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Fraud charges against Tesco directors dismissed

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The trial of two former Tesco directors on charges of fraud and false accounting, related to the discovery of a £250m ‘black hole’ in the retailer’s accounts, has collapsed after the judge dismissed the case due to lack of evidence, says Accountancy Daily.

The UK’s Serious Fraud Office (SFO) brought the case after Tesco announced an overstatement in its half year trading statement in August 2014, which was subsequently found to be down to early recognition of payments from suppliers.

On Thursday, a jury at Southwark Crown Court was told that Chris Bush, former UK managing director, and John Scouler, former UK food commercial director, had been acquitted by the Criminal Court of Appeal after judges backed the ruling of the trial judge, Sir John Royce, that they had no case to answer.

The prosecution case, which lasted two months, finished last week. Both men had denied the charges against them, which were one count of fraud and false accounting.

Charges against former Tesco finance director Carl Rogberg were dropped earlier this year, and he was not involved in the trial.

In a statement Bush said: ‘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.’

Scouler’s solicitor Richard Sallybanks, a partner at BCL Solicitors, said: ‘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.’

Ross Dixon, partner at Hickman and Rose and solicitor for Chris Bush, said: ‘This case highlights the risks faced by senior executives when companies are placed under criminal investigation by the Serious Fraud Office. 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. The Court of Appeal has now affirmed that decision and refused the SFO permission to appeal.

‘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 Mr Bush, despite the lack of any evidence that he was told about or concealed unlawful behaviour.

‘Given its status as the UK’s leading investigator of serious and complex fraud, the SFO made many basic mistakes. For example, failing to identify the correct versions of documents shown to Mr Bush, and failing to undertake any detailed forensic analysis of the underlying accounting evidence. The SFO’s failings have resulted in a four-year ordeal for Mr Bush, and the waste of millions of pounds of taxpayers’ money.

‘Mr Bush has now been fully vindicated by the trial judge and the Court of Appeal. However, his treatment at the hands of the SFO will be a serious cause for concern for those falling under investigation in the future.’

 

 

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