Legal Business

‘It’s just excruciating’: Tesco fraud trial abandoned as one defendant suffers heart attack

‘It’s just excruciating’: Tesco fraud trial abandoned as one defendant suffers heart attack

The trial of three Tesco executives charged with fraud by the Serious Fraud Office (SFO) has been abandoned after one of the co-defendants,  former UK finance chief Carl Rogberg, suffered a heart attack last week.

Norton Rose Fulbright (NRF) partner Neil O’May, who is representing Rogberg, said in a statement: ‘Mr Rogberg is devastated at the news that the trial has been aborted. He waived his right to attend these last stages after he had given evidence himself for many days, and had participated in the last four-and-a-half-months of the trial.

‘He was always very anxious that this jury should be allowed to reach its verdict and is desperately sorry that they were prevented from doing so.’

The case against Rogberg, alongside fellow former Tesco executives Chris Bush and John Scouler, revolves around a 2014 misstatement in which the retailer posted incorrect profits by a margin of £263m. As a result, Tesco reported a £6.3bn loss in 2015, one of the biggest in British retail history. All three men pleaded not guilty.

A spokesperson for the SFO said that the prosecutor is ‘still exploring its options’ and will make a decision on whether to pursue a retrial before March.

WilmerHale white-collar crime specialist Alison Geary said: ‘To reach no conclusion after four-and-a-half months is extremely difficult for all parties.  It is not simply a question of wasted costs on all sides, but the devastating effect on the lives of the defendants.  The SFO will now need to decide whether a retrial is appropriate, a decision which will no doubt need to be taken with the input of the new director’.

Former SFO prosecutor and current Keystone Law white-collar crime specialist Claire Shaw told Legal Business: ‘There is no doubt that the SFO will go for a retrial; there would be huge questions raised if they didn’t. Overall, however, this is a timely reminder of how much stress and pressure these things put on a defendant. It’s just excruciating.’

White & Case white-collar crime partner Jonathan Pickworth agreed: ‘This serves as a reminder of the massive strain that the long-running investigations ultimately have on the health and wellbeing of the defendant. These things are often presented as an economic pressure, but let’s not forget the human side.’

Tesco already entered into a deferred prosecution agreement (DPA) with the SFO in March 2017, agreeing to pay the watchdog £129m to avoid prosecution after a two-year investigation.

As a consequence of the DPA, Tesco did not admit any liability in relation to the scandal. The now-abandoned criminal trial of Rogberg, Bush and Scouler, would have established if there was any criminal activity on behalf on individuals within the company’s c-suite.

Recently-appointed Kingsley Napley senior partner Stephen Parkinson  advised Tesco on the SFO investigation, alongside Freshfields Bruckhaus Deringer partners Ian Taylor and Ali Sallaway.

The criminal trial will have been watched closely by litigation specialist Stewarts Law, which is currently representing over 125 institutional funds who claim to have lost money as a result of Tesco overstating its profits.

tom.baker@legalease.co.uk

Legal Business

City partners eye white-collar crime mandates as Tesco plea bargain gets green light

City partners eye white-collar crime mandates as Tesco plea bargain gets green light

Tom Baker speaks to corporate crime specialists as Freshfields advises supermarket on UK’s fourth-ever DPA and hires top SFO lawyer

Last month the fourth deferred prosecution agreement (DPA) in UK history was approved by judge Sir Brian Leveson, enabling Tesco to pay a £129m fine and escape criminal charges relating to the false accounting scandal of 2014.

Legal Business

‘It could still fall apart’: Freshfields client Tesco takes DPA after two year SFO investigation

‘It could still fall apart’: Freshfields client Tesco takes DPA after two year SFO investigation

Tesco has agreed to pay the Serious Fraud Office (SFO) £129m in fines relating to a 2014 profit misstatement, avoiding prosecution after a two-year investigation.

If approved by the Crown Court on 10 April 2017, Tesco will pay the £129m financial penalty in addition to the SFO’s full costs. As a Deferred Prosecution Agreement (DPA), Tesco does not admit any liability in relation to the scandal.

The hearing will be before Sir Brian Leveson QC, President of the Queen’s Bench Division, sitting at the Royal Courts of Justice.

The scandal relates to an accounting discrepancy in September 2014 that saw the retailer post incorrect profits by a margin of £326m. As a result, Tesco reported a £6.3bn loss in 2015, one of the biggest in British retail history.

In October 2014, it was revealed that Freshfields Bruckhaus Deringer was advising on the criminal investigation by the SFO, with disputes partners Andrew Austin, Ian Taylor and Ali Sallaway providing counsel. The retailer also enlisted Kingsley Napley, which advised with a team led by Stephen Parkinson, head of criminal litigation.

Quinn Emanuel Urquhart & Sullivan partner Robert Amaee said: ‘The steady onward march of DPAs in the UK, shows that equipping the right prosecutor with the right tools can make a real difference.  From Tesco’s perspective, while the investigation into individuals continues, the company will undoubtedly be pleased to bring this matter to a close.

He added: ‘DPAs have so far netted the UK fines and disgorgement in excess of £650 million, and that’s after just four of them with others waiting in the wings.  We may well see a significant growth in the use of DPAs, if the government’s recent consultation on corporate criminal liability for serious economic crimes does, as is expected, lead to a widening of the law.’

WilmerHale white collar counsel Alison Geary said: ‘DPAs are attractive to publicly-listed companies, they allow the board to deal with the issue and move on.’

‘The DPA is not in place yet, in theory the deal could still fall apart if the agreement was not approved by the judge at the final hearing. However, Tesco has taken the decision that it needs to make an announcement to the market at this stage.’

Introduced in 2014, DPAs offer an alternative for prosecutors that struggle to charge corporate entities due to the cost and complexity of cross-border investigations.

Following the announcement of the SFO probe, Stewarts Law launched legal proceedings on behalf of the retailers shareholders. Partner Sean Upson secured third party funding from Bentham Ventures and said he would file a claim for shareholders’ losses.

tom.baker@legalease.co.uk