Tag Archives: Tesco

November 17, 2014 · 01:59

Rated into immorality

Can anyone explain something weird to me? The news is given (at http://www.theguardian.com/technology/2014/nov/14/twitter-given-junk-credit-rating) to impress upon us a combination of values and steps that are beyond immoral. Consider the tweet, tweet twitter engine. I use it almost every day, it is the one unbiased part where we can follow events, people and companies so that we keep up to date, small messages that bring the actual information. A company that had a massive idea, is making money, when we see the quote “Jim Prosser, a spokesman for Twitter, pointed to S&P’s own words as comment: “Twitter will continue to experience very strong growth and not encounter a significant increase in competitive pressure.”“, we see issues, but is anyone seeing the question behind it? Then we see the one little gem hidden in all the text “The rating is unsolicited“, is this part of the issue? You see, as we look at companies, their revenue, their profit and some might consider their contribution, so as we look at it why is S&P suddenly decided ‘Twitter given junk credit rating‘? It seems to me that there is an economic shift going on. As companies are doing well, they are now getting downgraded for not meeting the expectations of some analysts.

Yet, where is this world going to?

Consider the application of morale (a word not found in a financiers dictionary) and reasoning for my thought train at present is the following: ‘Forex-rigging investigation: George Osborne gives full backing to SFO‘ (at http://www.theguardian.com/business/2014/nov/14/forex-rigging-investigation-george-osborne-sfo). Libor, Forex, Tesco and there is absolutely ZERO indication that this is just it. At the edge of reason we see the quote ‘Because I don’t want you to see any of my wobbly bits‘, which sounds ample and applicable as the financial district of happily ‘screw everyone over‘, it is all about the wobbly bits, according to Bridget Jones!

Consider the Forex articles. The second one is http://www.reuters.com/article/2014/11/14/us-banks-forex-crime-idUSKCN0IY0LV20141114. The issue is not just the events, the quote “Royal Bank of Scotland, HSBC, JP Morgan, Citigroup, Bank of America Corp and UBS were hit with penalties. Barclays is still in talks with authorities over a settlement“, which not just how far the issue has overstepped, but the issue is where banking laws are falling short, short to the extent that we have in access of half a decade. The issues continued after the banking collapse as the financial population continued to be nothing more than an eager courtesan to the bonus they so crave. The end result is a malignant decay of morals, standards and all this now (as I personally see it) on the standards as the poor are left with less than none, so Standards & Poor it is!

We now get back to what I regard to be a new level of exploited levelling. Consider the hidden simplicity that Libor held; now consider that debt ratings Moody’s, S&P, Fitch and the relative newbie Egan-Jones decide on ratings. Combine ‘how to lie with statistics‘ (a famous book by Darrell Huff) and the need to manipulate the market for 23 billionaires and we see the light of junk status made Twitter in a whole new light. Consider the basic state of an economy. A company sells, makes profit and pays taxes, a nation flourishes! This is a naive (remember my non-economic degree?) approach towards the worlds cloud of business. Investors, shareholders, analysts and raters are a cog within a machine of cogs. Yet this inner circular machine is different. It inflates, malleably changes and coaches towards a change that seems to be intent on syphoning and draining virtual cash flows into a different premise of profit, which is then turned to actual money. In an age of debts that go beyond the total of all treasuries, virtual numbers that have little to no foundation. The foundations and the levels they have been compromised towards are of a dimension we never imagined possible. Consider that the big banks have been fined in excess of 2.3 billion (at http://www.forbes.com/sites/halahtouryalai/2013/12/04/big-banks-fined-2-3b-over-illegal-libor-cartels-more-fines-on-the-way/), I wrote about it in ‘60% confiscated and counting in Cyprus!‘, on April 1st 2013, yet do not think this article to be a joke. I stated “If this is what frightens the US, then consider the consequences of a system like LIBOR being manipulated through the total value of trade. If that would have been off by 11.2%. Out of $1000T (UK and US combined) then that difference would be $112T“, several people laughed out loud then, yet now consider not just Libor, but the audited events of Tesco, the $5.3 trillion market of Forex and the fact that morality might be found in a church, but as we see the evidence, morality is not found in banks and financial institutions, where will it end?

With the Twitter events that question becomes more debatable and the impact that rating companies now impress upon profit turning companies have. Is it just about profit, or about the stated ‘anticipated statement of profit’? As certain ‘analysts’ claim that events are not exceeded, stock becomes junk, waves are created and as such, the welfare of companies are tweaked into a state of artificially changed state, some are inflated, some deflated, but always towards the claim of raters and analysts. The bottom line set towards an algorithm. Consider these states as we have seen not just the change of Tesco, but the events as they also gave way of downgraded profits with Sainsbury, which was not so vocally seen before that day in September. Interactions on many levels, based upon foundations that no one seems to question. Consider how the expectations were set by ‘analysts’ based upon data given to them and data available to them, now consider how Tesco had a quarter of a billion inflated and how the Pricewaterhouse Cooper auditors were ignorant of the inflated condition, now consider how Analysts used that element in predicting waves, the raters predicted and set the value and they are now setting the anticipation of investors and shareholders, an artificial pool with tidal wave creating capacity, and the two elements that have the ability to set the power and size of the waves. So how is your view of financial morality now? Consider the final part in this story. When we consider a story on Fortune titled ‘Twitter is junk, while Alibaba is class, ratings agencies say‘ (at http://fortune.com/2014/11/14/twitter-is-junk-while-alibaba-is-class-ratings-agencies-say/), why is that? Twitter is still holding its own, is it perhaps that the waves of Alibaba can be more easily influenced? Companies valued at the ability where the waves can be decided by the financial cogs, the stability of Twitter is less interesting to them, so they make way for whoever can aid in creating the waves these financial people want. (The last part you read is all speculation on my side), yet speculation or not, when we see the waves of Libor and Forex, are my thoughts so far out of bounds? How Twitter making millions is downgraded, how Tesco, beyond the inflated profits, still made a billion, it’s downgrade of 90% seems excessive beyond punishment, but Tesco is not a good example (because of their own internal manipulation), Consider the Fortune quote “And the fact that Alibaba is 90% dependent on a home market that is slowing, while acknowledged as a risk, doesn’t seem to scare the agencies“, it does not scare them, or it appeals the dependency of Alibaba to make certain decisions down the line? There is a side that seems ignored by all, I personally still have a hard time believing that (as my calculation went in ‘Price Waterfall Blooper‘ on October 25th) the price for 199 auditors could not find two events of inflation of each well over 100 million. Are my suspicions in regards to manipulations that far-fetched?

I wonder how long it will take for the law to catch up, for the Department of Public Prosecutions (DPP) or Crown Prosecuting Services (CPS) to get a handle on these events and deter these actions to such a degree. There should be additional questions as the raters are all American, in light of their shortfall that approaches 18 trillion at present. It seems that the US has no options, no solution and no resolution strategy, yet we see that the big four give ratings are all American. The last part is not an accusation in any way, yet the fact that the Auditors need new oversight, especially in the light of American auditing firm Pricewaterhouse Cooper as they will face questions regarding Tesco. As the 4 largest auditors include UK and Netherlands, why are there only American raters (of the proportions of the large 4)? With the risk of manipulation, should there not be a British and even a French or a Dutch rating service? Let’s not forget that PwC faces possible investigation, not because they are more likely than not guilty, but because their innocence needs to be proven beyond any doubt, especially in light of the amount of companies audited by them as well as the issue of 199 auditors (as I calculated them) not finding anything. When we consider the length of time that PwC has had Tesco as a customer, yet, these are two separate issues, there is no inkling of suspicion that auditors are part of any manipulation, yet the auditor’s data is essential to such steps.

Where is the solution?

Not sure if I know of one, laws can be made draconian to give much harsher sentence to the transgressors, but the issue is not the transgressors, the issue is that these ‘manipulators’ have by definition of law not broken any rules. Yes, we see the fines of Libor and soon Forex, these transgressions are seemingly clear, but what of the raters and the analysts? The issues of data are at the foundation here. That what is raw data and how it becomes processed data is now at the centre of it all. That what is construed to be the creator of waves through analysts, raters and auditors; Auditors collecting the data, analysts to manipulate (which is what they might see as a simple application of personal preference and weighting) and raters to set the pace for investors and shareholders.

So tell me, how wrong is MY view and why have these influential cogs not been dealt with through legislation?

 

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November 9, 2014 · 10:52

A buffet called Buffett

It is the independent that comes with the goods this morning (at http://www.independent.co.uk/news/business/warren-buffett-tesco-losses-take-millions-off-berkshire-hathaway-earnings-9848441.html), and even though Tesco is at the centre, this is not about Tesco; it is about all of us!

The article refers to a view given a few weeks ago when we saw ‘Mr Buffett, who has called his investment in Tesco a “huge mistake”‘, this is all good, and we saw this before, but how does this amount to Warren Buffett being the ‘Sage of Omaha‘ go from a brand name to a person in a public area where the others can snack on him, like food for Hyena’s and so on.

Well, this is all about us in the end and about image and ego. You see, there is something massively wrong with those who WERE (past tense) with Tesco and as the quarter of a billion hole was found, instead of calling for restraint and standing by the ethical high ground Dave Lewis was standing. People like Mike Ashley who did bet on Tesco bouncing back, as they should and I hope that Mike Ashley makes a bundle on this. Yet, the centre piece actually not one but two of them are all ignored. The first one is that Tesco still made a billion, so as we see people running away in ‘fear’ and all other sorts of reasons, the value of Tesco went down. I reckon that those screaming in misconceived ‘horror’ are now paying for the speedy speaking, I am not impressed with their anguish and I am not convinced that it was genuine.

