06:58, December 06 233 0 theguardian.com

2018-12-06 06:58:09
Two Tesco directors cleared of fraud and false accounting

Former Tesco directors Chris Bush and John Scouler have been cleared of false accounting at Southwark crown court.

The court case related to an alleged hole in Tesco’s accounts revealed in September 2014 when the company told the stock market it had overestimated profits by about £250m. The announcement wiped £1.5bn off the value of Tesco in one day.

The case’s failure represents an embarrassment for the Serious Fraud Office which is thought to have spent more than £10m, including investigation and legal fees covering two lengthy trials, pursuing the former Tesco senior managers.

Judge Sir John Royce instructed the jury to acquit both defendants. Scouler, previously Tesco’s UK food commercial director, and former UK managing director Bush, had each been prosecuted by the SFO on one count of fraud and false accounting.

The Judge ruled last week that there was no case to answer and that he would direct the jury to acquit the defendants. The SFO appealed against the ruling.

On Wednesday, the court of appeal refused the SFO leave to appeal and reporting restrictions were lifted on Thursday morning after the jury at Southwark were given their instructions.

Scouler’s lawyer, Richard Sallybanks of BCL Solicitors, said: “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.

“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.”

The retrial started in October after the previous trial, which had run to 18 weeks, was abandoned in February when one of the defendants was taken ill. Bush and Scouler were each charged with one count of fraud and one of false accounting.

It was claimed the men were aware that income from suppliers that should have been recognised in future years was recorded early to help the company hit targets and make Tesco look financially stronger than it was.

The SFO’s case relied heavily on whistleblower Amit Soni, a senior accountant within Tesco’s finance team who was concerned with the way income from suppliers was being handled. But the SFO did not directly interview any Tesco buyers or suppliers or call them as witnesses in the trial.

The loss of the high-profile case is likely to prompt criticism of the SFO, which has previously suffered a string of high-profile failures including the 2016 collapse of a trial of five brokers accused of helping the convicted trader Tom Hayes to rig the Libor rate.

It has also been slated for the inept handling of the prosecution of property tycoon Vincent Tchenguiz which led to him winning millions in damages and a public apology after the case was thrown out.

Tesco’s management team led by chief executive Dave Lewis is also likely to face scrutiny. The supermarket has already paid the SFO a £129m fine and further legal costs as part of a deferred prosecution agreement (DPA) relating to false accounting at Tesco Stores Limited, a subsidiary of the retailer, between February and September 2014. At the time it said the agreement was not an admittance by the company that it or any of its employees committed a criminal offence.