Britain's Fraud Office launches probe into Tesco accounting scandal

Wed Oct 29, 2014 1:50pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Neil Maidment and Kate Holton

LONDON (Reuters) - Britain's Serious Fraud Office (SFO) has opened a formal criminal investigation into accounting errors at Tesco (TSCO.L: Quote), 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.

When the SFO launches a full criminal investigation against a company or individuals it has to be satisfied that there are reasonable grounds to believe that conduct might involve serious or complex fraud or bribery.

Such investigations can take years to complete.

"The SFO confirmed today that the director has opened a criminal investigation into accounting practices at Tesco plc," the independent government department said in a statement.   Continued...

 
A woman enters a Tesco store in south London October 23, 2014. 
REUTERS/Stefan Wermuth