US Edition The pressure on Tesco and its beleaguered chairman has piled up after a major investor dumped a collection of its shares and the company was forced to admit that it has had no dedicated finance director for the last five months.
Britain’s biggest retailer admitted in a statement on Wednesday night that its outgoing finance director Laurie McIlwee had “has not been involved or had any input to any financial matters” since he resigned on April 4.
The statement will exacerbate the fears of investors about a lack of oversight at Tesco during the six month period at the centre of an accounting scandal and a lack of clarity from Sir Richard Broadbent, the chairman, about how the finance division was operating.
Tesco is facing one of the biggest crises in its history after new chief executive Dave Lewis discovered a £250m shortfall in its estimated profits for the six months to August 23.
An investigation has been launched into a “serious issue” in the way Tesco has accounted for deals with suppliers, which is being led by Deloitte and law firm Freshfields.
Shares in the company have fallen by more than 40pc in 2014, and one of the world’s biggest fund managers, BlackRock confirmed on Wednesday it has sold shares on the back of the scandal. BlackRock, Tesco's third biggest shareholder, is understood to have sold more than £150m of its shares, reducing its stake by a fifth from 5pc to 4pc.
The share sale added to the company’s woes on a day when the Financial Reporting Council said it is “monitoring the situation” and could force Tesco to restate past accounts.
Tesco has informed the City regulator, the Financial Conduct Authority, about the shortfall, while the Serious Fraud Office is also on hand if the company discovers the issue relates to fraud.
In addition, credit rating agencies Moody’s and Standard & Poor’s have put Tesco on review for a possible downgrade, with the latter warning that the company faces “significant” risks due its £2.6bn pension deficit and lease liabilities.
Tesco staff in Ireland, where the company employs 15,000 people, have been warned about redundancies as the company battles against falling sales and profits.
The confirmation that Tesco has been operating without a dedicated finance director adds to the questions facing Sir Richard and former chief executive Philip Clarke about the quality of governance at the company and the origins of the £250m black hole.
The company admitted, as reported by The Telegraph on Wednesday, that its financial operations were overseen by Mr Clarke during the vast majority of the six-month period in question.
In Tesco’s statement in April announcing the departure of Mr McIlwee it said he had “agreed to remain in his role to ensure a smooth handover to his successor”.
However, Mr McIlwee was asked by Mr Clarke not to return to Tesco’s offices after resigning. After this, Mr Clarke established a new finance committee that reported to him.
Mr Clarke was replaced as chief executive by Mr Lewis on September 1. Mr McIlwee’s replacement, Alan Stewart, only joined from Marks & Spencer on Tuesday.
Tesco’s new statement said: “During the transition period Laurie has in fact not been called upon by Tesco and has not been involved or had any input to any financial matters or held any position of responsibility in the company.
"A group of senior finance personnel – which excluded Laurie – responsible directly to the CEO, was established to ensure co-ordination and oversight of all financial matters.
“This arrangement remained in place through the transition from Philip Clarke to Dave Lewis and concluded with the appointment of Alan Stewart on 23 September.”
It is understood that Tesco made the statement after pressure from people close to Mr McIlwee for the company to clarify that he had not been involved in signing off the accounts for the six month period being scrutinised.