LONDON (Reuters) - Former Tesco (TSCO.L) chairman Richard Broadbent will be a witness in the trial of three former executives accused of fraud and false accounting at Britain’s biggest retailer, a court heard on Monday.
Christopher Bush, 51, who was managing director of Tesco UK; Carl Rogberg, 50, who was UK finance director; and John Scouler, 49, who was UK food commercial director, all deny charges of fraud and false accounting.
In the second day of opening arguments at London’s Southwark Crown Court lead prosecutor Sasha Wass told the jury they would hear evidence from Broadbent, who chaired Tesco from 2011 to 2015.
She told the court that Broadbent was misled at a meeting of Tesco’s finance committee in August 2014, during which Rogberg was asked if UK profit forecasts were still sound and he confirmed that they were.
The court had already heard that Tesco Chief Executive Dave Lewis would be a witness, as would representatives of its auditors in 2014, PwC.
The charges against the defendants follow Tesco’s announcement in 2014 that its profit forecast had been overstated, sending its shares tumbling and plunging the company into the worst crisis in its close to 100-year history.
On Friday the court heard that the three defendants had abused their positions of trust by encouraging the manipulation of profit figures, lying to auditors and misleading the stock market.
The case centers on two statements made by Tesco to the stock market in 2014. In the first, published on Aug. 29, Tesco downgraded its financial guidance. In the second, on Sept. 22, Tesco said it had found a 250 million pound ($331.9 million) overstatement of its expected profit, mainly through booking commercial deals with suppliers too early, so-called “pulling forward”.
The prosecution alleges that it is the difference between the first and second statements that exposes fraud.
On Monday Wass told the jury that all three defendants were well aware that a hole in Tesco’s accounts was “spiraling out of control” in the first half of 2014 but connived to conceal their failure to meet targets.
The trial is expected to last until Christmas.
($1 = 0.7532 pounds)
Reporting by James Davey; Editing by David Goodman