You see, if the financial backers had stood firm with Lewis, the hurt might have been there, but the structural repair would have been basic structural repairs and the pain to the financial backers would have been slightly more than superficial in the end.

The second part of this stake is Pricewaterhouse Coopers. There are too many questions, no answers coming in and no solutions directly in sight, other than those that would continue Tesco at a massively reduced size. I am still not impressed, you see, we all did this to ourselves. I oppose certain practices, not just because the stakes are high, but because as we ‘cater’ to profit, especially unnatural high percentages, we only cater to fatal self-inflicted wounding. So how does this link to Mr Warren Buffet (oops, intentional typo). You see we get that from the following two quotes ‘A week after Mr Buffett significantly reduced his shares in the retailer he saw $1bn (£160mn) wiped off the value of his stake in IBM, after the tech giant recorded a 17 per cent drop in its third quarter profits‘ and ‘Just days later, Coca-Cola caused Mr Buffett’s investment losses to climb to $2bn (£1.26mn) after the soft-drinks giant’s shares plummeted six per cent following flat sales and a lowered guidance for the year‘. So how does this affect us? Well consider the lives we have, the things we buy and the corners we cut. Are the two drops even a surprise and more important is the Tesco example strong enough for others not to play that dangerous game? I am not implying that certain ‘errors’ are currently being instigated, but consider the news on how America is now so much on a better track with people having jobs (which is true), yet consider when people like you and me spend money on a laptop, software and on cheaper food and no fuzzy drinks. I can say ‘YAY!’ to all three. My laptop (not an IBM Lenovo) is failing me, it is 4 years old and I have no budget for at least a year to replace it. Can you afford a new laptop, just like that? I have not bought software, still using Office 2010 (and happy to use it) and to keep my likes budgeted, my last can of coke was about 2 weeks ago. Many are turning their dimes to make ends meet and the market forgot about the people like you and me! In the end the concept requires people to buy and the juggling of numbers is no longer an option, we all depend on the cheaper places like Aldi to get a good deal. So how can Coca Cola remain so high? Will 6% be just the start of the plummeting for now? Yes, we tend to buy a little extra during Christmas and America has an upcoming thanksgiving in less than 3 weeks and Christmas 4 weeks after that, yet what happens 6 weeks after that? Will jobs suddenly get lost again, with unemployment numbers to go up? I am not sure, but it is not unlikely. People like financial analyst Charles Nenner have been speaking in regards to a crashing Dollar; he stated ‘The government has loans outstanding that are very short term.  If interest rates only go up a half a percent, they are already in trouble.  Also, the United States doesn’t have the power to force a lot (of Treasury bonds) on other countries because the United States has decided not to be a power anymore‘, which is kind of funny, because I saw that danger scenario coming for well over a year ago. Yes, I have seen some of the abuse of people stating that I am so wrong, which is a view that is fair enough, yet what happens when visible analysts in the economic market, not just like Charles Nenner, but heaps of others all making predictions in the same direction, then what will you do? Disagree a little more, or just until the dollar becomes Junk (or on equal footing with the Yen), then who will YOU blame?

Those who have no debt at that point will just lose mobility, those in debt will feel that drowning feeling sooner then they think. In the end we all did this to ourselves (to some degree). So as warren seems to lose 2 billion out of the 70 he had. I think that these ‘investors’ draining on the 10%-15% they expect, will soon need to refocus on the options where it is not about how quick you make a buck, but how you can slowly make some dollars and not lose your investments. That will be centre to all future deliberations, those who do will hold on to the farm, those who don’t will hand their farms over to those who did and now there is no actual option to recover for those who lost it. That is at the centre, as the economy is not restoring to the public and the consumers we see a push towards Aldi and other budget minded places like Aldi.

These ‘investors’ should start to realise that getting a 3% return is not that bad, it beats praying for profit in excess of 10%, which is less and less realistic, whilst they end up writing off the virtual money pool they thought they had. It all starts with the consumer, investors forgot about that, no matter what profit you expect or what is ‘balanced’ on paper, if people do not have the money to buy, it pretty much ends and that part was ignored by too many for too long a time.

The other part in all this remains PwC, let’s just accept that not all is well when we see ‘cover my back‘ statements and signing off on well over 100 million in inflated numbers, especially with a 10 million pound auditing bill, can we agree to the small fact that a clear statement after a thorough investigation at PwC could have prevented a massive loss of value for Tesco, which would have kept many investors in a lessened state of panic. By the way, did Coca Cola downgrade the profits as the stimulus is now ending? If so, what true hardships are ahead for the people as funds will need to come from other places?

For now the people are still struggling and poverty has never been higher in the US, so there will be consequences there too, but how much of it will hit the UK full on is a matter that will require time to investigate and time to protect against, time that seems to be wasted on several low yielding efforts (read: concepts that will not come to fruition). I cannot state what the best course of action is, but I feel fairly certain that the current trend will not solve anything; it will only make it harder for everyone down the track.

 

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October 27, 2014 · 10:29

One small sentence

So, we are still on the Tesco horse, but not completely. You see, I have made my case (a few times over), there are parts out in the open that I agree with, thoughts I had and one thought that is now casually stated in 19 words and they are getting slipped under the carpet of 1700 words: ‘but others point to less drastic solutions such as the sale of Dunnhumby, the data mining firm behind Clubcard‘. As we have seen an escalating wave of data issues all over the place, this one is suddenly for sale?

If we can believe some of the info that is out in the open, then we need to consider that Dunnhumby is holding onto 40-terabyte of data, considering the spread of Tesco and likely data collected form several other places, one could state that this is worth a few dollars. Yet, a complete sale seems almost ridiculous as the value (which some state is at 2 billion) cannot be matched by all but a few and there is every chance that they might not want this data. There is a second part to this, why sell the company, when, what I consider to be the wise decision, which was made in July 2014, to hold on to data and to sell data instead of buying it. There is a lot more to Dunnhumby (at http://adage.com/article/news/dunnhumby-time-ditch-demographic/239689/), There are however a few questions. I was unable to find an exact annual revenue list, but several sources place it over 300 million, Tesco gets a nice slice of that, so as we see that the total profit will slump even further without Dunnhumby, why sell it? Yet, Dunnhumby is also a risk to Tesco. Not unlike the growing spree of Tesco, Dunnhumby must simmer down and not drastically overextend itself. It is nice to be in so many places, yet consider the heavy beating market research has taken for well over 3 years now. Even though Dunnhumby is starting to chomp on the pie slice that Nielsen has had for a long time, yet Nielsen as its own share of innovators, it only takes one new idea from Nielsen to change the direction of interest. Dunnhumby still has the advantage with data and the way it is collected, but that will not last, then what will they do? Yet, that is for the future, which is not for the now, but must not be ignored. These simple facts give ample reasoning to the question why to sell this part?

Consider the consequences of Tesco no longer getting a slice and having to purchase data and research at premium, not at internal cost. I feel certain that this picture has not been fully investigated. I will add to this that the idea of handing over 40 terabyte seems to the worst possible decision in a long line of dubious actions. This of course gets me back to the original ‘hidden’ sentence and the use of ‘less drastic solutions’, so who are these ‘others’? People hoping to get in under the radar?

Are those suggesting it serving anyone else but ‘self’? Not asking that question seems to be wrought with questions too, which makes me wonder why that one sentence was added as some ‘inbetweenie’. In addition, some might remember that article less than a month ago on the Tesco Air Fleet, yet, we have seen very little in regards to Kansas Transportation. The total of bills should be decently staggering as the last number I saw in one of the papers placed the cost at almost 10 million a year add to this the value of 60 million and we are now at 25% of the inflated amount. An additional issue is that there is almost ZERO visibility for Kansas transportation, when we consider the need for profit, why was this fleet not used to get additional revenue, instead of just leaving the planes all covered up. Would such an operation not need serious web presence?

So, as we see that several sides of Tesco operations that are not part of the Core, we see that visibility is not really a real act, which makes me wonder about the reason for getting these planes in the first place, what do these cost cover, or perhaps a better implied question is: ‘what else are these costs covering up?’

I do not pretend or imply to have the answers, but I am surprised that the article did not ask these parts either. It is nice to see the list of people who might be on the list of Chairman wanted. I definitely know a good one, but I will refrain from stating this here in the open.

One little bit of advice I do leave here for Dave Lewis. If you truly want to get this ball rolling into the profit direction, then forget about the quick solution, that one will not happen. The track is wrought with both angers and risks, but the safest road is also the risky one. On your next flight, I suggest you watch the 1953 classic ‘Wages of Fear’; it is the road you are likely about to head on. Not by bringing the nitro-glycerine (if so, kudos to you) or going for the term ‘boom goes the dynamite’, but for the road that requires you to nip at the heels of Aldi and going to low profit road for some time to come, to beat them in that game, you will require both the Teradata sized files of Dunnhumby as well as their hopefully available creative view. You need to return to the core business and take that into a different approach to the customers your predecessors seemed to have forgotten about. From there Tesco will return to strength and stability, one small step at a time. It just requires a few good investors to stick by you and they will see that with faith this journey will end up being a reward for them too.

 

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October 25, 2014 · 19:08

Price Waterfall Blooper

I am sad to say, I am sorry to report
we have not seen any fraud of this sort
not a win or a gain, but just sadness and pain
are the man plainly vain, they do not travel by train
it will not go to court, yet the profits fall short

as my profits progress to the basement below
as executives go, with no exit fee show
we will wonder awhile, what results they proclaim
as we now still decide, should we name, should we shame
where is the pee double you sea and its dough

So, yes, is this the beginning of arts, the limericks and the consequences of non-accountability?

