‘Significant defeat’ for Serious Fraud Office as former Tesco directors cleared

The Serious Fraud Office (SFO) has been dealt a major blow after two former Tesco directors were acquitted over a £250 million fraud and false accounting scandal.

Tesco’s shares plummeted by nearly 12%, wiping £2 billion off the share value, when the company announced in September 2014 that a statement the previous month had overstated profits by about a quarter of a billion pounds.

Chris Bush, ex-UK managing director, and John Scouler, the then UK food commercial director, were accused of being aware that income was being wrongly included in the company’s financial records to meet targets and make Tesco look financially healthier than it was – but their trial collapsed due to a “weak” prosecution case.

On Thursday at Southwark Crown Court, the jury was told the men were acquitted at the Court of Appeal on Wednesday.

The acquittal came after trial judge Sir John Royce dismissed the case brought by the Serious Fraud Office (SFO), bringing the trial to a halt after the prosecution presented its case.

The SFO went to the Court of Appeal regarding the dismissal, but its appeal was dismissed on Wednesday and the men were cleared by Court of Appeal judges.

Mr Scouler, 50, of The Park, St Albans, and Mr Bush, 52, of Four Acres, Green End Road, Radnage, High Wycombe, were each cleared of one count of fraud and another of false accounting.

None of this could be reported until the jury was informed.

He said: “I concluded that, in certain crucial areas, one in particular, that the prosecution’s case was so weak that it should not be left for a jury’s consideration.”

On entering the courtroom, the judge remarked to prosecutor Sasha Wass QC it was “the end of a long saga”.

The judge told the jury there was a deferred prosecution agreement (DPA) between Tesco and the SFO, and as part of that agreement Tesco agreed to pay a fine of £129 million.

In total, Tesco took a hit of £235 million as a result of the DPA but avoided a trial.

The acquittal of the two men means neither Tesco nor any of its executives have been successfully prosecuted over one of the biggest corporate scandals in recent history.

In a statement, Mr Bush said: “While I am delighted that my innocence has finally been established, it is troubling that Mr Scouler and I were ever charged.

“Put simply, 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.”

Richard Sallybanks, partner at BCL Solicitors LLP, represented Mr Scouler, and said it was a “very significant defeat” for the SFO.

He added: “We are delighted that Mr Scouler leaves court today knowing that the judge, having heard the entirety of the prosecution evidence, reached the firm conclusion that he had no case to answer.

“That decision was obviously correct, yet the SFO chose to pursue an appeal which was rejected yesterday when the Court of Appeal refused even to grant leave.

“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.”

Ross Dixon, partner at Hickman and Rose, and solicitor for Mr Bush, said: “The SFO appeared determined to blame a small number of senior individuals including Mr Bush, despite the lack of any evidence that he was told about or concealed unlawful behaviour.

“Given its status as the UK’s leading investigator of serious and complex fraud, the SFO made many basic mistakes.

“The SFO’s failings have resulted in a four year ordeal for Mr Bush, and the waste of millions of pounds of taxpayers’ money.”

Sarah Wallace, London Head of Regulatory and Criminal Investigations, at law firm Irwin Mitchell, said there will be questions over whether the SFO – as both an investigator and a prosecutor – “have sufficient financial and human resources to investigate highly complex cases to the level required”.

During the trial, the jury was told the case was a retrial, and that a third man, former UK finance director Carl Rogberg, is charged with identical offences but was not currently well enough to stand trial.

A decision will be made in due course about what action should be taken in relation to Rogberg following the acquittals of Mr Scouler and Mr Bush.

The trial of Mr Scouler and Mr Bush, which began on October 8, had been expected to last three months.