Former Tesco directors repeatedly ignored warnings of profits hole, court told

Three former Tesco directors continued to "connive and manipulate figures" rather than admitting the retailer faced a massive profit black hole, as they had started to act "like a little hamster running around on a wheel", a court was told.

In September 2014, Britain's largest retailer revealed it had previously overstated its profits by £263m (€297m), which it later revised up by £63m.

A month later, the Serious Fraud Office (SFO) launched an inquiry into the profit overstatement case and, in March of this year, Tesco agreed to pay a £129m fine after reaching a deferred prosecution agreement with the SFO.

In September last year, the SFO charged three former executives - Christopher Bush, ex-managing director of Tesco UK, Carl Rogberg, the ex-finance director, and John Scouler, the former commercial director - in connection with the profit overstatement at the retailer.

The three executives were charged with one count of fraud by abuse of position and one count of false accounting each.

Southwark Crown Court was told late on Monday (2 October) that the trio had been warned the company would fall short of expected profit markets, due increased competition in the sector.

Sasha Wass QC, a lawyer for the SFO, told the court that members of Tesco's UK finance and commercial teams had repeatedly reiterated the retailer would not meet its intended targets and.

By the end of June 2014, the black hole in the company's book was "spiralling out of control and yet [the three directors] were refusing to deal with it", the court heard.

"Attempts to persuade them to lower the targets had been unsuccessful and the defendants carried on conniving and manipulating the figures," Wass added.

According to Wass, the defendants "must have been fully aware of the damaging effect this practice was having on the financial health of the company and, more particularly, its shareholders".

While the accounting problem "snowballed in size each year", the trio steadfastly refused to acknowledge the issue, instead acting "like a little hamster running around on a wheel".

The court was told that, along with Bush, Rogberg was a "major driving force" in covering up the accounting scandal as he allegedly insisted Tesco would have to meet its profit targets anyway.

All three former executives deny any wrongdoing and have pleaded not guilty. The trial, which is expected to run for another 13 weeks, continues.