You see, there is no doubt in my mind that the initial investigation is only the beginning for both Tesco and PwC. Whatever we may think, we can be certain that if Dave Lewis had NOT rung the bell, the mess would be a lot larger then it is at present. I think we should also ring the bell of honour for the whistle blower, because without it Christmas would have been the grimmest of experiences in the UK.

Let’s take a look to the last two days, when Deloitte got its report out (to some extent) as reported (at http://www.theguardian.com/business/2014/oct/23/tesco-profits-black-hole-bigger), we see a few things that do not add up.

  1. “He dismissed the idea that fraud may have been involved in the accounting blunder: “Nobody gained financially as a consequence of the overstatement of performance.”“, is that so? You see, there are a few issues that we have; I will step over one of them because I prefer to tackle that part a little further down.
  2. Laurie McIlwee (former CFO) as well as Mike Iddon require closer scrutiny. Mike was a group finance director, planning, treasury and tax. When we see tax, we see a person who will dig, trying to find any cent that is deductible, as a good FD should be, and in 13 years at Tesco, he had not seen anything? Seems rather clumsy doesn’t it? The fact that the accounting hole is a little bigger (15 million is not much when you say it fast), also came with the knowledge from Deloitte that the hole was there for a longer while, so basically, the inflated 265 million, means an inflated payment of taxation, how is that ever a good idea?
  3. So consider Tesco, the size and scope of it. They lose a CFO and a FD, and all along NO ONE at Tesco, I state again, NO ONE seemed to offer to pick up the baton for those months? Even if it was at no extra pay and only for 3-4 months, 99% of the financial industry would be chomping at the bit to pick up the baton, so that they can add this to their resume, it gets even better. It is a win won for whomever picks it up, because if that person does well, then the value of that person goes up by a lot and his/her future, whether within or not with Tesco would be a few steps on the large corporate ladder, even with nothing to gain it ends up being a win/win.

Let’s just face it, I am nowhere near next in line to take command of the 591 Signals Unit at Digby, but if I get the chance because the current commander was on the list to become Air vice-marshal, I would get there running, even if I was still in my pyjamas and was holding only a toothbrush. No matter how well my performance would be, if I made it I would be eligible for a nice challenge at GCHQ, a seriously cool way to skip half a dozen steps on that ladder, now consider that NO ONE had these levels of ambition at Tesco? I truly believe that beside the whistle blower a few more had a clear picture that taking that seat from within would turn out to be nothing less than poisoning their career.

  1. “He dismissed the idea that fraud may have been involved in the accounting blunder: “Nobody gained financially as a consequence of the overstatement of performance.”“, now we get to the issue that I have had since day 1.
  2. Consider that PwC had (a reported by the Guardian in an earlier blog) last year; PwC was paid £10.4m by Tesco for its auditing services and a further £3.6m for other consultancy work (a newer version at http://www.theguardian.com/commentisfree/2014/oct/23/guardian-view-tesco-auditing-debacle-pwc-systemic-shambles). This article now shows the following quote: “At the very least, this is a very cosy and lucrative relationship“, which slightly debunks the statement of Dave Lewis via Deloitte regarding ‘Nobody gained financially’; it depends on ‘how’ we regard ‘gain’, when the alternative is losing revenue, remaining at status quo is clearly a gain.
  3. So as we see these two numbers, let’s do a little math, let’s say an auditor makes £65,000 a year (a little less usually), so we now see that the annual fee gives us 153 auditors for a year and an additional 46 auditors for the consultancy for a year, that gives us 199 people going over the books, checking it all. No one saw anything? Now, the reality is not exactly like this, but considering that PwC is one of the big 4, we now have a clear case for some serious questions for 25% of all the large audited companies in the UK, how much taxation was not collected, how many large bonuses and incomes were honoured in such a symbiotic incestuous relationship? No wonder George Osborne has such a hard time, the deck seems to be seriously stacked against him.
  4. There is one more thought that comes to mind, but this one is, as I will happily admit, based on shallow grounds. This was all found by Deloitte in a little over a month, mainly because they knew WHERE to look. But, it is entirely plausible that the whistle-blower just knew about that one thing, what else is there and what has not been found yet?

This is important for two reasons. The first is that it then debunks the statement from Lewis, likely via Deloitte who said ‘He dismissed the idea that fraud may have been involved’, I am not convinced! It took Deloitte to find the obvious over the period of a month. We can consider that the fact brought by a whistle-blower gives weight to intently hiding, if not than this person would have stepped forward internally and the old crowd would have solved it, that did not happen. It is not unlikely that those involved hoped for a quick brush under the carpet, this circus was unlikely anything they ever desired. What was signed off on, by the equivalent of 199 auditors remains a serious issue.

This part we can see in the Guardian quote “The making up of the profits figures was not in a report signed off by PwC. That happened in August – three months after PwC had given the supermarket chain’s figures a clean bill of health. Even then, it noted that there was something potentially funny with the numbers, and expressly warned about “the risk of manipulation” – but allowed them to pass anyway“, so something potentially funny does not warrant digging? Let’s not forget they had the equivalent of 199 people for the year, so plenty of digging resources. If we add the following “It is one of the primary ways in which investors, business partners and regulators can tell the true state of the company they are dealing with“, so not only is there a link to possible fraud, the implied length of this gives reason to suspect intentional misdirection towards investors, which makes the news releases all over the papers on class actions against Tesco a plausible worry for some time to come.

It becomes a much finer point of debate when we consider the following abstract ‘Misreporting in our model covers all actions, whether legal or illegal, that enable managers of firms with low value to make statements that mimic those made by firms with high value. We show that even managers who cannot sell their shares in the short-term might misreport in order to improve the terms under which their company would be able to raise capital for new projects or acquisitions‘ (at http://www.law.harvard.edu/faculty/bebchuk/pdfs/2003.Bebchuk-Bargill.Misreporting.pdf). It comes from a paper by Oren Bar-Gill and Lucian Bebchuk, published at Harvard in 2003.

Now we add what they wrote on page 21 “3.4 Creating Opportunities to Misreport, at T=1 managers decide how much to invest in creating opportunities to misreport earnings. The equilibrium level of this investment decision is characterized in the following proposition“. after that it becomes increasingly mathematical, but behold, the initial text ‘whether legal or illegal’, so if the old Tesco gang focussed on ‘legal’, was that the reason they needed to pay an additional 3 million in consultancy (a clear and admitted assumption on my side), yet is that really too weird a thought? Let’s face it PwC signed off on books containing an additional quarter of a billion, which took some time to create.

I know that incestuous is all about keeping it in the family, but the fact that this could possible all be legal is just a little too hard to swallow.

Could it be that both Corporate Law and Taxation Law within the Commonwealth are in dire need of an overhaul? Some might say that it could be an idea to do this before Christmas, to them I say “Bah! Humbug!“, Monday the 5th of January 2015 will be soon enough. It will give Lord Blackwell, Lord Goodhart, Baroness Goudie and Lord Haskel something to look forward to as some might be enjoying a large roast with potatoes, Yorkshire pudding and thick gravy. The Rt Hon Lord Millett has done more than his share in his long career and his Lordship, as right honourably retired can enjoy a second helping of Christmas plum pudding with custard (unless his lordship prefers the challenge of making corporations a little more accountable then the currently seem to be). I would, as blogger Lawlordtobe be happy to lend a helping hand, but I never studied economy or taxation laws, so I would only get in the way, yet I remain available for assistance if need be. I do reckon that the members of the House of Lords who are members of the Joint Committee on Tax Law Rewrite Bills should consider their calendars, especially if the investigation turns out that the Financial Reporting Council (FRC) will be unable to press any criminal charges, to me and likely to all it should be clear that such levels of orchestration must be addressed!

 

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October 13, 2014 · 21:05

A matter of Jurisprudence

Another morning, another moment we see another round of iterated news. Just now I noticed another article placed 5 hours ago (5 hours after my previous blog) on how 2 more senior directors are moving out. The first one “company secretary Jonathan Lloyd, who advises the board on legal and governance issues, had resigned and was serving out his notice until March 2015“, the second one “Ken Hanna, chairman of Tesco’s audit committee, is also set to step aside as a non-executive director as the company’s chairman reshuffles his management team“. The news was in more than just one source. The quote “‘His resignation is not connected to the current investigation. It’s his own choice; he’s got a new job with another listed company,’ a Tesco spokesman said“. All this might be true, but let us be fair, if it was not HIS choice, would we hear this from either Jonathan Lloyd or Tesco?

This got me looking into another area. I got the impulse after seeing a PDF (at http://www.chadbourne.com/files/upload/dandoliability.pdf).

In there we see the following under the title ‘General Duties of Directors under the Act‘, “To promote the success of the company for the benefit of its members having consideration to: (a) the likely consequences of any decision in the long term” as well as what we see at 3.5 under Common Law Duties, where we see “At common law, a director is obliged to exercise a reasonable degree of skill and care in carrying out his/her duties. The standard of care involves both an objective and subjective element”. In other words, the director is required to exercise that degree of skill which might be expected from someone having both: ‘his own particular knowledge and experience‘ as well as ‘the general knowledge and experience which might be expected of a person carrying out the same functions as those carried out by that particular director‘.

For those who kept their eyes on my blog articles on Tesco, are you seeing the issues that are now in my mind?

I talked about negligence on several moments, I iterated parts of these and wondered about several questions, especially the fact that the press has been lacking in digging into these matters. Now a simple Google search led me to the PDF by Chadbourne & Parke. The Guardian could have had decent insight a mere 23 minutes by bus away (a little over 3 miles), so why does it take a non-journalist from the other side of the planet to connect the dots?

