Jessica Fino 6 Dec 2018 12:36pm

SFO’s case against ex Tesco executives collapses

The Serious Fraud Office’s (SFO) case against two former Tesco executives accused of fraud and false accounting has collapsed today, with both directors acquitted

Judge John Royce acquitted John Scouler, Tesco’s former food commercial director and Chris Bush, former managing director, who had been prosecuted by the SFO on one count of fraud and false accounting, following a £250m profit overstatement at the supermarket.

Last month, Royce ruled there was no case to answer and that he would direct the jury to acquit the defendants.

The SFO then appealed the ruling, but the Court of Appeal refused the SFO leave to appeal. Consequently, Royce instructed the jury to acquit both defendants.

The SFO said today Tesco accepted responsibility for false accounting practices through a Deferred Prosecution Agreement in March last year. The details of which remain subject to reporting restrictions.

Earlier this year, the trial had been abandoned after a third executive, former UK finance boss Carl Rogberg, suffered a heart attack. In July, he was removed from the re-trial on health grounds, and has not been included in this case.

The SFO said it is considering whether to pursue a retrial in light of the judgment.

Richard Sallybanks, partner at BCL Solicitors and Scouler’ solicitor said, “We are delighted that 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.”

Sallybanks accused SFO’s prosecution of being “fundamentally flawed”.

Meanwhile, Ross Dixon, partner at Hickman and Rose, and solicitor for Bush, said, “This case highlights the risks faced by senior executives when companies are placed under criminal investigation by the SFO.

“The trial judge heard from thirty witnesses and considered thousands of pages of written evidence; he reached the firm conclusion that there was no case for the defendants to answer.”

Dixon was also very critical about the SFO’s conduct. He said, “Quite how the SFO managed to so fundamentally misunderstand the effect of its own evidence demands an answer.

“The SFO appeared determined to blame a small number of senior individuals including Bush, despite the lack of any evidence that he was told about or concealed unlawful behaviour.

“The SFO’s failings have resulted in a four year ordeal for Mr Bush, and the waste of millions of pounds of taxpayers’ money.”

Bush also commented on the judge’s decision by saying, “While I am delighted that my innocence has finally been established, it is troubling that Scouler and I were ever charged.

“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.”

Tesco suspended four of its senior members of staff in 2014 after it found its profits has been overstated by £250m.

The mistake was spotted during final preparations of the store’s interim results, with Tesco saying the error occurred due to accelerated recognition of commercial income and delayed accrual of costs.

Last year, Kevin Grace, one of the directors being asked to leave the supermarket, sued Tesco for more than £600,000, claiming he was wrong. lt was dismissed.

Tesco has been approached for comment.