Tesco suspends execs as inquiry launched into profit overstatement

antrobus

MoneyMate wrote: »

Are you sure they are Birdseye ?

Yes, Sainsbury's aren't the cheapest supermarket for Birdseye frozen peas. If you absolutely insisted on buying branded, your best bet would be to buy the1.37kg size in ASDA and get them at the Tesco price less 10%.

Thrugelmir

Found this to be interesting.

Industry sources were claiming late this morning that departing Chief Financial Officer Laurie Mcilwee left Tesco just six days before the £250M profit overstatement anomaly was discovered. And as widely reported last April, he left with almost £1million of ‘goodbye money’.

As incoming Tesco CEO Dave Lewis told the media this morning that the £250M profit guidance overstatement is “something completely out of the ordinary”, he promised a full-scale investigation with “decisive action as the results of the investigation become clear.”

Early assumptions that the error was pure incompetence now seem misplaced: playing fast and free with future income outcomes is standard practice among multiple grocers reporting to the City…but that simply doesn’t fit with Lewis’s description.

Attention has now turned towards the CFO Laurie Mcilwee, ousted in the Spring after falling out with former CEO Philip Clarke. Mr Mcilwee remained at the company to carry out “transition activities” for six months. He picked up his £970,800 leaving present last Friday week. The profit outlook anomaly was discovered six days later.

Possible that the whistleblower was in disagreement with the accounting policy that was in place.

wotsthat

Thrugelmir wrote: »

Found this to be interesting.

Possible that the whistleblower was in disagreement with the accounting policy that was in place.

In a finger pointing game it's usually best to start the ball rolling to gain the initiative and moral high ground.

There hasn't been a great atmosphere at Tesco HO for years - there's no shortage of potential whistleblowers. Wouldn't surprise me if it was someone at (ex) board level.

SunReader

Yes, nice idea that this ex- unilever boss wouldn't be aware of the scope of false accounting, or ensure it isn't happenig.

importantly is how much blagging have they really been up to, these auditors are far too chummy with their customers.

By deliberately blagging the city, as well as their customers, suppliers and staff, Tescos have stolen money out of everyone's pension funds, endowment mortgages and even their own staff pension pot.

Perhaps we should all fill up a trolley and 'forget' to pay for it, if questioned we can blame it on a receivables/liabilities accounting error... "I meant to pay you in three months honest".

antrobus

wotsthat wrote: »

In a finger pointing game it's usually best to start the ball rolling to gain the initiative and moral high ground......

Indeed. An interesting report here from Sky News that states that "Philip Clarke, the supermarket chain’s former chief executive, informed Laurie McIlwee in writing in April that he would not be required to attend any of Tesco's corporate premises during his six-month notice period unless specifically asked to do so" and that "insiders confirmed that no request had been made for Mr McIlwee to undertake any formal duties for Tesco since April".

http://news.sky.com/story/1340601/tesco-finance-chief-absent-for-five-months

SunReader wrote: »

Yes, nice idea that this ex- unilever boss wouldn't be aware of the scope of false accounting, or ensure it isn't happenig. ..

If by "this ex- unilever boss" you mean Dave Lewis, he only started working for Tesco on the 1st September. I mean give the man a chance, he's only been there three weeks.:)

Bantex_2

Wonder what anyone hoped to gain by "massaging" the figures?

Generali

Bantex wrote: »

Wonder what anyone hoped to gain by "massaging" the figures?

A payout from stock options is the usual reason.

Or just keeping the City happy if you're one step down from LTIs.

antrobus

Bantex wrote: »

Wonder what anyone hoped to gain by "massaging" the figures?

Well, as suggested there might be some link between profits and remuneration - bonuses, stock options.

On the other hand, there doesn't necessarily need to be any specific monetary gain involved. The way that corporations work is that they have budgets, and if you don't hit budget, you get grief. There is always the temptation to fix the numbers so that you're on budget and you don't get grief, in the hope and expectation that things will get better very soon, and you'll be able to unfix them without the boys and girls upstairs being any the wiser.

Aka 'managing expectations'.

Thrugelmir

wotsthat wrote: »

In a finger pointing game it's usually best to start the ball rolling to gain the initiative and moral high ground.

There hasn't been a great atmosphere at Tesco HO for years - there's no shortage of potential whistleblowers. Wouldn't surprise me if it was someone at (ex) board level.

I've often seen good people bullied and disregarded. Change of culture is coming at the right time to address the fundamental issues of the business. Very much like the process that Barclays is on the road to in the wake of the Bob Diamond era.

tincans

Bantex wrote: »

Wonder what anyone hoped to gain by "massaging" the figures?

I'd suspect, given the amount that it can't just be this 6 month period, but once you start down that road its very difficult to get out.
You dig a little whole in one half year, you have to fill that hole and dig a little more in the next.

A 'bullying' culture and people being scared to highlight bad news, combined with a rapidly declining business & execs. thinking things will quickly improve is more likely than personal gain from bonuses & options