The PDF is a mere information piece, perhaps a little advertisement and it states that you needs proper legal advice, yet, not one paper has been digging into that pile have they? I did not get my law degree in the UK, yet I do get the gist of it, more important, the deeper I dig, the clearer the view seems to become that others are ignoring it. So, are these all just imaginations of conspiracy theory by me the blogger? This is clearly a question the reader might ask themselves. Yet, am I accusing of issues being covered up? I am to some degree, yet at the foundation I am questioning the information I read and I wonder why others, those who should be asking and digging on ‘issues’ are not doing that.

Yet the jewel was in 5.1, where we see “To a large extent, these mainly relate to duties of internal management, e.g. the keeping of accounting records; the preparation of annual accounts; the filing of documents with the Registrar of Companies and the keeping of the statutory books of the company. Failure to perform these duties or to ensure that they are performed may result in fines both for the company and the defaulting directors. Directors may also be subject to imprisonment“, so when we see this does it not seem interesting on how quickly some are leaving the field for a ‘better’ option?

This all brought me to Re D’Jan of London Ltd [1994] 1 BCLC 561. It is a UK Law case and quite the one at that became the main precedent which is now codified under s174 of the Companies Act 2006. “He did not show reasonable diligence when he signed the form. He was therefore in breach of his duty to the company“, how does this relate?

Is it about filling in a form? No, but when we regard s214(4) of the Insolvency Act 1986, we see the same approach as we see in a mere PDF by Chadbourne at 5.1, there is a visible need for “general knowledge, skill and experience“, but how do we see the term general knowledge? You see, the Tesco issues are stated in regards to ‘specific knowledge’, as we see the changes as they had been pushed through before the Dave Lewis change. This all gets me back to Rebecca Shelley at Tesco. First of all, there is no accusation here, there is no indication that she did anything wrong. So why does she pop up on my radar, because she is a woman? No! Tesco has several, some even in higher places then Rebecca. Let’s take a look that I saw on the Birchwood Knight site (at http://www.birchwoodknight.co.uk/news-article/tesco-hires-rebecca-shelley-for-group-director-of-corporate-affairs-role-151).

Here we see the following quote “As part of her corporate affairs role, Rebecca will be responsible for government and media relations, investor relations, internal communications and corporate social responsibility (the legal affairs and other elements of Lucy Neville-Rolfe’s brief are being split into another role)“, am I reading too much into this?

Consider the (former) flying parts of Tesco. When we see the need and the issues involving legal matters, was the revamping of the role as Rebecca Shelley received it a niche part of what should have been? This is where I see ‘general knowledge’ versus ‘specific knowledge’. It is my personal view that Rebecca’s role should be a lot more senior, especially in light of the revelations we see in the papers, am I that wrong? If she had the legal sides to her role, how much earlier might we have seen the overstatement, or the Gulfstream issue for that matter? These issues are in relevance towards the place I am trying to see, places the press does not seem to be looking, the place that readers as well as half a million Tesco employees should be aware of. I will go one step further, as I see the issues in play, as I see the matters of non-transparencies as well as an indicated lack of information towards the shareholders gives reasoning that they might want to evolve the role of Rebecca Shelley to the board. Especially in light of the massive changes Tesco is likely to face.

Yet, legally speaking, there are additional questions when we look at http://www.ibe.org.uk/userassets/briefings/ibe_briefing_31_tax_avoidance_as_an_ethical_issue_for_business.pdf, was the Gulfstream a form of tax avoidance? None of this is illegal, but it comes with ethical questions and as such I wonder how much the shareholders knew or should know. If tax avoidance is avoiding social obligation and as such it could damage public trust and reputation, does the link now make sense? The argument that shareholders want maximised value, which means a minimised taxable footprint, so how are choices made? More important why am I the only one who seems to be asking the questions that have relevance and am I alone digging into this?

One final step regarding the Chadbourne paper, at 6.15 we see “that directors of companies must make certain disclosure statements in the directors’ reports. This applies not only to information which the officer actually knew of but also information he would have known about if he had conducted a reasonable enquiry. However, the provision goes further and requires the director to confirm that, so far as the director is aware, there is no relevant audit information of which the company’s auditors are unaware. A director has a duty to exercise reasonable care, skill and diligence when preparing the directors’ report. In determining a director’s liability under the Act, the statutory test is that a director will commit an offence if he knew the statement was false or was reckless as to whether it was false and failed to take reasonable steps to prevent the report from being approved“, which just raises additional questions. Yet, consider the following in light of all I wrote and quoted about the issues on generic and specific tasks, the issues on “which the officer actually knew of but also information he would have known about if he had conducted a reasonable enquiry” becomes an issue when the board is so niched that reasonable inquiry is no longer an option. It would in my mind place the role of Rebecca Shelley at the centre of it all, yet with the legal part removed we would see a hindrance there too. So as you look at the events that the press wrote about, the parts I wrote about and the questions I have been asking. I mentioned in the early beginning of Tesco regarding orchestration in the article ‘The orchestration has engaged‘, yet I thought it was external, is it possible it had been internal and the involved parties are clearing the field really fast at this point?

But there is one more issue, especially if I want to remain true to the title ‘A matter of Jurisprudence’, s370 Enforcement of directors’ liabilities by shareholder action (as seen in the Companies Act 2006), we see under s370(1)(a) “in the case of a liability of a director of a company to that company, by proceedings brought under this section in the name of the company by an authorised group of its members;” there are a few other issues which give question on how enforceable this would be, yet consider the issues we have seen, what more should be looked at? Consider chapter 6 of the same act ‘Voidness of provisions protecting auditors from liability’, now consider “for exempting an auditor of a company (to any extent) from any liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company occurring in the course of the audit of accounts”, now we get Pricewaterhouse Coopers in the mix. There is no indication at present that PwC is at fault in any way, yet when we see the issue regarding small change (read 250 million), when we regard that this inflation was not just straight through, but as I see it (a clear assumption) the fact that it required a whistle-blower, indicates that the inflation was decently buried. Was it buried well enough for PwC? That is the question. The implied extra 3 million in consultancy might have been valid, considering the size of Tesco, so where is the negligence? There might not be any at all, but consider that the Tesco executives took PwC for a ride and it was not found and it was signed off on, when THAT becomes visible, what will happen to the value of PwC, if a mere 250 million can topple a 70 billion pound company, what would be the impact on PwC for not finding it?

Perhaps that is a conspiracy theory, evolving as the facts seem to fit (or fitting the facts as they seemingly evolve), but are they? Even I question that what I find, but I will ask questions none the less, something the press has not been doing in any way, shape or form.

 

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October 12, 2014 · 23:49

How the press became redundant

I wonder whether the press corps, or the press corpse we might call them, are aware of what they are working on. Did they consider the events? It is such an interesting wave when we see the consequences, yet those who write about them don’t seem to be too fussed about the reality of the facts. So shall we take a look?

Fact: ‘He abandoned this post to become CEO of Tesco effective of 1 September, 2014‘ (at http://online.wsj.com/articles/lewis-to-become-tesco-chief-executive-a-month-early-1409312947)

Fact: ‘Tesco reveals it overstated first-half results by £250m‘ (at http://www.ft.com/cms/s/0/67fb8db4-421e-11e4-9818-00144feabdc0.html#axzz3FvJ9DhJP)

There was a fallout, as we would expect, yet to what extent are we confronted with facts and to what extent are we introduced to the real events.

From October 3rd onwards, we have seen news in regards to the gulfstream that was apparently ordered in 2013 (at http://www.bbc.com/news/business-29488777), now let’s take a look at the quotes “Tesco has confirmed it has taken delivery of a new private jet worth £30m, a week after major errors were discovered in the company’s accounts” and “Tesco paid for the jet 20 months ago and is required to take delivery”. How interesting this news (not really), in addition we see the news from the Guardian (at http://www.theguardian.com/business/2014/oct/03/tesco-corporate-jet-gulfstream-supermarket), with the quote “Tesco’s new chief executive, Dave Lewis, moved quickly to defuse a situation likely to anger investors who have seen the value of their shareholdings halve this year. No Tesco executives will ever board the jet, as he has put it up for sale – along with the rest of the Tesco fleet, which includes a Hawker 800 and two Cessna Citations” and “To charter a G550 for a 12-hour flight would cost nearly £67,000 – more than twice the average UK salary of £26,000” and finally “In a further irony Tesco has only retrenched from overseas markets in recent years. It has shut down its US chain Fresh & Easy, pulled out of Japan and scaled back its ambitions in China”.

So how about the following questions:

  1. Why was the board not grilled initially?
  2. Why do we not see the press going after the ‘departed’ managers?
  3. So, why are the shareholders up in arms? Were they not informed of these purchases?

That entire issue becomes odd when we consider the fact that there was retrenching moving away from the international scene and no one asked questions? Was the purchase not approved 20 months ago? Was it not reported? No one seems to ask or investigate those questions, it was ordered 20 months ago, was there no down payment?

