23 September 2014
Update: Tesco has fast-tracked its chief financial officer on to the board in light of the profit overstatement scandal that has emerged.
Tesco has brought in its Chief Financial Officer Alan Stewart more than two months ahead of schedule. Stewart joins the board effective 23 September rather than the planned start date of 1 December 2014.
Stewart replaces Laurie Mcllwee, Tesco's last financial chief who resigned in April earlier this year.
Tesco Group profits for the six month period to 23 August 2014 were overstated by £250 million, which Tesco states was mainly a result of taking commercial income into account without recognising operating costs. The amount overstated would make up about a quarter of the Group’s profit for the time period in question.
A media spokesperson at Tesco confirmed to Governance + Compliance that four senior executives have been suspended as part of the inquiry into this incident, which was officially launched on 22 September. Other news sources claim UK managing director Chris Bush, UK finance director Carl Rogberg, food commercial director John Scouler and head of food sourcing Matt Simister at Tesco are the four suspended.
The FCA has been notified of the discovery and Deloitte has been bought into review these issues as well as Freshfields, Tesco Group’s external legal advisers.
Other news sources have also alleged that the incident was brought to light last week by a whistleblower within the company.
ICSA Policy Director Peter Swabey said: 'The Tesco nomination committee will certainly want to consider what gaps of knowledge and experience are evident on their board and take the necessary steps to address these, but it must also be remembered that one of the criticisms of bank boards was that there were too many bankers and not enough diversity of view.'Calls for the defenestration of the Chairman seem premature especially if, as may be the case, this issue came to light as the result of whistle-blowing which suggests that the culture at Tesco, for which the Board is responsible, is not as bad as it might be painted.'