Tesco suspends four executives over £250m accounting scandal

Dave Lewis, who became chief executive on September 1, said the discovery was a "serious issue".

He added: "This is out of the ordinary, even the auditors didn't spot it."

The problem was brought to the attention of Tesco by an "informed" member of staff, who told the general counsel. Mr Lewis was then informed and the company spent the weekend identifying the scale of the problem. The Financial Conduct Authority has been informed.

Mr Lewis is already battling against tough trading conditions in the UK and abroad, with Tesco sales falling at the fastest rate for a decade. He was brought into Tesco a month earlier than planned after a slump in trading prompted another profit warning in August.

Sir Richard Broadbent, chairman of Tesco, insisted he would not resign design the failure of governance.

"Things are always unnoticed until they have been noticed," he said.

"Shareholders will have to decide whether I am part of the problem or part of the solution."

"This is not a welcome event. No one here is having a good day today."

Mr Lewis added: "The board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear."

He insisted that the four members of staff who had been suspended were not disciplined but had been asked to step aside to "facilitate the fullest and deepest investigation possible".

Clive Black at Shore Capital said he was "flabbergasted".

He added: "Such an announcement is not the stuff of a well operated FTSE-100 organisation. Clearly there can be no suggestion of impropriety on behalf of the new CEO to our minds, who has been in the job less than a month.

"However, this development may raise, indeed must raise, much more fundamental questions over the chairman's position and the nature, composition and extent of the board, which to our minds has been lop-sided between executives and NEDs for far too long; such matters, of course, are for shareholders to decide."

"These are serious times for Tesco and its shareholders. We are flabbergasted by this development."

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