Tesco to face fraud investigation
The Serious Fraud Office is to launch a criminal investigation into the accounting scandal at Tesco, which led to a £263m profit overstatement.
Sky News reports that the investigation will be announced later this week and would follow an investigation by the Financial Conduct Authority (FCA) and confirmation by the Financial Reporting Council (FRC), that it is carefully considering a full inquiry.
The Serious Fraud Office and Tesco both declined to comment on the reports.
Tesco’s shares have dived since the retailer admitted last month that a whistleblower had identified an issue with how the retailer booked payments from suppliers. A team of forensic accountants from Deloitte was then bought in to investigate. They established that the estimate of first-half profits that Tesco gave the City back in August was artificially inflated by £263m.
Deloitte said £118m of the figure related to the first six months of the current financial year but that £145m related to previous years.
The inquiry triggered the suspension of eight senior executives, including Chris Bush, the head of the UK food business. None has yet been reinstated.
According to the Guardian, Deloitte concluded that supplier payments had been pulled forward or deferred in a manner that was contrary to Tesco’s accounting policies. It also found there had been similar practices in prior reporting periods and that the sums pulled forward grew period by period. The report is being shared with the FCA and FRC. Major suppliers to Tesco have also asked auditors to look into their dealings with the retailer.
This story has been added to our corporate database. The database powers all our live product guides, giving the score for each company on our rankings tables. Find out more about how we rate companies.
Ethical Consumer on Google+