Tesco suspends four over profits

Tesco has had another black Monday after it was forced to suspend four senior executives, thought to include UK managing director Chris Bush, following the news that it had overstated its half-year profit guidance by up to £250m.
The grocery giant has brought in financial consultants Deloitte and the legal firm Freshfields to carry out an investigation; Tesco’s usual auditors are PricewaterhouseCoopers.
Group chief executive Dave Lewis said: “We have uncovered a serious issue and have responded accordingly. The chairman and I have acted quickly to establish a comprehensive independent investigation. The board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear.”
On a conference call later, Lewis said “a number of people” had been suspended from duty while the investigation was under way. Although he would not confirm that Bush was one of them he added that Robin Terrell, Tesco’s multi-channel director, will be “stepping in and running and leading the UK leadership team”.
In its latest statement, Tesco said the profits overstatement was “principally due to the accelerated recognition of commercial income and delayed accrual of costs”. It also said some of the error was due to the timing of the accounting of payments between suppliers and Tesco.
Tesco said “an informed employee” had alerted the board to the issue on Friday, and added it had already informed the UK’s financial regulator, the Financial Conduct Authority.
As a result of the problem, Tesco has pushed back the release of its interim results to 23 October, from 1 October.