Accounting scandal to cost Tesco £129m

Jack Ridsdale

By Jack Ridsdale

April 11th 2017 at 11:02AM
UPDATED April 11th 2017 at 3:21PM
Accounting scandal to cost Tesco £129m

The high court has approved a settlement between Tesco and the Serious Fraud Office for accounting irregularities.

The high court has approved a settlement between Tesco and the Serious Fraud Office that proposes Tesco pay a £129m fine for an accounting scandal.

Sir Brian Leveson approved the so-called deferred prosecution agreement (DPA) at a hearing on Monday. The DPA, allows the company to suspend a prosecution in return for meeting specified conditions, such as paying a fine and demonstrating that its culture has changed.

Tesco has not necessarily admitted fault, as entering into a DPA does not require an admission of wrongdoing.

The DPA relates to allegations of false accounting between February and September 2014 against Tesco Stores Limited, a subsidiary of the retailer.

 

Tesco admitted in 2014 that it had overstated profits by £326m, triggering a crisis at the company. This overstatement was linked to how it booked payments from suppliers. The ruling means that Tesco will pay out £235m to settle investigations into the 2014 accounting scandal.

As well as the £129m, it has separately agreed with the Financial Conduct Authority to pay about £85m in compensation to investors affected by a trading statement on 29 August 2014 that overstated profits. Tesco will also pay legal costs associated with the agreements.

“I want to apologise to all those affected. What happened is a huge source of regret to us all at Tesco, but we are a different business now,” said Dave Lewis, the chief executive of Tesco in a statement last month.