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The Wall Street Journal reports this morning that the Serious Fraud Office (SFO) of the UK has charged three former Tesco executives "with false accounting and abusing their positions, the first charges announced by the office since the investigation began." That probe has been looking into Tesco's systematic and systemic underestimation of costs and overstatement of revenues as a way of bolstering its stock price.

The story says that "the SFO has charged former UK finance director Carl Rogberg, former UK managing director Chris Bush and former UK food commercial director John Scouler with one count of abuse of position and one count of false accounting. The three men must now appear in the Westminster Magistrates’ Court on 22 September."

The Serious Fraud Office says that the investigation is continuing.

The Tesco accounting scandal resulted in the resignation of then-CEO Philip Clarke, who reportedly also has been interviewed by the SFO.
KC's View:
Let's be clear about one thing.

Regardless of who gets charged and how this thing finally ends up, it seems inarguable that executive leadership at Tesco created a culture in which it was acceptable to manipulate the books so that the company looked better and healthier than it was. In fact, it may have been necessary for employees to do that if they were able to survive.

Tesco hardly is alone in such behavior. After all, it is big headlines today about how Wells Fargo has been fined $185 million because employees opened accounts for customers who did not want them or never asked for them. They did it to build up their own numbers and meet certain goals.

Companies pull this crap all the time. Senior executives turn a blind eye to it, or implicitly approve of it, because it is all about performance, not what is right or wrong or ethical or unethical.

Now, it isn't all companies. Not by a long shot.

But when one reads about companies like Tesco or Wells Fargo and what they have done and why they have done it, can there be any wonder why so many people are losing faith in institutions that they thought they could trust?