2. INTRODUCTION
• As of 2014, British supermarket chain Tesco held approximately 29 percent of Britain’s grocery market,
with more than 3,500 stores and over 310,000 employees. Tesco was Britain’s largest grocery chain
and the third-largest retailer by sales in the world. But with shifts in the industry, changes in company
management, and growing competition from rivals and discount chains, Tesco saw a decline in sales.
From 2013 to 2014, the company saw its stock price fall by more than 50 percent. By October 2014,
chairman Richard Broadbent announced his resignation
• Tesco’s finance director Carl Rogberg, managing director Chris Bush, and food commercial director John Scouler
were charged with fraud by abuse of power and false accounting. According to prosecutor Sasha Wass, the three
executives “encouraged the manipulation of profits and indeed pressurized others working under their control to
misconduct themselves in such a way that the stock market was ultimately misled.” Wass continued, “Each of
these three defendants used their managerial authority and actively encouraged those working beneath them to
falsify the figures.”
4. DOWNFALL
• Tesco's timing was unfortunate; the new venture launched in 2007, just as
consumer spending and taste for adventure went into sharp decline
• In the recession, many people had time, just no money. That reduces the
market for ready meals. But more crucially, this kind of food requires a
change of habit.
• The company was also accused of selling horse meat that was labeled as
beef, and its couple of stores in the UK were found to be selling expired
food items for which the company was also fined 7.5 million euros
5. OVER STATEMENTS OF PROFIT
The accusation was mainly with respect to the
recognition of commercial income. Normally for a
grocery store, the primary source of revenue was in
the form of the margins gained by selling groceries.
Tesco sourced and produced the groceries on its own
and sold through its stores. The present allegation
was against the Tesco stores operating in the UK
markets. In addition to the margins gained on the
groceries, Tesco also got additional revenue in the
form of in-store promotions S
6. The scandal came to light after a whistleblower alerted the
company’s new chief executive, Dave Lewis, who took over in
September 2014. A team of forensic accountants from Deloitte
then established that Tesco had artificially inflated an estimate
of first-half profits given to the City in August 2014. They also
found similar practices had been in place in prior reporting
periods. In April 2015, Tesco said it had found a further £60m in
mis-statements from previous years, mostly as a result of an
audit of its Irish operations.
7. INVESTIGATION
• The SFO said its investigation into Tesco remained ongoing and it
is still possible that further individuals could face action. However, it
is understood that former chief executive Philip Clarke, who was
questioned under caution by the SFO, will not be charged
• Tesco said in a statement that it continued to co-operate with the SFO’s
investigation: “The last two years have seen an extensive programme of
change at Tesco, but given this is an ongoing legal matter, we are unable
to provide any further comment at this time.”
9. CONCLUSION
Tesco cases of fraud and scandal have become one of the greatest
histories and have given awareness to all companies that fraud is one
of the measures that will kill a business or company. In addition,
Tesco competitors have also cut and are ahead of Tesco because of
this case. This case shows that ethics is something that is very
valuable and hard to find because it requires courage and sincerity in
everything that happens. Shareholders and investors have also
realized that a successful company is a company that adheres to
ethical principles