Former Tesco CEO has to testify under oath

Former Tesco CEO has to testify under oath

Former Tesco CEO Philip Clarke will have to testify, under oath, in front of the Serious Fraud Office in London about his knowledge in regards to the accounting fraud that took place at Tesco.

He is not the only one

Bloomberg notes that former commercial director Kevin Grace also has to appear in front of the SFO, alongside former UK Tesco financial director, Carl Rogberg and his boss Chris Bush (former Tesco UK CEO). All will have to testify under oath.

 

The SFO has been investigating Tesco's fraudulent accounting since October 2014, choosing to keep all interrogations classified and refraining from any comment until the official ruling. That is expected to arrive by the end of the year, according to SFO director David Green. A normal procedure would take 4 to 6 years, so a final verdict by the end of the year would be extremely fast.

 

Even though Clarke and other senior figures still have to testify, the overall idea is that the indicted managers will get a deferred prosecution agreement leading to a settlement. Tesco seems intent on reaching such a settlement, even though that may come across as an admission of guilt. The UK supermarket market leader wants to cleanse itself of its past as soon as possible, in order to focus on the future.

 

Lowest market share in a decade

That future looks somewhat grim: about a year into his tenure as CEO, Dave Lewis has not been able to halt the slide of Tesco's market share. A few days ago, Kantar Worldpanel announced that Tesco's turnover dropped 0.9 % in the 12 weeks until 16 August 2015. As the total market grew 0.9 %, the pressure on Tesco's market share stays on. Currently at 28.3 % and still much larger than the number 2 (ASDA with 16.6 %), it is still the lowest number in a decade.

 

The question is where the slide will eventually stop, because its turnover keeps dropping despite millions spent into a better product range and service. In June, it rejoiced that its turnover drop had slowed down, but that has not been the end of the road so far.

 

With Lewis in control for about a year, Tesco's shareholders will want better results and will want black numbers instead of red ones: ever since 2007, Tesco has lost 60 % of its stock value. It may yet face lawsuits from disgruntled shareholders in the United States, something which may also happen in the United Kingdom.

Tags: