Tesco fails to see US$410m hole in first half profits

"Things are always unnoticed, until they're noticed," Tesco chairman Richard Broadbent said when asked how Britain's biggest retailer had failed to spot a £250 million (HK$3.14 billion) sized hole in its first-half profit.

It was an oversight that led to a £4 billion drop in Tesco's market value and the suspension of four senior executives. The newly installed chief executive called in forensic accountants and lawyers to find out what went wrong.

Whether conspiracy or cock-up, the scandal raises doubts over the management and financial oversight at Britain's largest private sector employer, now in the midst of the gravest crisis in its 95-year history.

Tesco had once appeared unstoppable, boasting two decades of uninterrupted earnings growth as it bulldozed its way to dominance.

It has now issued three profit warnings in two months with the latest causing the most alarm - the overstatement of its half-year profit forecast by £250 million due to the early recognition of payments by suppliers and the pushing back of costs. The senior executives who ran Tesco during its glory years of the 1990s and 2000s have all left and the board lacks retail experience.

"The chairman has been the leader of this organisation that seems to have failed at every turn," said David Herro of large Tesco investor Harris Associates.