Tesco CEO Dave Lewis today told a court of his shock at discovering the company’s profit black hole.
Lewis told the trial, of three men accused of failing to correct inaccurately recorded income figures, that the discovery was like nothing he had ever experienced in his career.
Carl Rogberg, 50, Chris Bush, 51, and John Scouler, 49, deny charges of fraud by abuse of position and false accounting from February to September 2014.
Lewis told jurors at Southwark Crown Court that though he started his position on 1 September, he was not told of the issue until 19 September, despite numerous meetings with Bush and a meeting with Scouler.
He said he was called into a meeting with Adrian Morris, Tesco’s chief counsel, at around lunchtime that day, and presented with the legacy paper.
Prosecutor Sasha Wass QC asked what his immediate reaction had been.
“One of surprise and one of shock really,” said Lewis.
“I think the thing that was unique to this paper was the indication that the numbers that had been declared had a potential misstatement within them.
“What was new was the proposition here that £246m of income had been included in the first half of the year that on that basis of this paper was deemed to be questionable.”
Asked what he concluded needed to be done, Lewis said: “I had never experienced anything like this before, but it was quite clear that having read the paper, and the manner in which it was served, I felt that it had to be taken very seriously.”
Jurors heard that Lewis called Tesco chairman Sir Richard Broadbent and told him what the document said, and that a team of internal and external auditors was assembled to work through the weekend.
They were told Sir Richard flew back from his holiday in Italy and it was discovered by the end of the weekend that the actual amount of shortfall was £263 million.
Ms Wass asked Lewis what happened between Tesco’s public announcement on 22 September stating profits had been over-estimated, and when the company was due to issue its interim results on 23 October.
He said: “It was a very intensive amount of investigation of these numbers.
“It required a huge amount of review of paperwork, documentation between pretty much all of the suppliers to Tesco and the different categories in order to validate the number.
“So that was quite an extensive exercise.”