The former chairman of Tesco has told a court that the first time he became aware of a hole in the retailer’s accounts was when he received a phone call in Rome from the new chief executive.
Giving evidence in the trial of three former executives, Sir Richard Broadbent told Southwark crown court that Dave Lewis had called him in September 2014 and had said “something like, ‘Richard we’ve got a problem.’ ”
The early evening call was to discuss a report prepared by a senior accountant at Tesco detailing the issues and came three days before a statement was issued to the stock market disclosing that the retailer had overstated its interim profit forecast by about £250 million.
The correction, issued after a frantic weekend in which bosses and accountants sought to get to the bottom of the report, shocked the stock market and hit Tesco’s share price.
Under questioning yesterday from Sasha Wass, QC, for the prosecution, Sir Richard called it an “important statement” and the consequences “serious”. He said: “We were given the information on Friday night, which suggested something quite serious in terms of the numbers. We had no way of knowing immediately what weight to give it.”
Sir Richard, 64, said it was “very important” for Tesco to work over that weekend to “understand what this meant” as the company “could not just say to the market ‘here is something we have been told’ ”. Sir Richard, who stepped down as chairman of Tesco in March 2015, said that the board understood it had to make an announcement “as soon as possible” to investors.
Earlier the court heard how Amit Soni, a senior accountant, had commissioned the report on payments brought forward by Tesco from suppliers before passing it to Tesco’s legal department after becoming frustrated with the reaction of the defendants.
The three defendants are Christopher Bush, former head of Tesco UK, John Scouler, former UK commercial food director, and Carl Rogberg, former UK finance director. All deny fraud and false accounting. The trial continues.