Personal note: Can I offer a deal on one citation? I can raise $20.00 (pretty much all I have left)

‘Tesco Workers Want The New CEO To Know About The Unpaid Overtime They’re Working‘ (at http://www.businessinsider.com.au/tesco-unpaid-overtime-2014-9)

Let’s take a look at the quotes “Six of them mentioned, without being prompted on the issue, that they or their staffers were required to work unpaid overtime“, so when we consider gov.uk “Employers don’t have to pay workers for overtime. However, employees’ average pay for the total hours worked mustn’t fall below the National Minimum Wage“, was that taken into consideration? What is stated in the contracts on working overtime? Those are issues that are a given and have been a known quantity, so why does this pop up now? Let’s not forget the quote “Lewis, who started his new job earlier this month“, from an article on September 8th, the man has had the function for only one week. So is this article by Jim Edwards at the Business Insider anything but a hack job? It is even more interesting that the name Philip Clarke does not come up once in the entire article, who was in charge whilst this mess was growing, were the overtime issues properly investigated? 6 out of 500.000, I think that the business insider has other issues to explain. This article did not just pop up, a mere week after Dave Lewis got to be in charge, questions should be asked! (especially at the desk of Business Insider)

This takes us to the Guardian article (at http://www.theguardian.com/business/nils-pratley-on-finance/2014/jun/27/mark-carney-interest-rates-tesco-barclays), the quote “Half the City is playing the game of fantasy chief executive, and some former Tesco directors have been muttering darkly about Clarke’s supposed strategic errors and how the company’s woes shouldn’t be dumped on former boss Sir Terry Leahy” gives us the issue that there are several problems in the works, when we consider “This boils down to a simple question: do investors believe Tesco should cut its prices deeply, take the fight to Aldi and Lidl, and accept that profit margins of 5% are no longer viable?” gives us the question that this is all a year after the gulfstream was ordered, why was the order not cancelled at this point? The article has an interesting paragraph: “Do Tesco shareholders really want to sanction a price war, which would mean accepting a lower share price, at least in the short-term? Most, one suspects, are not convinced by Clarke’s strategy but still hope he might be proved correct. Another profits warning would force them to get off the fence. If it doesn’t happen, Clarke ought to be safe. But a warning after three years of heavy capital investment would surely force a strategic rethink“, what was decided by the shareholders? This article came on June 28th 2014, 8 weeks before Dave Lewis took the reins, so what happened in these 8 weeks? More important, it seems that no criminal investigation into Philip Clarke has been reported up to now. Before we even consider whether there are criminal charges yes or no, we see overstatements by a quarter of a billion, we see a 50 million dollar plane delivery and there are questions of the process of reporting, towards the shareholders, within the corporate structure, an oversight of transparencies and a stronger indications that the board of directors is either inapt or uninformed, which seems to point towards strong levels of negligence, possibly criminal ones. The press seems uninformed and unable to inform, so why the half-baked (as I see it) levels of the active press?

If we consider the Tesco PLC Annual General Meeting 2014 (at http://www.tescoplc.com/assets/files/cms/Notice_of_Tesco_PLC_Annual_General_Meeting_2014.pdf), we see at the first part: “1. To receive the audited accounts for the financial year ended 22 February 2014, together with the strategic report, directors’ report and auditors’ report on those accounts. The directors are required to present the annual accounts, strategic report, directors’ report and the auditors’ report on the accounts to the meeting“, that sounds nice, but in a 12 page document, which I admit is just a notice of the meeting, we see several references and an overall ‘dividend’ of as stated “To declare the final dividend of 10.13 pence per Ordinary Share recommended by the directors“, was that including or excluding the 250 million balloon act? If including, what is the dividend after that? So what was in play to begin with?

In addition in another Guardian article (at http://www.theguardian.com/business/2014/jun/27/uk-growth-figures-awaited-as-tesco-faces-agm-business-live) on June 28th we see “Shareholders may also quiz CEO Philip Clarke about the 310 separate, undeveloped sites across the UK which Tesco owns, but hasn’t developed. Enough to build 15,000 new homes, as a Guardian investigation has found“, really? So what about that gulfstream prices at 20% of the inflated amount, where is that one in the books? So this opens another door for Dave Lewis. What if these sites get converted to houses and as such people can get a Tesco mortgage? It is long term, it offers a stable future and it gives you a consumer base as you open a small Tesco on one of the plots. Tesco must change, yet to what extent?

Yet one other article from June 30th showed “Clarke repeatedly refused to bow to shareholder pressure to set a target date for when its US business Fresh & Easy – which has been in the red since it launched in 2007 – would finally begin to turn a profit“, so after 7 years there is a profit? Why was there no stronger investigation in regards to these parts? Why was there no real tally of the Tesco corporation in the Guardian and pretty much every other paper?

Now we see the following (at http://www.theguardian.com/business/2014/oct/10/tesco-sell-financial-footing-blinkbox-dobbies-dunnhumby), written last Saturday by Zoe Wood. The title is kind of catchy ‘Passed their use-by date? The businesses Tesco could sell‘, oui oui Zoe!

“Analysts think Lewis needs to find £2bn-£3bn, either from the pockets of big City investors or selling some of the family silver – or both – if it is to have a sure financial footing from which to recover from this year’s collapse in profits and the accounting scandal that has exposed a £250m black hole in expected first half profits“. First of all, these analysts are not really worth the paper they write on. This all went by them as there suddenly was a whistle blower, as such, before that none of them wondered on how there was too much (like a quarter of a Billion) in the report and until the blower of the whistle, they kept pretty quiet. I feel at times that the Monday morning quarterback is a better judge then these analytical experts. Then there is “But some retail experts think it strayed too far when it started investing in trendy restaurant chains, tablet computers and video streaming services“, is that so? It seems that the tablet sold like hot cakes and was a good alternative to the iPad and its competitors. As for selling its assets the first being ‘Dunnhumby’ “The accounts for that year show a pre-tax profit of £67.6m on sales of £165m – a year when it paid Tesco a £140m dividend. There’s no doubt Dunnhumby’s services are valuable but getting someone to part with £2bn might be a stretch“, this might be true on several counts, yet are these dividends part of the 1.1 billion profits? If not, then we are not told the whole thing, if yes, then losing 10% of the profit is not a good thing, more imp0ortant, who owns the data, who owns the parks and who is in charge? Data of this magnitude has multiple applications and additional value. Yes Lewis might want to focus on retail, but getting a shave on road to the guillotine is also questionable. Some say, if that is all that is left, then the shave is extremely important. I state, data is treasure, you only need to combine it with the right databases and you open up an entirely new branch from the initial base, which would all be Tesco’s if it is currently all Tesco’s. The important part is shown in the part of Tesco Air, the quote “Kansas Transportation’s accounts show Tesco spent £29m flying executives around the world in private planes between 2005 and 2012, but with fewer countries to visit the company’s airfare bill will probably come down anyway“, so we see on average four million a year. How many did fly? Can anyone explain how negligent acts are not investigated? Is there a case for criminal investigations? How many executives and where to? If we consider London – Tokyo business class and it costs Business Class at £1,290, it means they either flew 3100 executive, or one executive for 8 years EVERY DAY. Is anyone seeing the writing on the airplane yet? You see, in my old job we has a VC, a Sandhurst graduate. He had one massive rule (actually he had 12 of them), the rule was in place since 1992 at least. ‘Rule 4, Don’t give our profits to the airlines‘, that rule made perfect sense 12 years before the financial collapse; it should have been a biblical rule from 2004 onwards with every big corporation.

You might think that getting rid of several executives would solve it, but consider the amounts and the level of actions from long before Dave Lewis stepped in, why was this not sanitised on a massive scale al lot earlier, which gets me back to the actual AGM’s, what was discussed, what was presented and where are these documents? It feels so right to quote baby Herman from ‘Who framed Roger Rabbit‘, “this whole case smells like yesterday’s diapers!”

I can understand that the press was to some extent unaware, yet no one dug into this, why is all this managed by Kansas Transportation, were they in the AGM documents, with every small fact I get loads of additional questions, questions that I did not see anywhere in the press, so what else did they miss? Seeing it mentioned now by Zoe Wood does not count in my books, this should have been on the front page a lot longer before this.

Yet, most of the issues here we see that they ask questions of the CEO Dave Lewis, which makes sense as he is Mr Big Boss, yet the other members are not chased for answers. Why not? It seems that these people were there when massive issues were bungled. The article only has one issue that bothers me, it is not with the writer, or how she wrote it, it is an excellent piece, yet this part “Tesco is thought to be soliciting offers for Blinkbox, which was set up by former Channel 4 and Vodafone executives to create a competitor to Amazon’s LoveFilm and Netflix. If a buyer cannot be found the heavily loss making streaming service could just be closed down. “The inherent value of Blinkbox is its relationships with content providers,” says Ken Olisa, chairman of technology merchant bank Restoration Partners. “It’s an example where content is king.”” troubles me. ‘If a buyer cannot be found the heavily loss making streaming service could just be closed down‘, so why not let it close down? Why pay for the bungling of others? When we consider the part ‘The inherent value of Blinkbox is its relationships with content providers‘, so if there is enough content, there should not be heavily losses. Yes, it all depends on customers, yet content draws in customers. Is the content of good value? There is more when I look at the website. If it is so clued in, why are Nextgen consoles not there, why is the Tesco tablet not mentioned there? Seems to me that either this is not updated, especially as the Nextgen consoles were here in 2013, it seems to me that if you want a growing interest, being the first in Nextgen seems to be a high priority.

There is more, yet when we consider the issues in play, like Tesco Mobile, I see opportunities ignored, the fact that the chips are down seems to be a massive push for the siblings of Tesco to put them into high gear. Perhaps this is done, which would be fair, but the press is not noticing any of that, which makes me wonder whether things are not happening, or whether the press seems to be looking at issues wearing very specific glasses. I honestly cannot tell which, yet considering the Sony Mobile debacle, we see options for Tesco to swoop in and grab some revenue (as Sony lost 2.4 billion), there are more avenues, yet I wonder whether I should state them now, or should I wait and see what else the press at large is missing over the coming week.

Should be more fun to wait, I reckon!

P.s. Consider the AGM PDF, how come PwC is nowhere to be found in press mentions (if they are there then only in the most shallow of mentions).

