Thursday 6 December 2018 11:33 am

Serious Fraud Office trial against Tesco executives collapses

The Serious Fraud Office’s case against two senior former Tesco’s executive has collapsed because of insufficient evidence.

At Southwark Crown Court this morning Judge Sir John Royce instructed the jury to acquit both defendants, former UK managing director Chris Bush and ex-UK food commercial director John Scouler.

The pair had both been charged with one count of fraud and false accounting.

The Judge had ruled last Monday on a defence submission of no case to answer and that he would direct the jury to acquit the defendants.

The fraud office appealed the ruling and yesterday the Court of Appeal refused the SFO leave to appeal and reporting restrictions have now been lifted.

In a statement Bush said: "These charges should never have been brought, and serious questions should be asked about the way in which the SFO has conducted this investigation. In my view, the SFO wholly failed to investigate this case thoroughly, independently or fairly from the outset."

In 2014 Tesco put out a stock market announcement saying it had overstated its profit for the first half of the year by an estimated £250m “due to the accelerated recognition of commercial income and delayed accrual of costs."

The SFO claimed Bush and Scouler were aware of the shortfall and had kept the information quiet. They had also claimed that the pair connived at a series of “complex” and “clever” accounting practices that hid the true state of Tesco’s accounts from its auditors and the stockmarket. 

Scouler's solicitor, Richard Sallybanks a partner at BCL Solicitors, said: "We have long argued that the SFO’s prosecution of Mr Scouler was fundamentally flawed, that he should not have been charged, and that the SFO should not have proceeded with this trial. Mr Scouler has maintained since the outset of this investigation that he was not guilty of fraud and false accounting, and those close to him always knew that to be the case."

Bush’s solicitor Ross Dixon, partner at Hickman and Rose, said: “The SFO’s failings have resulted in a four year ordeal for Mr Bush, and the waste of millions of pounds of taxpayers’ money.

“Mr Bush has now been fully vindicated by the trial judge and the Court of Appeal. However, his treatment at the hands of the SFO will be a serious cause for concern for those falling under investigation in the future."

The collapse of the trial is a serious blow to the SFO, which is in a transitional period following the appointment of a new director, Lisa Osofsky, in August.

Sarah Wallace, a partner at law firm Irwin Mitchell said: "If more cases against high profile corporates and chief executives collapse, the SFO will have to rethink their strategy as the big boys and their lawyers may be emboldened and deterred from conceding criminal liability if the prospect of actual criminal conviction is uncertain."

Jeremy Summers, a partner at law firm Osborne Clarke, said: "It appears to be a very significant reversal, it is not just an acquittal but a senior High Court judge saying elements of the SFO’s case were so weak they shouldn’t have gone before a jury.

“Lisa Osofsky can point to the fact this is a case that started before her time so its not on her watch. However, part of her brief is to encourage companies to come forward and self-report and this may not help."