Serious Fraud Office trial of former Tesco boss collapses after four months

Serious Fraud Office trial of former Tesco boss collapses after four months

The serious fraud trial of three former Tesco executives, which has lasted for more than four months, collapsed yesterday after the presiding Judge put an end to the trial before the close of the defence case.

The prosecution against Chris Bush (Tesco’s former UK boss), John Scouler (former commercial food director), and Carl Rogberg (former UK finance chief), was abandoned after Mr Rogberg suffered a heart attack. The Serious Fraud Office (SFO) are expected to make a decision early next month whether to seek a retrial.

The trial’s collapse comes amid news that Tesco could now face Britain’s largest ever equal pay claim following a series of claims lodged with the conciliation service ACAS. Thousands of women who work in Tesco stores could receive back pay if the legal challenge is successful.

Background

The charges of fraud and false accounting were brought following a false statement about expected profits the supermarket giant made over three years ago in August 2014. Three weeks after the statement was published, Tesco admitted that the profits had been overstated by an estimated £250 million. The final figure ended up closer to £284 million.

The newly instated Group CEO Dave Lewis instructed Deloitte to undertake an independent review of the discrepancy and, in October 2014, the Financial Conduct Authority launched a large-scale investigation.

Around the same time, the case was also accepted by the Director of the SFO for investigation.

Last year, Tesco agreed to pay a financial penalty of £129 million under terms of a Deferred Prosecution Agreement with the Serious Fraud Office. Under those terms, the SFO confirmed that Tesco Stores Ltd would not been prosecuted. In relation to the FCA investigation, Tesco also agree to establish a compensation scheme for investors who lost money as a result of the inflated profit statement. This was expected to total around £85 million.

The agreement, however, did not preclude the SFO from individual prosecutions, which it brought against three former executives in September 2016. Mr Rogberg, Mr Bush and Mr Scouler were each charged with one count of fraud by abuse of position, contrary to the Fraud Act 2006, and one count of false accounting, contrary to the Theft Act 1968. Both offences carry lengthy custodial sentences.

All three appeared at Westminster Magistrates’ Court on 22 September 2016 and then later at Southwark Crown Court on 20 October 2016, where they continued to deny the charges.

Decision

The trial at Southwark Crown Court of the three executives was abandoned on Tuesday (6 February 2018) after it emerged Mr Rogberg, aged 51, had suffered a heart attack the week before and was awaiting surgery in hospital. The decision was made following submissions by Mr Rogberg’s defence counsel, Nicholas Purnell QC, to proceed with the trial while his client was continuing treatment.

The trial Judge, Her Honour Deborah Taylor, discharged the jury after more than four months, saying: “It wouldn’t be right or proper to continue with this trial.” The SFO will decide next month whether to pursue a retrial.

SFO prosecutions

The Serious Fraud Office is a specialist prosecuting authority tasked with tackling the most serious or complex fraud, bribery and corruption.

Rolls Royce:

Last year, the SFO entered into a significant deferred prosecution agreement (DPA) with Rolls Royce PLC last year following its four-year investigation into bribery, corruption and false accounting. The DPA involved payments of £497,252,645 (comprising disgorgement of profits of £258,170,000 and a financial penalty of £239,082,645) plus interest. Rolls-Royce also reimbursed the SFO’s costs of around £13m in full. An investigation into the conduct of individuals is ongoing.

Torex Retail:

In 2013, SFO secured the conviction of a Torex Retail company executive for offences of conspiracy to defraud and false accounting. The executive, Mark Woodbridge, was sentenced to three years and ten months’ imprisonment for a fraud where accounts were manipulated to show healthy trading.

Harlequin Group:

Harlequin Group boss, David Ames, was charged by the SFO with three counts of fraud by abuse of position. The SFO have directed that Harlequin investors may be entitled to compensation. Mr Ames denies allegations that he cheated investors out of £260 million over the sale of thousands of off-plan (pre-completion/development) properties at luxury Caribbean resorts. His trial is set to take place in January 2019.

Blaser Mills Law

At Baser Mills, our Legal 500 and Chambers UK ranked criminal department successfully defends clients charged with the most serious crimes and provides advice to businesses on complex fraud matters. The team routinely represents defendants facing prosecutions over alleged financial wrongdoing and are adept at preparing complex financial crime trials.

Should you wish to contact the criminal defence department, please get in touch with a member of the team here.