Towards the end of 2014 the UK supermarket giant Tesco found itself embroiled in a major fraud scandal after it emerged that senior executives have overestimated the company’s profits by some 263 million pounds or about P400 million.
The exposé came about just a few weeks after the arrival of new chief executive Dave Lewis, who was brought in to turn around falling sales and profits at what is Britain’s biggest retailer. It came to light when a team of forensic accountants from Deloitte established that the estimate of first-half profits that Tesco had given the City back in August was artificially inflated by that amount, determining that only £118m (P180 million) of the figure related to the first six months of the current financial year but that £145m (P220 million) related to previous years. The inquiry triggered the suspension of eight senior executives, including Chris Bush, the head of the UK food business.
Some economic analysts speculated that increasingly desperate executives were pulling forward payments in order to paint a more flattering picture of the supermarket’s finances, though Lewis dismissed the suggestion that fraud was involved, saying “Nobody gained financially as a consequence of the overstatement of performance.”
Deloitte concluded that supplier payments had been pulled forward or deferred in a manner that was contrary to Tesco’s official accounting policies. It also found there had been similar practices previously and that the sums pulled forward was growing period by period.
The criminal investigation came at a very difficult time for Tesco, struggling to cope with a rapidly changing grocery market amid new competition from discount chains and the rising influence of online retailing. The retailer had continued (and is still continuing) to lose market share while German discounters Aldi and Lidl continue to grow rapidly.
Following the revelations, Tesco revealed that first-half profits had actually plunged by 92%, to £112m, further adding to the speculation that the inflated figures had been meant to shore up confidence in the company by shareholders and the general public and hide the true picture.
If that wasn’t bad enough, the beleagured food retail group found itself in trouble yet again in February this year facing yet another investigation amid concerns that it has mistreated suppliers. UK Groceries Code Adjudicator (GCA) Christine Tacon said she had "reasonable suspicion" that the Groceries Supply Code of Practice had been breached. The GCA will be looking into the supermarket's profits and delays in payments to suppliers in a probe that is expected to take up to nine months.
Financial Times said the retailer will now face a series of allegations, including the "bullying of suppliers", invoicing discrepancies and demanding rebates in exchange for prominent positioning on its shelves.
In this latter malpractice, sadly, Tesco is not alone. Most of the larger supermarket chains are all guilty of the same unfair squeezing of their suppliers, using their clout and huge buying power to create a David and Goliath situation with one side far stronger than the other which is too weak and dependent to argue but there’s no doubt that it came as a bad time for Tesco, with the fraud investigation still ongoing.
But this week came what to many may be the biggest eye-opener of them all with the announcement that the company is about to sell off the last of the private jets used by its top executives. Jets? Plural? It would come as news to most small shareholders, much less to their cash-strapped customers, that the corporation owned even one executive jet, much less a fleet of five.
And in a statement that can only be described as ‘the bleeding obvious’, sure to invoke the astonished response of ‘you think?’, the new Chief Executive Dave Lewis admitted the planes gave the wrong image and therefore the decision had been made to put them up for sale.
To date four have been sold and the final one, a Hawker 800, will be gone by the end of next month. Its flagship seven-year-old, Gulfstream 550, costing £30million (P45m) and capable of flying 14 executives at a time was sold off earlier this month. It was the height of luxury, kitted out with DVD players, widescreen TVs and a bar plus cabins allowing executives to sleep in full-sized beds on longer journeys to America and Asia.
Said a slightly sheepish Mr. Lewis “ In future we will use chartered aircraft only if there is a compelling business justification and travel cannot be completed by scheduled airline.”â€¨â€¨There is a cruel irony here. By its very nature as a discount food seller, Tesco’s image is that of a bargain basement, cutting margins to the core and passing on its bulk savings to is struggling customer base.
Yet the truth was that its top executives were the real beneficiaries of the one-sided price war , enjoying generous salary packages and luxury travel perks regarded by most as the privilege of world leaders, rock stars and royalty whilst most of its frontline supermarket staff are earning minimum wage, as are many of its customers. But this, Mr. Lewis implies, is all in the past and he and his executives are going scheduled, just like regular people but you have to wonder.
Will any of their lowly shoppers en route to the Costa Brava for a budget break and travelling cattle class really find themselves butting up against a (literally) high-flying Tesco exec? Or will they be up front in First Class, feet up and sipping complementary champagne? I wonder?
STUART WHITE is the Managing Director of HRMC and they can be reached on 395 1640 or at www.hrmc.co.bw
The Central Bank has by way of its Monetary Policy Statement informed us that the Botswana economy is likely to contract by 8.9 percent over the course of the year 2020.
The IMF paints an even gloomier picture – a shrinkage of the order of 9.6 percent. That translates to just under $2 billion hived off from the overall economic yield given our average GDP of roughly $18 billion a year. In Pula terms, this is about P23 billion less goods and services produced in the country and you and I have a good guess as to what such a sum can do in terms of job creation and sustainability, boosting tax revenue, succouring both recurrent and development expenditure, and on the whole keeping our teeny-weeny economy in relatively good nick.
