Tesco’s £250 million accounting black hole

A Tesco employee highlighted that the supermarket had over-stated the first half profits to the tune of £25tesco0 million, the employee first told his superiors of the problem when Philip Clarke was still in charge.

There have been serious questions raised over the culture at Tesco during the time of Mr Clarke’s reign, as it emerged that these concerns had been ignored. This has since led to Tesco admitting last week that it had over-stated its first half trading profit by £250 million.

Tesco hired Deloitte and Freshfields to investigate the accounting disaster, which is connected to the income the retailer receives from deals with its suppliers.

As a consequence, four of the retailer’s executives have been suspended, including its UK boss, Chris Bush and UK finance director, Carl Rogberg.

A senior source has told The Sunday Telegraph (http://www.telegraph.co.uk) that there had been a “corruption of virtues” among staff at Tesco.

Mr Clarke was replaced as Tesco chief executive on September 1st by Dave Lewis.

It is understood that the concerns were raised by an employee in Tesco’s accounting department, whilst Mr Clarke was still in post. However, their concerns had apparently “failed to get traction” when they were highlighted the first time around.

The supermarket giant admitted last week that it had “identified an overstatement of its profit for the half year”.

A spokesman for Tesco said: “We have an investigation under way and we will await the findings before drawing any conclusions.”

After a controversial week for Tesco, its rival retail giant J Sainsbury will also get a taste of shareholder discontent this week when it is expected to unveil a plunge in like-for-like sales of up to 4pc over the summer.

It has been said that Sainsbury’s has been under pressure from the German discount chains – Aldi and Lidl. The most recent market share data, from research firm Kantar shows its share of the UK grocery market slipped to 16.2 pc from 16.6 pc in the 12 weeks to September.

Sainsbury’s has fought back with a range of price cuts and matching its prices on branded products to Asda. However the chain is coming under particular pressure from Aldi and Lidl in its key markets of the South and East of England.