 

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October 3, 2014 · 22:09

The orchestration has engaged

It is nice when the world falls apart, when you look at the abyss in front of you softly stating: ‘It cannot get any worse!’, then you feel a foot pressing against the lower spine of your back as you lose your balance and fall down. The last thing you hear is ‘Guess again!’

This is how certain news events felt the last few days. I am not referring to the McCain family, who states that the press has not learned anything, post-Leveson. Was anyone surprised?

My issue is with Andy Street at the John Lewis department store (at http://www.theguardian.com/business/2014/oct/03/john-lewis-boss-andy-street-says-france-finished). In light of Tesco, I wonder what drives this person. Yes, we all know that John Lewis is upper class shopping, yet is that reason for whatever you think? Apart from your freedom of speech, which I will not hinder, my question becomes, in light of your remark “He told the gathering of entrepreneurs that the award was “made of plastic and is frankly revolting”“, so not only are you a snob, the element grace is just not within you. Fair enough! Yet, consider that as you got recognised with an award, you should consider the 3 G’s, “Be Gracious, Be grateful, Get off!” (Thanks Paul Hogan for that jewel!)

I am all for freedom of speech, but I am also in favour of accountability. So when I read this: “Street advised his audience: “If you’ve got investments in French businesses, get them out quickly.” The eurozone’s second largest economy is struggling for growth under President François Hollande and the country’s finance minister admitted last month that it will overshoot the EU’s 3% budget deficit target this year. The French economy has been hampered by low growth and poor tax receipts in recent years“, I wonder how often Mr Street got hit with the silly stick in the hours before he spoke these words.

The second issue I see is also from the Guardian (at http://www.theguardian.com/business/2014/oct/02/warren-buffet-tesco-huge-mistake), this is an entirely different matter. We all make mistakes, so when a billionaire admits to this with the headline ‘Warren Buffett: ‘Tesco was a huge mistake’‘, it is not that big a deal initially, but then I went to think it through. Why is there such a massive overreaction in regards to Tesco? Yes, the profit was overstated; however, Tesco made over ONE BILLION! Can we please wake up now? In a year where most nations are doing worse than zero per cent, in a time when the straps are on so that we recheck every dime we spend. Tesco made over a Billion. Yes, I saw the statements ‘too big to fail‘, but in this instance I do not agree. In the case of the Dutch SNS Reaal, that place LOST a Billion, Tesco MADE a billion, so can we please wake up and not overreact?

So, when the response comes, ‘Well Lawrence, you seem to be overreacting here a little above average’, my response would be ‘darn right!’

You see, the initial events, of Blackrock moving out, whilst this is a drop on a plate, is what I personally see as a form of orchestration, a few big wigs who seem to be hoping on massive write offs for Tesco. There is something so darkly unethical about such actions, that these greed driven profiteers would endanger the incomes of tens of thousands just to get a nice dividend. This is what it looks like, am I right?

That remains to be seen, but overall the fight is not done yet. Tesco is not sitting still and the new Tablet as it launched just now could be another incentive, especially if we consider where Tesco could also be active. If this is the budget option, with Tesco Mobile in the Netherlands, This gem could find many happy homes during the Dutch Sain Nicholas feast (which is on December 5th), in additional to the Christmas celebrations, as many Dutch do both instances. Tesco is not done by a long shot and the activities that we see give me the impression that several actions do not seem to be about ‘cutting losses’, but as stated on many occasions that I am not an economist.

So, when I see this article http://www.independent.ie/business/irish/billionaire-mike-ashley-bets-on-tesco-bounce-back-30616710.html, where Mike Ashley, who owns Newcastle United takes a 43 million pound share believing that Tesco Shares will bounce back, I say “well done Mate!”, two thumbs up for this man. Now, let’s be honest, as this man seems to be a millionaire a thousand times over, 43 million will not seem like a big dent in his wallet, but the fact that this man is willing to enter more cash then I will ever make (even if I grow to the ripe old age of 14645), the entered amount will boggle my mind for some time to come.

This is one of the two parts where disbelieve is still on the front of my mind. Let’s be clear, I get the entire write off, loss of share value, yet the actual occurrence, especially with a billion in profits is too strong to be just a jittery action from the market. The fact that Blackrock moved out to this extent is still an issue. It left me with two options, either they know something Dave Lewis has not been told yet, or they wanted a curve so that they can make a sweet deal down the track. Let’s not forget that the value write off is just on paper, it is like a virtual event. Blackrock did not hand over these billions in gold or actual cash; we are seeing the fallout of virtual value (as I see it). And this all gets me to the final quote, which was also in the Warren Buffet article and had been mentioned in earlier articles. “UK fund manager Neil Woodford – who decided to sell his stake in Tesco in 2012 after its first profit warning – said last week it could be a long time before any of the British supermarkets became good investment prospects again“. Why?

You see, if he sold his shares earlier, fair enough. Yes, we see that Sainsbury is lowering expectations and shares have fallen there too. I think that all supermarkets will have to change their entire approach. We see that places like Aldi and Lidl are growing, especially in Australia where Aldi is now more and more a common sight, yet over here Woolworths and Coles remain. The same applies to England, in the end people need food, so these places will remain locations where food is bought and yes, as Tesco mobile remains competitive, people will come for that options too. All that is a given, so why such a massive overreaction?

This is at the heart of my foundation for suspected orchestration. If you are in the UK, then take a look at the papers and the degree that they are looking at Pricewaterhouse Coopers. They did the auditing for Tesco, so why is not every reporter looking at PwC and seeing what links might be there, which is not an accusation, but consider all the redigesting we see on several papers, they all mention PwC in a casual way, when they have been auditing Tesco for some time. Only the Times (at http://www.thetimes.co.uk/tto/business/industries/banking/article4214689.ece) had done so, yet the full article is not available to me as I am not a subscriber (one of the reasons why I stick to the Guardian).

There are two more quotes the first is “Shorting Tesco has been a profitable bet” and “Traders gamble on falling share prices by borrowing equities from other investors and selling them in the hope of later buying them back cheaper – known as shorting” The latter quote comes from http://www.thisismoney.co.uk/money/news/article-2772107/Dont-shred-thing-new-Tesco-chief-warns-staff.html, so it is a way to make money, even though it seems unethical, the act is not, but one could call it questionable. This is the one moment where I need to ask the one question in regards to the given scenario. Let me first add the following quote “Lewis’s ‘no shredding’ order will be seen as a sign that he is determined to get to the bottom of the problem.  It also indicates that the group fears the errors – whether or not deliberate – may extend deep into the company“, as well as “Cantor Fitzgerald analyst Mike Dennis said: ‘A discrepancy of this size suggests this is not just the behaviour of a few individuals, but behaviour instilled by the senior management team“, which is where I was all along. Is this the case and if that part was known to 1-2 insiders, could this be the reason for certain action? What if Blackrock dumped its part to cause a stronger downfall, so that they can buy it again later with a much more interesting profit curve, which makes up for a lot more than the small loss they had, what happens then?

All valid questions, I just wonder if those who have actual answers are willing to give them, because it looks like a slippery slope of massive proportions. As this happens to the one place that feeds a nation, how will the people react should evidence of intentional tampering ever be shown?

Then how angry will the people get?

 

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September 30, 2014 · 22:57

Thriving Team Tesco?

Another day, and another moment where we see the Guardian (amongst others) giving us more news on the corporation Tesco. I will be honest, I have a soft spot for Tesco, the moment issues became visible both the CEO and CLO went all out keeping everyone in the loop. It started exactly a week ago, someone miscounted 250 million to coin a phrase. People were removed and all kinds of actions were started. A few days ago in the Guardian (at http://www.theguardian.com/business/2014/sep/28/tesco-crisis-doesnt-add-up) we see additional information.

So what can be done?

First of all, we need to take one additional look at a few items. You see, as stated more than once, I am not an economist. Now I know that minus 250 million is not a small amount, yet, the article states “its profits for the first six months of the year would be some £250m lower than the £1.1bn previously indicated“, which means that they are still getting 750 million in profits, which is a lot. So why is Blackrock ‘suddenly’ pulling out like that? The shares will bounce back! That is at the heart, the fact that the shares took such a tumble, whilst making a decent profit. Let us also keep in mind that the investigation is still ongoing. I touch on one side in ‘Double Jeopardy!‘ on September 27th, less than a day before this Guardian article. In there I ask the question “I stated before, what if this was not about the event, but about the orchestration?” Is that what is going on? It is a sincere question, I do not know, yet for a company to have a lesser profit, there would be consequences, yet would it be to the extent we are seeing here? Seems like a massive overreaction in my view.

Now let us get back to the article.

“The chairman has been the leader of this organisation that seems to have failed at every turn, was the assessment of David Herro, chief executive of US fund manager Harris Associates“, perhaps this is true, yet he is not there alone, why are the other members of the board not speaking out? This is not a boys club where you wash my back and I wash yours….real hard!

