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Two former Tesco executives are CLEARED of £250million fraud

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Two former Tesco executives are CLEARED of £250million fraud and false accounting scandal after 'so weak' case against them dramatically collapses despite four-year probe that cost taxpayers £10million

  • Chris Bush and John Scouler cleared of fraud and false accounting scandal
  • Bush was UK managing director and Scouler was food commercial director
  • Judge tells jury today that duo were acquitted by Court of Appeal yesterday
  • Both charged in September 2016 and a first trial was abandoned in February

By Mark Duell for MailOnline

Published: 06:26 EST, 6 December 2018 | Updated: 07:22 EST, 6 December 2018

Two former Tesco directors have been cleared of fraud and false accounting after the company's profits were overstated by £250million, it can be reported today.

The firm's shares plunged by nearly 12 per cent, wiping £2billion off the value, when it announced in September 2014 that it had overstated profits the previous month.

A jury at Southwark Crown Court in London were told this morning that Chris Bush, 52, and John Scouler, 50, had been acquitted at the Court of Appeal yesterday. 

It is a major embarrassment for the Serious Fraud Office, which is thought to have spent more than £10million on its investigation and legal fees over two trials. 

Former Tesco boss Chris Bush
Former Tesco boss Chris Bush
John Scouler has been cleared of a £250million fraud and false accounting scandal
John Scouler has been cleared of a £250million fraud and false accounting scandal

Former Tesco bosses Chris Bush (left) and John Scouler (right, both today) have been cleared of a £250million fraud and false accounting scandal after the case against them collapsed

Bush, of High Wycombe, Buckinghamshire, was Tesco's ex-UK managing director, while John Scouler, St Albans, Hertfordshire, was its UK food commercial director. 

They were accused of being aware of income being wrongly included in Tesco's financial records to meet targets and make it look financially healthier than it was.

Who are the acquitted former Tesco chiefs? 

John Scouler and Christopher Bush have now been found not guilty of the charges against them.

Chris Bush

Managing director at the time of the scandal, Chris Bush was a Tesco veteran with a 30-year association with the retailer.

He was appointed managing director in January 2013, about a year and a half before the supermarket admitted that it had over-estimated profits by around £250 million.

John Scouler

Tesco's former food commercial head, John Scouler joined the grocer in 2002, having previously spent eight years with Kraft.

Since leaving in December 2014, the year of the scandal, he has become managing director of consumer business at TalkTalk.

But trial judge Sir John Royce dismissed the case brought by the Serious Fraud Office (SFO), 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.

Scouler and Bush were each cleared of one count of fraud and another of false accounting. None of this could be reported until the jury was informed.

During the trial, the jury was told the case was a retrial, and that a third man, former UK finance director Carl Rogberg, is 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.

The trial of Scouler and Bush, which began on October 8, had been expected to last three months. Bush and Scouler were first charged in September 2016. 

A first trial was abandoned in February, shortly before the jury was due to retire to consider its verdict.

Reacting to the news today, Bush said: 'On November 25, 2018, after considering the entire SFO case, the trial judge Sir John Royce, reached the 'firm conclusion' that there was no case against me, or against John Scouler.

'I am sorry to say that the SFO tried to appeal that decision. I am pleased that yesterday the Court of Appeal concluded that the trial judge was right to decide that there was no case to answer and refused the SFO permission to appeal. 

The duo were accused of being aware of income being wrongly included in its financial records to meet targets and make Tesco (file picture) look financially healthier than it was
The duo were accused of being aware of income being wrongly included in its financial records to meet targets and make Tesco (file picture) look financially healthier than it was

The duo were accused of being aware of income being wrongly included in its financial records to meet targets and make Tesco (file picture) look financially healthier than it was

'Therefore yesterday, after a four year ordeal, I was acquitted of all charges against me. While I am delighted that my innocence has finally been established, it is troubling that Mr Scouler and I were ever charged. 

Four-year timeline of the accounting scandal

September 2014: Tesco admits issues uncovered in UK food business means it is likely to have overstated profits by £250million

April 2015: Tesco reports a £6.4billion loss, one of the largest in corporate history

September 2016: Christopher Bush, 52, managing director of Tesco UK, and John Scouler, 50, UK food commercial director, are charged with one count of fraud by abuse of position and one count of false accounting

March 2017: Tesco reaches agreement with authorities over scandal as it pays investors £85million in compensation and £129million in fines and costs

February 2018: First trial is abandoned, shortly before the jury is due to retire to consider its verdict

October 8: Fresh trial begins and is expected to last three months

November 25: Trial judge Sir John Royce concludes there is no case against either Bush or Scouler

Yesterday: SFO goes to the Court of Appeal regarding the trial's dismissal, but its appeal is then dismissed

Today: Jury at Southwark Crown Court are told of the men's acquittal 

'Put simply, these charges should never have been brought, and serious questions should be asked about the way in which the SFO has conducted this investigation. In my view, the SFO wholly failed to investigate this case thoroughly, independently or fairly from the outset.

