Tesco fraud trial hears two staff quit over their concerns

Former Tesco executives Carl Rogberg (left), Christopher Bush (centre) and John Scouler (right), are on trial at Southwark Crown Court.

The trial into alleged fraud at Tesco has heard that two members of its finance department resigned in 2014 over concerns they may be compromising their professional integrity.

The two were unhappy about what they were being asked to do by bosses.

Tesco's former finance head, managing director and food commercial boss deny charges of fraud by abuse of position and false accounting.

Investors were told the company's accounts had been overstated in 2014.

Carl Rogberg, 50, Chris Bush, 51, and John Scouler, 49, are alleged to have failed to correct inaccurately recorded income figures.

Problems with Tesco's accounts came to light in a regulatory announcement in September 2014, when Tesco shocked the market in admitting it had overstated profits by around £250m.

Fears

Southwark Crown Court in London has heard the three men are accused of "cooking the books" by bringing forward income not yet earned to artificially inflate its figures.

The prosecution told the court that, at the end of meetings with commercial directors before the company's half year ended in August, Mr Bush knew how critical the situation was if it continued.

She said: "Mr Bush knew that the hole in the accounts at the end of the second half in the financial year could be as large as £600m if nothing changed.

Tesco's accounting black hole came to light in 2014

"Mr Bush said they would be able to sort it out when the new chief executive officer arrived. But until the new chief executive officer arrived, Mr Bush's instructions were to get to zero the budgets for half one and half two."

She told the court that the situation had left some staff "in tears", and afraid they would compromise their professional integrity if they continued to work at Tesco.

The prosecutor said: "Let me tell you about two people who felt so compromised by the mis-recording of profits that they did resign rather than engage in what they considered to be practices that were unlawful."

She told the court about Richard Parsons, a project manager at the supermarket, who in an exit interview said: "It has broken me" and that he was angry at having been put in a position which compromised his ethics.

Jurors also heard that former Tesco accountant Aysen Nadiri quit her role on August 26 2014. She had said senior Tesco management refused to accept targets could not be met and they had a disregard, in Miss Nadiri's view, for proper accounting principles.

The court also heard that one of Tesco's senior accountants, Amit Soni, who eventually presented findings of the hole in the accounts to the board, spent weeks agonising about what he was going to do.

In an email on September 3 2014, he told colleagues: "Keep the file with you, the whistle is about to blow."

He added: "It has consumed my life in the last four to five weeks, collecting information in secret, getting my team to understand what I want and then doing it in a subtle way and only on my desktop."