Tesco fraud trial: Former chairman Sir Richard Broadbent gives evidence

 
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Broadbent gave evidence in court yesterday (Source: Getty)

Former Tesco chairman Sir Richard Broadbent told a court yesterday of the pressure facing Tesco in 2014 which caused him to replace the company's chief executive.

As early as 2013, Broadbent told the jury, "you could tell results were beginning to show a downward trend".

He said he had taken the decision to find a replacement for then-CEO Philip Clarke as a result of his belief that only a change in leadership could turn the business around.

It emerged during the hearing that Clarke was only informed that he was to be pushed out of the business on the Friday evening before an announcement went out the following Monday to say he would be replaced by Dave Lewis.

Read more: Dave Lewis has given evidence in the trial of former Tesco colleagues

Broadbent's remarks were made at Southwark Crown Court in the trial of three former Tesco executives, who are accused of "pulling forward" income in Tesco's accounts, leading to a £250m overstatement of expected profit in an August 2014 trading update.

Former Tesco UK managing director Christopher Bush, former finance director Carl Rogberg and former commercial director for food John Scouler are facing charges of fraud and false accounting.

Questioned by prosecutor Sasha Wass, Broadbent also admitted that Tesco had feared that its credit rating could be downgraded, limiting its access to short-term capital. "I was aware that there had been downratings over that period of time," he said.

Read more: Former Tesco executives "misled" the stock market, court told

During cross-examination Broadbent said that he could not recall either Christopher Bush or Carl Rogberg indicating to him during meetings that Tesco was likely to miss its targets for the financial year.

While he said that his memory was "sketchy", Broadbent said that in a finance committee meeting on 7 August 2014: "I have some recollection of someone asking 'is it OK?' and some kind of reassurance being given."

Broadbent also said he had no recollection of Chris Bush alerting him to a potential shortfall in a separate meeting. "If he had said to me we were going to miss the targets I would have been interested," he said.

It later became clear that Tesco would miss its targets for the second half of the 2014/2015 financial year, at which point the company informed the stock market that profits would be lower than expected. However it later emerged that this adjusted expectation was still overstated, allegedly due to the false accounting practices.

The defendants deny the charges. The trial continues.

Read more: Tesco fraud trial: Whistleblower had tried to warn of hole in accounts

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