Britain’s Fraud Office launches probe into Tesco accounting scandal
Britain’s Serious Fraud Office (SFO) has opened a formal criminal investigation into accounting errors at Tesco (TSCO.L), raising the stakes in a scandal that has hammered the reputation of the country’s biggest grocer.
Already battling challenges on multiple fronts, Tesco said on Wednesday it had been notified of the SFO’s new investigation into the 263 million-pound ($424 million) overstatement of its first-half profits that has led to the suspension of eight senior members of staff.
Tesco is already facing one proposed investor lawsuit in the United States over the accounting irregularities caused by booking deals with suppliers too early.
Britain’s accounting watchdog, the Financial Reporting Council, is also examining how the error came about.
Shares in Tesco, which had been up about 2 percent all day, fell initially on the news by half a percent before recovering to close up 2 percent at 172 pence.
Having only recently appointed a new chief executive and finance director and now looking for a new chairman, Tesco revealed in September it had found a 250 million-pound overstatement in its first-half profits, prompting investors to dump the stock.
Then last week the group said in its delayed first-half results that it now believed the accounting hole stretched to 263 million pounds.
Chief Executive Dave Lewis, just seven weeks into the job, also said he could no longer provide a full-year profit forecast because he did not know how much it would cost to rebuild the firm, Britain’s largest private employer.
The SFO probe will replace one already being carried out by the Financial Conduct Authority (FCA) which will now be closed.
Source: Reuters-Britain’s Fraud Office launches probe into Tesco accounting scandal
