Tesco to pay 129 million stg to settle false accounting charges
LONDON: Britain's biggest retailer Tesco has agreed to pay a 129 million pound ($162 million) fine to settle an investigation by prosecutors over a 2014 accounting fraud, it said on Tuesday.
The supermarket group has struck a deferred prosecution agreement (DPA) after months of talks with the Serious Fraud Office (SFO). It will also open a compensation scheme to some investors who bought shares at the time, which could reach 85 million pounds.
"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," said Chief Executive Dave Lewis.
Tesco expects to take an exceptional charge of 235 million pounds in respect of the penalty, compensation scheme and related costs. This will be booked as an adjusting post balance sheet event in its 2016-17 results, due to be published on April 12.
The DPA - in which a company can admit to and settle any alleged offending with a fine if a judge agrees - relates to false accounting by Tesco's UK business between February 2014 and September 2014.
Tesco said the DPA was the subject of a preliminary court ruling on Monday and the SFO and the firm's UK unit Tesco Stores Limited will now seek final judicial approval for the DPA from the court on April 10.
It is a voluntary agreement under which Tesco will not be prosecuted provided the business fulfils certain requirements, including paying the fine.
Tesco also said on Tuesday that it has agreed with the UK Financial Conduct Authority (FCA) to a finding of market abuse in relation to a trading statement it published on August 29 2014.
It said that statement overstated the expected profits of the group at that time and arose from the same historic accounting practices.
There is no penalty being levied by the FCA on Tesco.
As part of the agreement, Tesco has agreed to establish a compensation scheme for those investors who bought shares or bonds for cash between 29 August 2014 and 19 September 2014, giving 24.5 pence per share plus varying rates of interest depending on whether the investor was institutional or retail.
"The cost of the compensation payable is estimated by both Tesco and the FCA to be in the region of 85 million pounds excluding interest," it said.
The supermarket group has struck a deferred prosecution agreement (DPA) after months of talks with the Serious Fraud Office (SFO). It will also open a compensation scheme to some investors who bought shares at the time, which could reach 85 million pounds.
"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," said Chief Executive Dave Lewis.
Tesco expects to take an exceptional charge of 235 million pounds in respect of the penalty, compensation scheme and related costs. This will be booked as an adjusting post balance sheet event in its 2016-17 results, due to be published on April 12.
The DPA - in which a company can admit to and settle any alleged offending with a fine if a judge agrees - relates to false accounting by Tesco's UK business between February 2014 and September 2014.
Tesco said the DPA was the subject of a preliminary court ruling on Monday and the SFO and the firm's UK unit Tesco Stores Limited will now seek final judicial approval for the DPA from the court on April 10.
It is a voluntary agreement under which Tesco will not be prosecuted provided the business fulfils certain requirements, including paying the fine.
Tesco also said on Tuesday that it has agreed with the UK Financial Conduct Authority (FCA) to a finding of market abuse in relation to a trading statement it published on August 29 2014.
It said that statement overstated the expected profits of the group at that time and arose from the same historic accounting practices.
There is no penalty being levied by the FCA on Tesco.
As part of the agreement, Tesco has agreed to establish a compensation scheme for those investors who bought shares or bonds for cash between 29 August 2014 and 19 September 2014, giving 24.5 pence per share plus varying rates of interest depending on whether the investor was institutional or retail.
"The cost of the compensation payable is estimated by both Tesco and the FCA to be in the region of 85 million pounds excluding interest," it said.
