Tesco faces fresh legal challenge over accounting scandal
Supermarket chain Tesco is facing a fresh lawsuit for damages from investors over its 2014 accounting irregularities scandal.
The legal action is being pursued by Manning & Napier, with the Financial Times newspaper reporting that the US investment house is claiming losses of $212m (£169m) because of Tesco overstating its profits.
The UK firm is already being sued for more than £100m by about 125 institutional investors over the scandal.
Tesco suspended eight executives in 2014 after revealing that it had overstated its half-year profit guidance by £263m.
Auditors found that the inflated profits were a result of Tesco booking profits from suppliers before costs.
The news wiped out more than £2bn from the supermarket chain’s market value.
Tesco filed a defence against the first case in UK courts this month, arguing that investors had failed to show specific instances in which they had made investment decisions based on the incorrect accounting statement, or show that senior executives at the company knew about the irregularities, according to FT.
A partner at Stewarts Law, the litigation firm leading the class action lawsuit, said Tesco’s defence “simply does not stand up”.
“We are very confident we have a strong case,” Sean Upson told FT.
Christopher Bush, former managing director of Tesco UK; Carl Rogberg, former UK finance director; and John Scouler, former UK food commercial director, were all charged with fraud by the Serious Fraud Office last September.
Tesco said later that month that it had undertaken an “extensive programme of change” following the accounting irregularities scandal.
“The last two years have seen an extensive programme of change at Tesco, but given this is an ongoing legal matter, we are unable to provide any further comment at this time,” it said.
In November, Tesco reached an £8m settlement with US shareholders, who alleged that the company had misled them about its financial health.
Source: International Business Times