So, there seems to be a few issues, yet, this is at the top, so this means we are looking into several layers before we get to lower management. Either they have no clue, or they do not care. I am actually puzzled by the thought on what might be worse. What is a given is that Tesco is bleeding. Unlike those paperback investors, I like a puzzle and I want to solve it. How can this be turned around? First of all, to create places of peace, certain issues need to change, with the unemployment numbers, these people can either get on board, or leave the company. Greed will be stricken. Which means that this quote “The list includes disputing or delaying payment of invoices for more than 120 days; cutting a product’s price and then demanding compensation to maintain the profit margin; and demanding upfront payments in exchange for hitting sales targets that do not materialise” this can no longer be a method of operation. To get Tesco safe, the board will need to change methodology and remove anyone who is not on board; in addition, payment delays should be trimmed back to no more than 60 days. It is just absurd to get payments settled outside of the quarter to that extent. To truly become a contender, why not revamp Tesco Mobile? iiNet went from ‘seems to exist‘ to the number two in the Australian market by offering ACTUAL deals they left the rest behind them almost overnight, this means a mobile, not unlike the current offers, but with 1Gb data at £19.90 a month, Now we are starting to build a customer group! As I look at the different business groups, Dave Lewis might want to change a massive option, if they allow for the iiNet approach in the UK, Tesco Mobile could become more than a contender. Some might say that at this point it is not a good idea to make large changes. I disagree, this is the best time! As some of the rats are leaving the ship, why not upgrade the ship from cargo vessel with passengers, into a ferry with a large cargo hold. As you grow the passenger, all needing your cargo, you will offer a massive footprint with a loyal based cloud transporter. London is one of the largest mobile workforces on the planet. Use this as consumer strength!

There are a few more Australian approaches that could rock the foundation and make the future a stronger reality. It starts by changing the entire premise on how business is done. The Tesco bank seems to have overlooked options for both funeral insurance as well as the Wester Union approach, which many banks are overlooking, yet such a presence to such a service makes perfect sense in a shopping mall/supermarket. Consider that Western Union made over 5 billion in the last year, this gets us a net profit of around 14%. In the end good business is where you find it!

There are a few other options, but overall. There are several things Tesco can do, even if it was for the sheer fun of seeing Blackrock lose out on a good deal. If profits were lower than now this presently seems to be a likely fact. The reaction that some have now pushed for seems too much overkill, especially when you realise that they are measuring events and Tesco is in trouble, but not in the size and scope that Neil Woodford and Blackrock seem to imply it to be. Consider that Blackrock has over 4.5 trillion dollars in Assets under management. 250 million seems like a mere drop in the ocean. So, that there is no misunderstanding! The assets under managements represent 4,500 billion, the adjustment for Tesco is 0.25 billion,

Yet, instead of whinging about that part, why can we not do something to strengthen the Tesco position? It is all good and fine to be the sideline quarterback and comment on every aspect of the game, but what can be done to get the game going and to improve the game? One idea is to see if the Australian iiNet solution could work in the UK. It is only one of the options and that would lower mobile expense tensions by a roughly stated 57%, so the numbers are all on a level where the top 6 mobile and broadband providers will feel a new level of pain as they see their people run towards the upgraded Tesco Mobile provider.

It would be a start, but will it be enough?

No matter what we do and the amount of ‘more’ we create, there are fundamental issues that need to be addressed. How a company decided to run without a CFO for that long will be cause for questions, and perhaps even cause for investigations into criminal negligence. Consider that a company is set to structure, order and reporting pressures, how can a firm be without a CFO for six months? This is not at the heart of the matter, yet there is an overall level of concern in that mere part of the entire mess. In addition the quote “Although the investigation into Tesco has only just begun, analysts think the Albert Heijn scandal, which had woeful corporate governance and aggressive earnings management at its heart, provides an interesting history lesson, if nothing else.” Is that enough? There is an overly eagerness to appease shareholders and stakeholders far beyond the point of acceptability. If you consider opposing that (which might be valid), then consider how the numbers had been inflated by 29% just to keep the wealthy masses happy.

So, improving Tesco will require another level of changes. That part is seen in the Guardian article by Aditya Chakrabortty (at http://www.theguardian.com/commentisfree/2014/sep/29/tesco-accountants-auditors). It is quite a witty style of writing and well worth the read. One of the more interesting quotes was “He found a bunch of men well aware of the boredom of the audit and of the shortcuts they were forced to make“, so how does that work when we consider “Tesco paid PwC £10.4m in the last financial year – plus another £3.6m for other consultancy work“. Was that not enough? You see, this reminds me of some conversations I had in the 90’s. How short sighted Americans truly believed how business can grow, with the same staff, by 20% annually. Prices had to remain the same, to remain competitive. But as short sighted as they were (being sales people); they forgot that the time of a consultant is finite. It is measured in time (you know, that pesky 60 minutes in an hour scale), so as they are set at 90% billable, it means that by year three you’ll have to work an average of 57 hours a week (whilst getting paid 40 hours). It seems that there are levels of short cuts set into place to get results completed, whilst there is no proper investigation on the amount of work that needs to be covered. It is only one cog in the entire failing machine and if Tesco is to stand up from this, illustrating and changing the entire approach to how accountancy is done seems like a logical next step, especially considering that the PWC pass never spotted 29% of inflation somehow.

It is my opinion that the entire system has been duct taped for far too long. This now falls back onto the desk of the Chancellor of the Exchequer George Osborne.

You might ask why.

It is clear that Tesco is the most visible one, but I feel 99.5336% certain (roughly) that they are not the only one. As the British Cabinet minister responsible for all economic and financial matters, it stands to reason that if the economic recovery is to be preserved and maintained, we will need to make certain that not too many sheep fall of the paddock. This means taking a look into these regulations and more important, if (according to the article) 90% of all audits is done by the big four, seeing 25% fall of the reservation should be ample reason to forego sleep for the foreseeable future (sorry, Mr Osborne, that is why they pay you the extra £26.90 a week!).

It is clear that actions need to be taken, but it is also pretty curious how there is a massive amount of bashing on Tesco, whilst PWC is not getting the spotlight as much, can anyone explain that? Let’s be clear here, it is very possible that this is all due whilst PWC has not been involved at all, so this is not about their optional guilt, it is however valid to ask how some involved thought of pulling this off, it seems that a whistle-blower started all this, yet did no one else notice, did PWC (Price Waterhouse Coopers) have ZERO visibility that something was going on? And, let me be clear, it is very possible that nothing was visible at their last audit, which means that these systems had to be orchestrated and specifically edited to not raise flags, mainly because 250,000,000 is just too much, it would require over 5 billion rounding issues for this to be validly invisible, I reckon we can ignore the likelihood of the latter scenario.

Can Tesco become a team again? Yes, but it requires a massive sanitation of the board of directors as well as the higher managers. One final thought here, they were without a CFO for 6 months, was number two in that hierarchy (whomever reported to the CFO) not on the list, the longer I consider the facts and the numbers, the more I feel that this has been going on for some time to inflate something to this amount, did previous audits not pick anything up?

Can Tesco be a team again? Yes, but compartmentalisation needs to be removed, there needs to be overlap of high directors as well as a fundamental change in communications.

Can Tesco thrive again? I would think so if the previous two points are dealt with and adding the iiNet solution to Tesco might be needed sooner rather than later.

By the way, Mr Lewis, if you read this, consider that this mess came about whilst Philip Clarke made £1,171,000 a year, I reckon that my good insights and ideas are worth a mere 20%, especially if my Tesco mobile solution helps you gain more momentum in the mobile field.

 

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September 27, 2014 · 10:07

Double Jeopardy!

Let’s take this article in a different, artistic, free for all spin, where we (reader and writer) need to look at the facts and see what seems to be behind it. Now we all agree that when I say ‘what seems to be’ is of course open to some interpretation and it is JUST one view. For example, if we take Dr Who and his TARDIS, or as some know it the story of a mad man and a box, we are left with two thoughts ‘Is it bigger on the inside?’, or is it ‘Smaller on the outside?’, so: ‘Run you clever boy!’ (girls too) and get to the end of this steeple chase!

When we look at how the news was given yesterday as voiced by Sarah Butler and Sean Farrell (not related to Gerard Butler or Colin Farrell as far as I can tell), we see a strange change in pace. Now the issues we see here call in for some additional worries and considerations.

Business for £100!

“In light of the write off of 250 million, we see that a loss of 3 billion due to stock pressure has been found, whilst rating agencies like Fitch are now calling for a lot more transparency“.

“Why must Tesco Reinvent themselves?” (at http://www.theguardian.com/business/2014/sep/26/tesco-must-change-culture-reinvent-brand)

Yes, that was indeed the correct question. Now, we see that actions are getting taken and overall, the top dog (aka Dave Lewis, not related to Inspector Lewis of the Oxfordshire police department) has been on top of this since the earliest moments. Yet when we consider the quote “On Friday shares in Sainsbury’s, Morrisons and Tesco all fell in response to further evidence of difficulties in the market and bearish comments from one of the UK’s most influential fund managers“. I have, to a partial degree, an issue with Woodford. Yes, he made billions and yes, he has called it a few times, yet overall, this came out of the blue (or so it seems). The fact that Woodford had no money in this does not make it a case, what is the issue is the entire trip of reinventing, whilst this was all an implied accounting irregularity. So is this more, or was that an assumption by some of the players? If the four managers are gone and this is about a lot more and for a lot longer, then the question become why? I stated before, what if this was not about the event, but about the orchestration? Investigations need to be completed before we can say anything of value here, but the facts seem to bear out that this, not unlike libor was about a few people and no transparency or oversight. This calls for alterations and modifications. When we hear the quote Dave Lewis made “Turning our business around will require change in our culture, as well as in our processes and our brand proposition. We want to work in a business which is open, transparent, fair and honest. We all expect Tesco to act with integrity and transparency at all times“, then we see an implied event that points towards the fact that there was more and must be dealt with too. The question then becomes what do we not know yet?

