Tesco chief executives could face jail after The Serious Fraud Office is investigating the accounting irregularities.
The agency has confirmed that they have launched a formal criminal investigation, which could result in anyone that is actually convicted facing up to ten years in prison.
The Financial Conduct Authority was originally investigating the allegations but have now decided to step down after The Serious Fraud Office have taken over.
“Tesco has been co-operating fully with the SFO and will continue to do so,” the retailer said in a statement.
With The Serious Fraud Office launching a formal inquiry, they have rights to now compel staff members to give evidence and also have the power to raid homes and offices. They will primarily focus on examining emails and documents and if needs be, will team up with local force to interview people under caution at police stations. At this stage however SFO have announced they are just going to “see where the evidence takes it,” taking one step at a time with this inquiry. Yet Tesco has already seen eight senior executives of the company suspended in connection to account irregularities in the past eight weeks.
Last week Retail Gazette reported that it was discovered the supermarket had been booking supplier contributions that were conditional on hitting sales targets that it was not going to reach. Further to this, last week Tesco which is Britain’s biggest retailer raised the original estimate of £250 million profit mishandling to around £263 million. They also confirmed that the overstatement had gone on longer than previously thought.
Tesco have had a testing few months recently, and last week revealed that first-half profits had plunged by 92%, to £112 million, and declined to give any guidance on the full- year outcome.
Aside from the investigation within head office of Tesco, this ongoing scandal is subsequently damaging the reputation of store managers and shop floor staff.
“We can’t solve the world’s problems but we want Tesco to always do the right thing, to inspire and to earn trust and loyalty from all of our stakeholders.” This is written on the Core Purpose and Values statement on the Tescoplc website. Dave Lewis, chief executive at Tesco who took on the role last month is now focussing on ensuring executives within the industry stop losing touch with what its customer want, and focalise on Tesco’s original brand values. Especially as the company hopes to regain customer loyalty with the golden quarter on the horizon.