Tesco Finance Chief ‘Absent For Five Months’

By Mark Kleinman, City Editor

The credibility of Tesco's chairman was thrown into serious doubt on Tuesday when it emerged that the company's outgoing finance director had not been to its head office since soon after resigning more than five months ago.

Sky News can exclusively reveal that Philip Clarke, the supermarket chain's former chief executive, informed Laurie McIlwee in writing in April that he would not be required to attend any of Tesco's corporate premises during his six-month notice period unless specifically asked to do so.

The revelation comes the day after Tesco announced that Dave Lewis, its new chief executive, had ordered an urgent inquiry into the apparent overstatement of its half-year profit by an estimated £250m.

Sir Richard Broadbent, who is coming under mounting pressure to step down as chairman of the UK's biggest retailer, said this week that he was "not prepared to guess" when Mr McIlwee had last been involved in any form of corporate decision-making.

Philip Clarke was sacked in the summer

The chairman declined to say whether it had been "days or weeks" that the finance chief had been absent.

However, insiders confirmed that no request had been made for Mr McIlwee to undertake any formal duties for Tesco since April.

One source said that he had not been to the company's Cheshunt headquarters since the week after his resignation was announced on April 4.

Mr McIlwee had also not attended any meetings with either Barclays or Deutsche Bank, Tesco's corporate brokers, or with PricewaterhouseCoopers, its auditor, since then.

Alan Stewart has replaced Mr McIlwee

The disclosure is significant because it raises questions about whether Sir Richard intended to imply that Mr McIlwee had directed the accounting practices which led to the early recognition of supplier payments in an attempt to inflate profits.

News of the earnings overstatement for the six months to August 23 sent Tesco's shares plunging and wiped more than £1.5bn from its stock market value, triggering one of the gravest crises in its history.

Mr McIlwee's resignation was announced on April 4 in a statement which said that he had "agreed to remain in his role to ensure a smooth handover to his successor".

The statement was designed to reassure shareholders that Tesco would not be left without a key executive role being occupied even as concerns were mounting about its trading performance.

However, insiders said that Mr McIlwee resigned as a director of all Tesco group companies in April.

Since then, Tesco has been forced to issue three profit warnings and oust Mr Clarke as chief executive

One investor said it was "deeply concerning" that Sir Richard had not been fully transparent about Mr McIlwee's lack of involvement with the business since his resignation.

The deepening row came as Tesco secured the early arrival of Alan Stewart as Mr McIlwee's replacement.

Mr Stewart, who had been due to take up his role in December, joined the supermarket group's board on Tuesday following overnight negotiations with Marks & Spencer, his former employer.

In a brief statement issued to Sky News on Tuesday, a Tesco spokesman said:

"We set out in April that until he left the company in October Laurie McIlwee would carry out transition activities and support handover with colleagues."

Mr McIlwee could not be reached for comment.

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