Watchdog drops probe of Tesco accountants in £250m scandal

8 June 2020, 09:34

Shoppers queue outside a Tesco Extra
FRC drops investigation into Tesco accountants. Picture: PA

The Financial Reporting Council was examining the role of the supermarket’s internal accountants in a scandal which stretched over three years.

Authorities have ended a five-year investigation into Tesco’s accountants over a £250 million accounting scandal.

The Financial Reporting Council said it would close its probe into the supermarket giant’s accounts for the financial years ending between February 2012 and 2014.

The watchdog had set out to uncover what led Tesco to overstate its profits by £250 million over the three years.

It announced the investigation in September 2014.

It closes another chapter in the saga that has bugged chief executive Dave Lewis since just after he started in the job.

Weeks after taking the role, a whistleblower contacted Mr Lewis about a potential overstatement in the company’s accounts.

Inquiries led Mr Lewis, who announced his departure from the retailer last year, to discover a scheme that led to a black hole in Tesco’s accounts.

The business had been banking profits from its suppliers before the money actually dropped into its account.

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The Tesco accounting scandal had been bugging Dave Lewis since soon after he took up the role of chief executive (Joe Giddens/PA)

The scandal revealed a toxic relationship between the supermarket and its suppliers. Under former boss Philip Clarke, Tesco pushed its suppliers for heavy discounts, and for incentives to put their products in prominent places in stores.

Mr Lewis vowed change at the time.

The supermarket ended up signing a deal with the Serious Fraud Office in 2017. Tesco paid a £129 million fine, and £85 million in compensation to investors, and the SFO promised not to prosecute it.

Prosecutors did, however, bring charges against individuals within Tesco, but the cases later fell apart for lack of evidence.

On Monday, the FRC said: “During the course of the wider investigation, a number of accountant employees within Tesco were added as subjects.

“The investigation into these individuals was subsequently paused pending the Serious Fraud Office’s (SFO) trial of three (non-accountant) senior Tesco employees on charges relating to the overstatement.”

It added: “Following the conclusion of the SFO proceedings, and consideration of relevant material and information subsequently obtained from the SFO, Executive Counsel has decided to discontinue the matters in relation to each of the remaining subjects.

“Accordingly, the matter has been closed without service of a formal complaint.”

By Press Association

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