Case Study – Media Campaign – Tesco and The Serious Fraud Office

An acquittal in a high-profile corporate crime case provided Myddleton Communications with the opportunity to showcase the work of its client BCL Solicitors LLP.

Background: Myddleton Communications is PR Counsel to top corporate and financial crime law firm BCL Solicitors. BCL’s head of corporate crime, John Sallybanks represented John Scouler, the former UK Foods commercial director at Tesco, who, along with two co-directors, was prosecuted by the Serious Fraud Office (SFO) on two counts of fraud and false accounting and subsequently acquitted.

Objective: To showcase our client’s work when John Scouler was acquitted, and to profile their expertise in the defence of high-profile individuals in cases of serious fraud.

Strategy: We leveraged our relationships with broadsheet and trade journalists as well as broadcast news outlets to achieve our objective. Reporting restrictions were in place, so we could not issue statements to the press until court proceedings ended in December 2018 for two defendants and then again in January 2019 when the third defendant was acquitted.

Results: Our client was quoted in more than 30 high-profile pieces of repeated broadsheet press coverage in the Financial Times, New York Times, The Times, Bloomberg, The Guardian and City AM, broadcast opportunities on BBC Radio 4 Today and BBC News, BBC Panorama and trade press coverage in amongst others, Law 360, Economia, The Grocer, Retail Gazette, Global Investigations Review and Money Laundering Bulletin.

Background Tesco plc announced it had identified a £250 million overstatement of its expected profit for its half year to August 23, 2014. The Serious Fraud Office (SFO) investigated and in September 2016, announced three former senior executives of Tesco’s UK business were being charged with fraud by abuse of position and false accounting: Chris Bush, formerly the managing director, Carl Rogberg, formerly the finance director, and John Scouler, formerly the commercial director for food. Mr Scouler was represented by our client, Richard Sallybanks at BCL Solicitors.

All three stood trial between September 2017 and February 2018 when the trial was stopped after Mr Rogberg suffered a heart attack. A re-trial of Mr Bush and Mr Scouler commenced in late September 2018 and concluded in December 2018 when the trial judge, Sir John Royce, ruled there was no case to answer, a decision upheld by the Court of Appeal in refusing an application by the SFO for leave to appeal. Sir John commented “the prosecution case was so weak it should not be left for a jury’s consideration.”

In light of the outcome of the re-trial, on January 23, 2019, the SFO formally offered no evidence against Carl Rogberg, who had been too ill to participate in the re-trial, and not guilty verdicts were entered by the court. All three defendants were acquitted of both charges they faced.

Separately, a Deferred Prosecution Agreement (DPA) had been concluded between the SFO and Tesco Stores Limited (TSL), Tesco plc’s UK operating company, on a charge of false accounting, the terms of which mirrored the false accounting charge faced by the defendants.

The DPA was approved by the court in April 2017 (after the three defendants had been charged but before they stood trial), although publication of the Statement of Facts was restricted until the conclusion of the criminal proceedings, to avoid the risk of prejudicing those proceedings.

The publication of the terms of the DPA entered into between the SFO and TSL provides an example of how a DPA can result in real injustice to individuals.

The Statement of Facts which reflected the prosecution case in the trial of the three defendants, contained an unequivocal statement of the defendants’ guilt in the following terms; that the three defendants “were aware of and dishonestly perpetuated the misstatement [of Tesco’s financial position] thereby falsifying or concurring in the falsification of accounts or records made for an accounting purpose.”

Deferred Prosecution regimes allow a company to avoid criminal proceedings by a settlement, subject to court approval.

However in cases such as this, where a company’s criminal liability is dependent on the guilt of a ‘directing mind’, i.e. a senior decision-maker at the company, there must always be a risk that a company might find itself accepting liability and paying a financial penalty (£129 million in the case of TSL), for an offence which ultimately is not proven to have been committed, by those people on whose guilt the company’s liability depends.

Richard Sallybanks, partner at BCL Solicitors who represented John Scouler and commented on his client’s acquittal:

“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 Serious Fraud Office 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 Serious Fraud Office’s prosecution of Mr Scouler was fundamentally flawed, that he should not have been charged, and that the Serious Fraud Office 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. We are simply pleased that, after four years, this has now been confirmed by the Court of Appeal upholding the judge’s decision that he should be acquitted of all charges.”

This is a very significant defeat for the Serious Fraud Office and a notable win for BCL Solicitors and the two ex-Tesco directors.”

Examples of media coverage:

https://www.bbc.co.uk/news/business-46459884

https://www.ft.com/content/672fdb88-f949-11e8-af46-2022a0b02a6c

https://www.theguardian.com/business/2018/dec/06/two-tesco-directors-cleared-of-false-accounting

https://www.nytimes.com/reuters/2018/12/06/business/06reuters-britain-tesco.html

http://www.cityam.com/270251/serious-fraud-office-trial-against-tesco-executives

https://news.sky.com/story/ex-tesco-directors-cleared-over-250m-profit-scandal-11573089

https://www.dailymail.co.uk/news/article-6467087/Two-former-Tesco-executives-CLEARED-250million-fraud.html

https://www.bloomberg.com/news/articles/2019-01-23/tesco-u-k-cfo-cleared-in-accounting-case-ending-sfo-trials

https://www.ft.com/content/b6c2b688-1f29-11e9-b126-46fc3ad87c65

https://www.thetimes.co.uk/article/former-tesco-executive-carl-rogberg-cleared-of-fraud-dkhm8v69d

 

 

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