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Every extra million unnoticed helps Tesco’s shareholders

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Issue 2422
Tesco shares lost £1.5 billion in value at the start of this week

Tesco shares lost £1.5 billion in value at the start of this week (Pic: Flickr/Gordon Joly)

Bosses of Britain’s biggest supermarket have found, that when trying to bluff your way out of a profit crisis, every little helps.

Tesco suspended four of its top bosses on Monday of this week for an investigation. The company admitted that almost a quarter of the profits it reported in the past six months were made up.

Tesco made accounting errors in a profit warning last month, meaning that money owed to suppliers in the future was counted as income in the present. Tesco’s profits are around half those of a year ago.

The announcement wiped £1.5 billion off its share price within hours. Shed a tear for billionaire Warren Buffett, who lost almost £60 million.

The suspended bosses —including managing director Chris Bush—could follow former CEO Phil Clarke. 

He was sacked in August after insisting he was “not going anywhere” in April. He’s still being paid today.

Chairman Sir Richard Broadbent pleaded, “I want to be part of the solution”—despite admitting to not knowing when his outgoing finance director was last in the office.

He also admitted that £250 million might not be the limit to the wrongly accounted cash. Broadbent explained sagely, “Things are always unnoticed until they’re noticed.”

Indeed. Before Tesco, he chaired the risk committee of Barclays in the run-up to the global financial crash. Before that he spent decades at the top of the civil service, including a stint at the top of the tax office.

Troublemaker can’t help but wonder what went unnoticed there.

Tesco has struggled to keep prices high enough to pay the costs of its rapid expansion in the early 2000s.

When told that Tesco was taking about £1 in every £8 spent on shopping in Britain, then boss Terry Leahy said that meant he still had another £7 to go for. 

Leahy now says he’s “very disappointed”. Still, not to worry.  Since his early retirement Tesco has paid him an extra £8.4 million in bonuses on top of the £18.4 million pension pot he left with.

Whatever the question the answer is war—if you’re Tony Blair that is. In a shocking twist this week, he said ground troops would be needed to beat Islamic State. Presumbly because that has a great history of success in the recent past.

Number of fraud investigations launched last year by the City of London Police: 544.  Number of investigations the previous year: 792. Maybe that’s because there’s a lot more honesty. But lawyer Barry Vitou who got the figure says it  is a “drop in the ocean compared to the scale of the problem”.

The cuts in Yorkshire are pretty gritty

Calderdale Council in West Yorkshire paid a “branding” agency £40,000 to devise a slogan to promote the area.

After quizzing locals and running a competition to find what made Calderdale “stand out” the agency came up with two words—Pretty Gritty.

And a bargain at only £20,000 a word. Calderdale has seen £86 million cut in funding since 2010. Council bosses are looking at ways it can cut a further £14.5 million.

Praise at last for G4S, after the security giant’s run of bad publicity over the Olympics and Guantanamo Bay. G4S Cyprus has been honoured by the president of Cyprus, Nicos Anastasiades, for its sterling work guarding Cypriot cash machines from a stampede of customers as the banks reopened after a shut-down during the island’s financial crisis. 

Oh, and it was providing security at the Labour Party conference this week.

Another brick in the wall but no pledges

Nicky Morgan, the education secretary, put on a hard hat and visited the construction site of a new free school in south east London last week.

She was asked to write an inspiring message on the side of a brick for future generations.

Morgan wrote “aspiration”, before ramming the brick into line and cementing it in place. So ensuring that it would never go anywhere. 

The “vow” made by David Cameron, Nick Clegg and Ed Miliband to give more powers to Scotland is under scrutiny. But the Lib Dems made sure the word “pledge” was nowhere to be seen in the final draft. 

It was agreed that reminding voters in Scotland of Clegg’s broken signed “pledge” not to raise tuition fees for students was not such a good idea.

Chuka Umunna refutes Labour anti-boss slur 

Lord Digby Jones claims the Labour Party “don’t get it” when it comes to business. Happily shadow business secretary Chuka Umunna was prepared to stand up to the slander.  He said, “I do think we’re seen as a pro?business party.

“I don’t think you can claim a party that is committed to having the lowest rate of corporation tax in the G7, will cut and freeze business rates for many of our small businesses…is in any way, shape or form anti?business.”


No. 646723

Geoffrey Cox QC, Tory MP

  • Westminster’s best-paid MP Cox put money into an investment scheme that HM Revenue and Customs thinks is a scam.
  • Cox, who has earned £329,452 as a lawyer on top of his £67,000-a-year parliamentary salary, says “I am not going to comment on my private tax affairs.”
  • The MP stashed his cash in Phoenix Film Partners. Cox quit the scheme earlier this year.

Millions lose sleep over money

Nearly one in seven people lie awake in bed at night worrying about money. Some 15 percent of more than 2,000 adults surveyed by charity  StepChange said that being plagued by late-night thoughts of their financial difficulties is preventing them from sleeping properly. 

This equates to 7.4 million people across the country. The most common money worries were a lack of savings, meeting the costs of essential household bills and debt problems.

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