Industry sources were claiming late this morning that departing Chief Financial Officer Laurie Mcilwee left Tesco just six days before the £250M profit overstatement anomaly was discovered. And as widely reported last April, he left with almost £1million of ‘goodbye money’.
As incoming Tesco CEO Dave Lewis told the media this morning that the £250M profit guidance overstatement is “something completely out of the ordinary”, he promised a full-scale investigation with “decisive action as the results of the investigation become clear.”
Early assumptions that the error was pure incompetence now seem misplaced: playing fast and free with future income outcomes is standard practice among multiple grocers reporting to the City…but that simply doesn’t fit with Lewis’s description.
Attention has now turned towards the CFO Laurie Mcilwee, ousted in the Spring after falling out with former CEO Philip Clarke. Mr Mcilwee remained at the company to carry out “transition activities” for six months. He picked up his £970,800 leaving present last Friday week. The profit outlook anomaly was discovered six days later.
Retail industry sources asserted this morning that “this is too big and basic to be incompetence” and “whichever way this now falls, it might have been an accident, but nobody in the Square Mile is going to believe it”. Shore Capital analyst Clive Black said he was “flabbergasted” by Tesco’s announcement.
“Such an announcement is not the stuff of a well operated FTSE-100 organisation. This development may raise, indeed must raise, much more fundamental questions over the chairman’s (Richard Broadbent) position and the nature, composition and extent of the board.”