Year after year after year, Tesco has supposedly made massive profits. No doubt these resulted in extremely generous bonuses for Tesco bosses.

But, oops, we now find out that Tesco has problems in its Chinese business, problems in its Thailand business, its US business is a disaster and its core British business is suffering badly and making a loss. Moreover, we’re now told that Tesco’s profit figures for the last few years – the ones that probably earned Tesco bosses big juicy bonuses – were smoke and mirrors, mostly built on false accounting, hugely inflating property values and all sorts of other jiggery pokery and Tesco shares have tanked:

tesco-death-spral

I used to know one of the key figures behind Tesco’s business. I used to work for him in another company. But for legal reasons, I probably shouldn’t reveal too much. But let’s just say that the person was a top Tesco executive and really smart. A cynic might conclude that people like that tend to know what’s going on. If Tesco’s previous wonderful profits were largely thanks to fiddled figures, people like that are smart enough to know what is really happening.

So, perhaps Tesco’s former bosses were well aware that their reported results were total bllx? Perhaps not?

But are Tesco’s new bosses fooling us yet again?

Most of Tesco’s latest £6.4bn loss has come from writing down the value of its assets. Tesco’s new boss seems to be “kitchen sinking” – getting absolutely all the bad news out so he can start rebuilding the company. But are these massive write-downs truthful or exaggerated? I don’t know.

However, judging by the management culture at Tesco, please don’t be surprised if this is just a paper write-down of property and other values to create an artificially large loss this year which can conveniently be blamed on Tesco’s previous management.

Then in the next few years, as Tesco’s business starts to rebuild itself, the value of those properties and other assets will rise, as if by magic, allowing the new management to claim that profits have increased dramatically and they have ‘saved’ the company:

tesco fiddling

Therefore they will get huge performance bonuses, the shareholders who buy the shares now will see the value go up substantially, and all the thicko journalists will be singing the praises of this wonderful new team at Tesco.

As for me. I’m buying some Tesco shares as I suspect that Tesco’s new management have overdone the doom and gloom with their £6.4bn loss and set themselves up for a massive payday when they ‘heroically’ reverse the company’s decline.