ITV's Norman Courted Over Tesco Chairmanship

Tesco (Xetra: 852647 - news) has approached the former Conservative MP Archie Norman about becoming its chairman as the UK's biggest retailer nears a decision on a crucial component of its revival plan.

Sky News has learnt that Tesco has been holding "active talks" with Mr Norman about taking over from Sir Richard Broadbent, although he is not the only candidate in the frame for the role.

The company, which is in the process of shedding thousands of jobs as it attempts to rebuild its reputation in the wake of a commercial trading scandal, is said to be keen to decide on its next chairman by the end of the month.

John Allan, the former chairman of Dixons Retail, also remains in talks with Tesco's board about the job, according to a person close to the process.

Mr Norman's name has been associated with the impending vacancy ever since Sir Richard indicated last autumn that he would step down this year.

Now (NYSE: DNOW - news) the chairman of ITV (LSE: ITV.L - news) , he spent eight years as a Conservative MP during the party's last period in Opposition.

He made his name as a businessman while chief executive and then chairman of Asda between 1991 and 2000, with subsequent roles including chairmanships at Energis and HSS, the tool-hire chain.

Mr Norman would be a popular choice among Tesco shareholders, many of whom have bemoaned the lack of retail experience on its board.

One hurdle to Mr Norman taking the role could be his existing range of international business interests, which include chairing the London operation of Lazard, the investment bank, the toy retailer Hobbycraft, and serving as a director of Target (NYSE: TGT - news) and Coles in Australia.

If he took the Tesco job he would almost certainly have to relinquish some of these positions.

Tesco's recruitment process remains fluid and it still remains possible that another person could become its new chairman.

A decision could be announced as early as next week.

Sir Ian Cheshire, the former chief executive of DIY retailer Kingfisher (LSE: KGF.L - news) , was also approached about the job but withdrew from the process after preliminary talks.

Sir Richard's intention to step down emerged after Tesco overstated profits by £263m because of its inaccurate booking of revenue from suppliers.

The Serious Fraud Office has launched a formal criminal investigation, which sources say is likely to take about a year to conclude, while the Groceries Code Adjudicator and the Financial Reporting Council are undertaking separate inquiries

Tesco suspended nine executives over the affair, four of whom have left the company, with most of the rest now reinstated.

The retailer's next chairman will have to grapple with the fallout from the supplier scandal as well as helping Dave Lewis, the new chief executive, navigate what analysts say is the toughest environment for big food retailers for many years.

Last month, Mr Lewis outlined proposals to relocate Tesco's head office, close dozens of stores and terminate its defined benefit pension scheme in an effort to save costs.

He also plans to sell a stake in Dunnhumby, its customer loyalty arm, and has announced a long-term price-cutting initiative across hundreds of core grocery items.

Sky News revealed two weeks ago that Mr Lewis had begun a cull of head office staff which is expected to involve thousands of job cuts.

The debate over Tesco's decline was recently reignited when Sir Terry Leahy, the former chief executive, blamed his successor, Philip Clarke, for "a failure of leadership".

A series of profit warnings last year led to Mr Clarke being sacked, but analysts pointed out that some of Tesco's least successful initiatives in recent years, including its expansion into the US and China, had taken place during Sir Terry's tenure.

Earlier this month, Tesco said it would pay more than £2m in "liquidated damages" to Mr Clarke and Laurie McIlwee, its former finance director, after concluding that there was no legal basis for withholding the payments.

The process of recruiting a new chairman is being led by Patrick Cescau, Tesco's senior independent director, along with JCA Group, a City headhunter.

Tesco and Mr Norman declined to comment.