Tesco Now a “Different Company” Says Boss, as Report Finds it Knowlingly Delayed Supplier Payments
27 Jan 2016 --- Tesco chief executive Dave Lewis has said the UK supermarket giant is a “very different company” to the one identified in a withering report, which found it repeatedly and deliberately delayed payments to suppliers in an effort to improve its financial position.
Tesco was found to have seriously breached the industry’s code of conduct to protect grocery suppliers, the Grocery Code Adjudicator Christine Tacon found in her highly-anticipated report.
Taco said she was “shocked” at how widespread the supermarket giant’s actions were, highlighting that “practically every supplier I spoke to had evidence of delays in payments”.
Tacon’s report made a series of recommendations to halt the practices.
Central to this was that the retailer should be more transparent in its dealings with suppliers.
However, she added that she could not impose a financial penalty on Tesco as did not have the authority when she launched the probe.
She said: “I found that Tesco knowingly delayed paying money to suppliers in order to improve its own financial position. The length of delays, their widespread nature and the range of Tesco’s unreasonable practices and behaviours towards suppliers concerned me."
Tesco now has a four-week deadline to say how it intends to respond to the recommendations.
Lewis responded saying: "In 2014 we undertook our own review into certain historic practices, which were both unsustainable and harmful to our suppliers. We shared these practices with the Adjudicator, and publicly apologised. Today, I would like to apologise again. We are sorry.”
"Over the last year we have worked hard to make Tesco a very different company from the one described in the GCA report. The absolute focus on operating margin had damaging consequences for the business and our relationship with suppliers. This has now been fundamentally changed."
Separately, Tesco remains under investigation by the Serious Fraud Office (SFO) into alleged accounting irregularities.
The ombudsman’s investigation started in February 2015 after an accounting scandal emerged at Tesco.
By John Reynolds
