Monday, January 24, 2022

Tesco fined £129m over 2014 accounting scandal

Tesco discount

The Serious Fraud Office has handed Tesco a £129 million fine over the 2014 accounting scandal, but has allowed the company to avoid prosecution.

The supermarket giant‘s subsidiary – Tesco Stores – finalised a deferred prosecution agreement (DPA) after a two-year investigation by the SFO.

The DPA means the grocer will avoid prosecution as long as it “fulfils certain requirements”, including paying the fine.

The SFO had found Tesco had committed market abuse when it exaggerated profits by £263 million in a trading update on August 29, 2014.

This was later revised to £326 million.

This is the latest development in the scandal after three former Tesco executives – UK boss Chris Bush, finance director Carl Rogberg and commercial director John Scouler – were charged last year with offences including false accounting and fraud by abuse of position, and are due to stand trial next year.

READ MORE: Tesco could be fined “well in excess” of £100m over accounting scandal

The trio have said they will plead not guilty.

The 2014 scandal occurred soon after Dave Lewis was appointed chief executive of the retailer, replacing Philip Clarke – who was let off by the SFO after being under investigation last year.

The SFO first began its Tesco inquiry in October 2014, recently confirmed that its probe into the retailer’s accounting practices was not yet complete.

Shareholder lawsuits relating to the scandal have also been brought against Tesco, although the retailer has settled some of these with modest sums.

The Financial Conduct Authority has also ordered the supermarket to compensate investors who had bought shares and bonds on – or after – August 29 and had held the securities when the statement was later corrected on September 22, 2014.

Lewis said: “Over the last two-and-a-half years, we have fully co-operated with this investigation into historic accounting practices, while at the same time fundamentally transforming our business.

“We sincerely regret the issues which occurred in 2014 and we are committed to doing everything we can to continue to restore trust in our business and brand.”

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