Joseph’s and Judah’s family lines conjoin to produce lineal seed
Just to recap, General Atiku, the Israelites were not headed for uncharted territory. The Promised Land teemed with Canaanites, Hittites, Amorites, Perizzites, Hivites, and Jebusites. These nations were not simply going to cut and run when they saw columns of battle-ready Israelites approach: they were going to fight to the death.
Parliament has begun debates on three related Private Members Bills on the conditions of service of members of the Security Sector.
The Bills are Prisons (Amendment) Bill, 2019, Police (Amendment) Bill, 2019 and Botswana Defence Force (Amendment) Bill, 2019. The Bills seek to amend the three statutes so that officers are placed on full salaries when on interdictions or suspensions whilst facing disciplinary boards or courts of law.
In terms of the Public Service Act, 2008 which took effect in 2010, civil servants who are indicted are paid full salary and not a portion of their emolument. Section 35(3) of the Act specifically provides that “An employee’s salary shall not be withheld during the period of his or her suspension”.
However, when parliament reformed the public service law to allow civil servants to unionize, among other things, and extended the said protection of their salaries, the process was not completed. When the House conferred the benefit on civil servants, members of the disciplined forces were left out by not accordingly amending the laws regulating their employment.
The Bills stated above seeks to ask Parliament to also include members of the forces on the said benefit. It is unfair not to include soldiers or military officers, police officers and prison waders in the benefit. Paying an officer who is facing either external or internal charges full pay is in line with the notion of ei incumbit probation qui dicit, non qui negat or the presumption of innocence; that the burden of proof is on the one who declares, not on one who denies.
The officers facing charges, either internal disciplinary or criminal charges before the courts, must be presumed innocent until proven otherwise. Paying them a portion of their salary is penalty and therefore arbitrary. Punishment by way of loss of income or anything should come as a result of a finding on the guilt by a competent court of law, tribunal or disciplinary board.
What was the rationale behind this reform in 2008 when the Public Service Act was adopted? First it was the presumption of innocence until proven otherwise.
The presumption of innocence is the legal principle that one is considered “innocent until proven guilty”. In terms of the constitution and other laws of Botswana, the presumption of innocence is a legal right of the accused in a criminal trial, and it is an international human right under the UN’s Universal Declaration of Human Rights, Article 11.
Withholding a civil servant’s salary because they are accused of an internal disciplinary offense or a criminal offense in the courts of law, was seen as punishment before a decision by a tribunal, disciplinary board or a court of law actually finds someone culpable. Parliament in its wisdom decided that no one deserves this premature punishment.
Secondly, it was considered that people’s lives got destroyed by withholding of financial benefits during internal or judicial trials. Protection of wages is very important for any worker. Workers commit their salaries, they pay mortgages, car loans, insurances, schools fees for children and other things. When public servants were experiencing salary cuts because of interdictions, they lost their homes, cars and their children’s future.
They plummeted into instant destitution. People lost their livelihoods. Families crumbled. What was disheartening was that in many cases, these workers are ultimately exonerated by the courts or disciplinary tribunals. When they are cleared, the harm suffered is usually irreparable. Even if one is reimbursed all their dues, it is difficult to almost impossible to get one’s life back to normal.
There is a reasoning that members of the security sector should be held to very high standards of discipline and moral compass. This is true. However, other more senior public servants such as judges, permanent secretary to the President and ministers have faced suspensions, interdictions and or criminal charges in the courts but were placed on full salaries.
The yardstick against which security sector officers are held cannot be higher than the aforementioned public officials. It just wouldn’t make sense. They are in charge of the security and operate in a very sensitive area, but cannot in anyway be held to higher standards that prosecutors, magistrates, judges, ministers and even senior officials such as permanent secretaries.
Moreover, jail guards, police officers and soldiers, have unique harsh punishments which deter many of them from committing misdemeanors and serious crimes. So, the argument that if the suspension or interdiction with full pay is introduced it would open floodgates of lawlessness is illogical.
Security Sector members work in very difficult conditions. Sometimes this drives them into depression and other emotional conditions. The truth is that many seldom receive proper and adequate counseling or such related therapies. They see horrifying scenes whilst on duty. Jail guards double as hangmen/women.
Detectives attend to autopsies on cases they are dealing with. Traffic police officers are usually the first at accident scenes. Soldiers fight and kill poachers. In all these cases, their minds are troubled. They are human. These conditions also play a part in their behaviors. They are actually more deserving to be paid full salaries when they’re facing allegations of misconduct.
To withhold up to 50 percent of the police, prison workers and the military officers’ salaries during their interdiction or suspensions from work is punitive, insensitive and prejudicial as we do not do the same for other employees employed by the government.
The rest enjoy their full salaries when they are at home and it is for a good reason as no one should be made to suffer before being found blameworthy. The ruling party seems to have taken a position to negate the Bills and the collective opposition argue in the affirmative. The debate have just began and will continue next week Thursday, a day designated for Private Bills.