'I want to thank certain people for their unwavering help and support: my amazing family and friends, my brilliant legal team at Hickman and Rose, and also the many people still working in Tesco, from the very top of the organisation down, for their countless messages of support.

'I am now looking forward to getting home and spending Christmas with my family. That is all I wish to say, thank you.'

Richard Sallybanks, partner at BCL Solicitors, representing Scouler, added: '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.

'We are simply pleased that, after four years, this has now been confirmed by the Court of Appeal upholding the judge's decision that he should be acquitted of all charges. This is a very significant defeat for the SFO - and a notable win for BCL Solicitors and the two ex Tesco directors.'

How did the Tesco accounting scandal unfold? 

News of Tesco's accounting scandal sent shockwaves through the City in 2014 and raised serious questions over how a FTSE 100 firm could get away with 'cooking the books'.

The grocery giant issued a series of profit warnings in the run up to the September announcement about overstated profits, as the group reeled under the disastrous reign of then-chief executive Philip Clarke.

Mr Clarke, who left the retailer just before the scandal, presided over a tumultuous period for Britain's biggest retailer, in which market share slumped as Tesco came under pressure from discount rivals Aldi and Lidl.

Tesco issued a series of profit warnings in the run up to the announcement about overstated profits
Tesco issued a series of profit warnings in the run up to the announcement about overstated profits

Tesco issued a series of profit warnings in the run up to the announcement about overstated profits

The bombshell disclosure came on September 22, when the company admitted that issues uncovered in its UK food business meant it was likely to have overstated profits by £250 million.

The disclosures wiped £2 billion off the supermarket's share price in one day, and the overstatement was later revised up to £326 million.

Tesco ordered an immediate review into the errors, undertaken by Deloitte and law firm Freshfields, but the damage had already been done.

Tesco suspended eight directors and the Serious Fraud Office (SFO) charged three former executives - Carl Rogberg, Chris Bush and John Scouler - with fraud after the black hole was discovered.

Tesco chief executive Dave Lewis has tried to move the group on from the scandal
Tesco chief executive Dave Lewis has tried to move the group on from the scandal

Tesco chief executive Dave Lewis has tried to move the group on from the scandal

To compound matters, the scandal contributed to Tesco's £6.4 billion loss in 2015, one of the largest in corporate history.

In 2017, Tesco reached an agreement with authorities over the scandal that saw it pay £85 million in compensation payouts to investors and £129 million in fines and costs.

The Deferred Prosecution Agreement (DPA) with the SFO saw the company escape prosecution but book a total hit of £235 million.

The agreement came as Britain's financial watchdog, the Financial Conduct Authority, concluded that Tesco had committed market abuse.

Although Mr Clarke was spared charges linked to the scandal, Mr Rogberg, Mr Bush and Mr Scouler - the former finance chief, managing director and food commercial head - faced a lengthy court case that eventually began in 2017.

They stood accused of being involved in a 'white-collar crime' plot and were charged with fraud by abuse of position and false accounting.

After the initial trial collapsed, a retrial date was set for October this year.

The jury was told the case was a retrial and that 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 Mr Scouler and Mr Bush.

All three maintained their innocence.

News of Tesco's accounting scandal sent shockwaves through the City in 2014 
News of Tesco's accounting scandal sent shockwaves through the City in 2014 

News of Tesco's accounting scandal sent shockwaves through the City in 2014 

Dave Lewis, Mr Clarke's successor as Tesco chief executive, has attempted to move the group on from the scandal.

He has said the firm is doing everything possible to 'restore trust' after seeing the brand suffer.

He said last year: 'What happened was a huge source of regret to all of us at Tesco, but we are a different business now.

'The decisions over the last years are evident to all and the job now is to keep this momentum.

'I am pleased with how our colleagues have responded and that has allowed us to rebuild the business since 2014.

'The brand was affected by the announcement back in 2014, that is clear.

'I think everyone will recognise that there is nothing here to be proud of, but I am proud that we faced into it.

'The situation was real and I hope people will respect Tesco for facing a difficult situation and dealing with it in the manner in which it has.'

Mr Lewis appeared in court in October, where he told of his 'genuine shock' on learning of the company's overstated profits.

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