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MPs may quiz Tesco on profits error

Tesco executives may be hauled before MPs to explain the supermarket giant's "stratospheric" error over its inflated profits guidance.

Adrian Bailey, chairman of Parliament's Business, Innovation and Skills Committee, told BBC Radio 5 Live it was "unbelievable" that a company of Tesco's size could get into such a mess.

He said bosses could be called before the committee to be grilled over the £250 million overstatement, with any inquiry likely to be extended to cover the wider UK grocery industry and its relationship with suppliers.

The UK's accountancy watchdog, the Financial Reporting Council, has said it is monitoring the situation at Tesco closely but is powerless to do anything until the supermarket's own investigation has been completed.

Tesco issued its fourth profits warning of the year on Monday in a bombshell statement that sent its shares to their lowest level in a decade.

However, backing for the embattled chain came from an unlikely source today when Sports Direct International, which is controlled by Newcastle United owner Mike Ashley, placed a £43 million bet on the supermarket's recovery.

The retailer has entered into a put option agreement over 23 million shares, representing a 0.3% stake in the supermarket business.

Sports Direct said: "This investment reflects Sports Direct's growing relationship with Tesco and belief in Tesco's long-term future."

Tesco admitted last night that finance director Laurie McIlwee has not had any involvement with the company since handing in his notice in April.

This was despite Mr McIlwee being available to carry out transitional duties until his official departure date next month.

Tesco said: "During the transition period, Laurie has in fact not been called upon by Tesco and has not been involved or had any input to any financial matters or held any position of responsibility in the company.

"A group of senior finance personnel was established to ensure co-ordination and oversight of all financial matters."

The company was forced to fast-track former Marks & Spencer finance director Alan Stewart into the role earlier this week.

The crisis has also prompted BlackRock, which is one of Tesco's biggest shareholders, to sell some of its stake in the retailer.

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