decision.

Former chief executive Philip Clarke, who stepped down just weeks after the accounting black hole was unearthed, had been off by the SFO after being under investigation.

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