Tuesday, 28 March 2017

Tesco fined £129m for overstating profits

Tesco has agreed to pay a fine of £129m to avoid prosecution for overstating its profits in 2014.

Its subsidiary, Tesco Stores Ltd, reached what's known as a deferred prosecution agreement with the Serious Fraud Office after a two-year probe.

Tesco said there was "regret" over the issues of 2014 and said it has been working hard to "restore trust".

The firm also agreed with the Financial Conduct Authority (FCA) to spend £85m on compensating investors.

The money will go to those who bought shares or bonds between 29 August and 19 September in 2014.

Those investors would have had misleading information from a trading statement on 29 August, which gave a rosier assessment of its performance than was actually the case.

Tesco issued a corrected statement before the markets opened on Monday 22 September, which estimated it had overstated profits by about £250m.

The revelation sent the retailer's share price plunging and sparked two internal inquiries.

Even that was not the full story, the overstatement was subsequently revised up to £326m.

The compensation order is a first for the FCA, although it has not imposed its own penalty, and Tesco has accepted the regulator's finding of "market abuse".

The SFO said Tesco had co-operated with the investigation and had undergone an "extensive" period of change.

Tesco's current chief executive, Dave 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."

BBC     News.