Tesco turnaround disrupted as three former directors charged with fraud

In bad news for Tesco and the progress of its ongoing turnaround, three former directors, including its former UK boss Chris Bush, have been charged with fraud and false accounting in relation to its £263m profit overstatement.

Tesco

An ongoing investigation by the Serious Fraud Office (SFO) going back to 2014 has led to three former Tesco directors being charged today (9 September) with fraud.

Carl Rogberg, the former finance director of Tesco UK, Christopher Bush, the former managing director of Tesco UK, and John Scouler, the former commercial director for food, have been charged with fraud by abuse of position and false accounting in relation to the supermarket overstating its profits by up to £263m in September 2014.

A statement from the SFO says the alleged activity occurred between February 2014 and September 2014, and that the three men will appear at Westminster Magistrates’ Court on 22 September 2016. Its investigation remains ongoing.

Tesco was quick to talk about the positive changes it has since made under CEO Dave Lewis, who was not in charge when the activity occurred.

“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,” says a Tesco spokesman.

Could this impact the Tesco brand?

The short answer is probably yes. Earlier this year, when Tesco was accused of short-changing suppliers in a probe by the Government’s Groceries Code Adjudicator (GCA), its brand health plummeted. But fraud is an issue that will have a much greater public interest.

The Tesco brand perception was torpoeded by the initial accounting scandal in 2014. According to YouGov BrandIndex, the main measure of consumer perceptions, which includes metrics such as quality, value and impression, sunk to 9.3 from 14.8 in the seven days after the accounting error was made public. It then plummeted to 2.8 over the next few months as the negative publicity took its toll on its brand.

READ MORE: Tesco’s corporate woes torpedo brand perception

However, the Tesco brand has recovered since and its Index score is now above its pre-scandal high, at 15.3. It has also recorded two consecutive quarters of sales growth.

Although it is too early to tell what these charges and the accounting scandal being thrust into the public arena again will do to the brand, it is clear today’s announcement is a headache Lewis could do without.

Latest from Marketing Week

Marketing Week Meets… Mark Ritson

The Marketing Week columnist, consultant and professor explains why marketers need to talk about “making money first”, in a podcast recorded at the Festival of Marketing in October.

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email customerservices@marketingweek.com

If you are looking for our Jobs site, please click here