So, now we go to International politics for £250. “The Palestinian president, Mahmoud Abbas, is calling for the UNSC to set a clear deadline for Israel’s withdrawal from the West Bank”

“Why has Palestinian president, Mahmoud Abbas (aka Abu Mazen) entered into a joint government with Hamas?” (at http://www.theguardian.com/world/2014/sep/26/mahmoud-abbas-un-israeli-withdrawal-occupied-territories)

Yes, that is indeed the question, although the answer is less simple, Mahmoud Abbas keeps on ‘ignoring’ the simple fact that Israel reacted to missiles fired from the west bank into Israel. This is at the core why Israel has had enough, when you get a barrage which comes down to well over 3 missiles a day for an entire year, at some point people have had enough and they come calling with a rather large piece of Willow (aka Cricketbat). When we hear Mahmoud Abbas talk about “a just peace through a negotiated solution”, I recall that man in Liverpool who claimed to have invented a game that in certain respects is a bit like cricket. What he doesn’t know is that the England team has been playing it for years. Mahmoud Abbas is so bend on getting into as many organisations within the UN as fast as possible, also calls for questions that many are not asking. My issues with all that is that at present, Hamas (or Abbas) have broken every seize fire, only when they learned that no one was interested in their insincere crying, did Hamas realise that their extinction had become an international acceptable solution, proving the target is a terrorist organisation. Now we get the speeches, yet the underlying issue of missile acquisition and delivering them through tunnels has still not been dealt with. The additional side is what has had Israel ‘upset’ for some time now. Iran who claims to be peaceful and is so ‘deserving’ of nuclear power, shows the side we knew would come. Even though they talk about Nuclear power for energy only, the fear Israel had is shown with the quote “Two senior Iranian officials told an Arabic-language television channel on Monday that Tehran has supplied missile technology to Hamas for its fight against Israel“, So as other players up the ante for Israel, the consequences for Mahmoud Abbas seems clear as well, especially after the quote “There’s a reason that Abu Mazen entered into a joint government with Hamas“, which leads me to the question Why is Mahmoud Abbas allowed into the UN building, or into America at all. Was there now a clear consequence to be labelled a terrorist? This part gets another uncomfortable side (at http://www.gatestoneinstitute.org/4392/isis-gaza), I cannot vouch for the supplier of the news, so that part MUST be considered to be an issue. Yet, the quote “Hamas prevented local journalists from covering the ISIS rally in the Gaza Strip last month as part of its effort to deny the existence of ISIS in the Gaza Strip. But Hamas seems to be trying to cover the sun with one finger” gives ample weight to both the desperate (could just be frantic) acts by Mahmoud Abbas to get into bed with the UN as much as possible. If ISIS is indeed already active in Gaza, then the ante for Israel is now a lot higher than many thought it was (I am still having a question mark with the validity of that intelligence). I did cover the risk to some extent in ‘Puppet on a string!‘ on July 30th 2014, yet my disagreement with Lt. General Michael Flynn was not on that, the fact that he seems to have been spot on in regards to something worse is indeed coming to fruition, yet the fact that Hamas is losing to ISIS on their home turf is also a worry (one I did not see coming that fast), because we now see that changing the balance in the Middle East (or Arab Spring as some call it) seems to have had several adverse effects, changing the gameplay in a game many did not understand to begin with.

If this is all correct, then ISIS is now confirmed in both Gaza and Sinai, which means that the next step to this scenario is Jordan, before Israel becomes a target. Here we see a possible disaster in the making, as ISIS could have access to recruitment and slaughter of up to 600,000 refugees. The question becomes, how many would they recruit and where will they then head to next?

If this is a case of Double Jeopardy, then who is getting set on trial twice? The refugees, Israel of Palestine? In this game, people can get trialled twice, almost like a bad episode of Big Brother. The danger here is that the eviction will lead to housing in the cemetery, which might look cheap but the living space truly sucks!

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September 23, 2014 · 10:58

Tesco, the Lehman way

It’s all the buzz
It’s all the rage
What Lehman did once
On a grocery stage

So cabbage that cherry
and settle that sprout
and if you want balance
you’ll fall on your snout

So be not afraid
for them closing the doors
bring coins to Tesco
250 million and it’s yours!

Yes, another day in the works for the CFO’s of the world. Did anyone imagine, when the Lehman brothers had their methods of inflating their economy it would be all the rage. So much so that it would even come to a grocery near you?

Well, as we see the Guardian (at http://www.theguardian.com/business/2014/sep/22/tesco-investigators-overstating-profit-250m) announces how Tesco overestimated their profit. Let’s be honest, 250,000,000 is just a number, if you say it really fast it doesn’t seem like much (you should actually really try to say it fast 5 times).

Now, they will fork out additional costs as they have requested DeLoite and Freshfields to take a look at all this.

It would be nice to bash them ‘board’ members around a little more, but it seems unfair because when we see Dave Lewis and how open he is on what has transpired, we should wonder what comes next. The fact that he was alerted by the CLO only adds to the confusion here. Not confusion in a bad way, but actual confusion. First of all, let’s have a round of applause (seriously!), for Dave Lewis to bring this out into the open. I believe that it will remove pressures and I feel certain that the body blow the stock gave them will settle and likely return, perhaps even a little stronger. We should expect a Chief Legal Officer to act in this way and seeing it so is just a builder of confidence. Yet, I stated confusion, which I remain true to.

Even though these matters are in place and also the fact that the new CFO is not joining them until December 1st, we should ask what elements were in play with the old CFO leaving. The BBC throws a few more logs on the fire (at http://www.bbc.com/news/business-29306444). There are facts between the emotions of people. When I read “Professor Ajay Bhalla of Cass Business School said ‘things could not be worse for Tesco’s management and shareholders’“. Sounds nice BBC! Was this the only expert you could find willing to speak out? What do the people at the London School of Business say?

I have other questions too. Where were Chris Bush (Managing director UK) and Mike McNamara (CIO)? Did they not notice the 250 million ‘offset’? Let’s not forget that this 250 million pound caper represents 10% of the ENTIRE Tesco Group profit. That is way too large a number to be this unnoticed by too many on the high level. In regards to the CIO questions will also rise on what data was used, how it was collected and how it was ‘mined’ for the ‘information’ nuggets in the end. Be very wary of what I state here. I am not accusing, or considering their involvement or guilt. Yet, if reports are based upon numbers, which comes from data files, how was all this achieved? There is an entire internal track that should be examined and not just by the two fore mentioned ‘guests’ of the Tesco system. The list of the members of the executive committee seems unbalanced as well, we see all these commercial players, marketeers and even a Chief Creative Officer, however on the other end there is only one Chief Information Officer. Where is the CTO? Where is the CDO (Chief Data Officer)? As I see it, when you have your global groceries and your banks, one CIO just does not cut it, you need two more to create a wall to ‘prevent’ these commercial boys (and three girls) into becoming a little too over enthusiastic. Hurray for Dave Lewis (not Dave Allen), for taking the Bull by the horns and acting the right way. The Guardian informs us of a few other interesting choices, but the two parts that did raise a few issues were “He said the problem was not in the ordinary course of events and that rules may have been broken” and “Analysts pressed Tesco’s chairman, Sir Richard Broadbent, about how the accounting problem went undiscovered until just over a week before the planned announcement of first-half results. Clive Black, an analyst at Shore Capital, said Broadbent’s position was untenable because he had left the board without a finance director“.

Was it that simple? You see, the Lehman reference is there for a reason, they did all these naughty things, yet never actually ‘broke’ the law. a better quote in that regard is one I read a little while ago “Just because an action is legal does not always mean that it is ethical“, which is at the heart of this here. There are two sides, not just that Tesco was without a CFO, but this situation implies that those directly below the CFO, who have been there until now (my assumption) is that they either did not know or did not care what was going on. These are questions that clearly need additional investigation. It is also cause for my opposition to Clive Black, the Shore Capital analyst. A good machine should be able to continue running if a head falls away (for whatever reason); if the machine is sound this would not have happened. So as Mr Black looks at one person, it is my personal believe that the machine itself is not up to scrap. This is partially due to the lacking presence of a CTO and a CDO, the last one is essential when you see someone like Tesco, where the grocery and banking branch are now intertwining. That issue will be more and more essential to other areas where larger players are now doing much more, whether it is banking, insurances or mobile communication. The overlap makes the need for a Chief Data Officer more than just essential.

Even though four people have been suspended there is one more person that needs to be looked at. When I say this I mean not as in suspension, but an investigation into her role seems to be essential as well. In this case I am referring to Rebecca Shelley, the Group corporate affairs director. If we look at the Tesco Governance structure where it states “We have two Committees responsible for ensuring that we live up to our commitments and responsibilities. Our Social Responsibility Committee (see below) is led by our Chief Executive, Philip Clarke, and is responsible for driving our strategy and monitoring our progress. Our Corporate Responsibility Committee, which includes Non-executive Directors, defines our corporate and social obligations as a responsible business. As outlined in his introduction to this report, Sir Richard Broadbent has handed over the Chair of this Committee to Jacqueline Tammenoms Bakker“, which is at http://www.tescoplc.com/index.asp?pageid=168. The role of Rebecca Shelley, in my view should have been more central with inclusion in the financial matters as well (perhaps she was). Even though her role would only have been ‘to be aware‘ it is likely that whatever game was played could not have lasted, or remained this hidden if she would have been part of the reporting side. Is that not a corporate affair?

So as we look at what happened and how to stop it, I think it is also important on how things were meant to run and how they should be run in light of the branching of Tesco. It also lights one other aspect. I reckon the outspoken actions of Dave Lewis might be rare, which means that Tesco is not the only one where there has been an issue of overstating. Who else played and how is compartmentalising in these events is a lot more dangerous than people outside and inside the circle regard them to be.

In the end we should all form our own minds on events when they take place and I hope that this blog raised several questions on things some got away with and more important how things can get better when people like Dave Lewis pick up the issues and goes for them, camera’s and image be damned!

 

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