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Tesco crisis deepens as sales fall and new CFO joins

Tesco, the U.K. supermarket chain battling an apparent £250 million ($409 million) accounting error, has announced its new finance director will start three months earlier than planned.

The crisis at the retailer goes much further than its accounting, as demonstrated by the 4.5 percent sales decline in the 12 weeks to September 15, compared to the same time in 2013, according to figures from Kantar Worldpanel Tuesday. Its market share was further eroded to 28.8 percent over the same period, from 30.2 percent, as discounters like Aldi and Lidl took advantage of the weaker euro to compete aggressively on price.

Alan Stewart, who was previously chief financial officer at the clothing retailer Marks & Spencer, had been serving out his gardening leave before planning to join rival Tesco in December.

He will now begin on Tuesday, after new Tesco Chief Executive Dave Lewis discovered the company had overstated its half-year profits by £250 million ($409 million).

Four executives at the top of Tesco's U.K. operations have been suspended pending an investigation by accountants Deloitte into the overstatement of profits.

The blue-chip company's share price plunged 12 percent in early London trading on Monday, amid growing concern from investors about its governance.

What problems does Tesco face?

Takeover bid?

There were even whispers in the City that the once unassailable supermarket chain, the world's third largest, might be vulnerable to a takeover bid. Its market value is now less than half of its 2007 peak.

Chairman Sir Richard Broadbent, a City grandee who has been in the job since December 2011, has become the focus of discontent. He told reporters Monday it is up to shareholders to "decide... whether I'm part of the solution or part of the problem".

"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 lopsided between executives and non-executive directors for far too long," Clive Black and Darren Shirley, analysts at Shore Capital, argued in a research note.

Tesco's board is mainly made up of executives with finance - rather than retail - backgrounds, including several who have served as chief financial officers at other FTSE 100 companies, which makes the apparent discrepancy in its U.K. accounts more troubling. There is also a separate executive committee composed of Tesco management.

Another issue which may arise further down the line is whether the supermarket giant can claw back some of the millions of pounds paid to departing chief executive Philip Clarke and chief financial officer Laurie McIlwee. Dave Lewis, Clarke's replacement, refused to rule this out yesterday.

- By CNBC's Catherine Boyle