One of Britain’s biggest accounting scandals came to a dramatic end on Thursday after two ex-Tesco executives were acquitted because of lack of evidence.
In another embarrassing defeat for the Serious Fraud Office, the trial it brought over a £250 million profit black hole at grocery giant Tesco collapsed.
A judge dismissed the charges of fraud and false accounting against Chris Bush, Tesco’s former UK boss, and John Scouler, an ex-commercial director, halfway through a retrial.
The SFO unsuccessfully tried to appeal and overturn that decision over the past two weeks.
But on Thursday judge Sir John Royce told the jurors that the SFO’s arguments had been “so weak” at times it should not be put before a jury for consideration.
Bush said: “While I am delighted that my innocence has finally been established, it is troubling that Scouler and I were ever charged. Put simply, these charges should never have been brought, and serious questions should be asked about the way the SFO has conducted this investigation. In my view, the SFO wholly failed to investigate this case thoroughly, independently or fairly from the outset.”
The judge decided in September that former finance director Carl Rogberg, who had been on trial with his colleagues, was no longer well enough to stand trial having suffered a heart attack in February.
The SFO, which is now considering a retrial, launched the case after Tesco discovered a £250 million hole in its profits in 2014.
This caused the supermarket chain’s market value to collapse by £2 billion at the time and engulfed it in one of the worst corporate crises.
Previous high-profile reverses for the SFO include a failed prosecution of the property tycoon Tchenguiz brothers — settling out of court to avert a multi-million damages claim after a botched investigation. The organisation also lost a major court battle in 2016 when six defendants were acquitted of Libor- rigging, in a significant blow for the then SFO boss Sir David Green. He was replaced by Lisa Osofsky in August.
"Lisa Osofsky paints a positive future for the SFO but when a high-profile case takes a dramatic nosedive it is a blow," said Sarah Wallace, a partner at law firm Irwin Mitchell.
The allegations centred on a practice known as “pulling forward”, whereby earnings already expected in the future are brought forward to boost the present bottom line. All three had pled not guilty to the charges.
The legal wrangle began four years ago. The defendants have been on trial at Southwark crown court.