Tesco bosses could face UK parliamentary scrutiny over accounting scandal: BBC

Thu Sep 25, 2014 5:31am EDT
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LONDON (Reuters) - British lawmakers might want to grill top executives at Tesco (TSCO.L: Quote) about the overstatement of profits that has thrown the world's third-biggest retailer into turmoil, BBC radio reported on Thursday.

Adrian Bailey, chairman of the UK parliament's Business, Innovation and Skills (BIS) select committee, told BBC Radio 5 Live that past and present Tesco executives could be asked to give evidence to explain the company's announcement on Monday that it had overstated its first-half profits by 250 million pounds ($408 million), wiping 2 billion pounds off the grocer's stock market value.

The overstatement related to the mis-booking of rebate payments from suppliers.

Bailey's intervention is another blow to Tesco, which on Wednesday saw major shareholder Blackrock reduce its holding in the firm to below 5 percent, regulatory filings show.

In the past few years several major companies and executives have faced high profile interrogations by the UK Parliament's select committees, including media mogul Rupert Murdoch, the chief executive of G4S (GFS.L: Quote) and energy company bosses.

Bailey said Tesco's overstatement was a "stratospheric error", adding that any probe could be extended to the wider UK grocery industry.

"We may well as a committee want to look at this. Not just at Tesco but at what is going on in the retail industry and in the relationship with the suppliers to see if the issues we came across two years ago are still there," he said.

Bailey said Tesco's auditors PwC [PWC.UL] could also be called to give evidence.

He said any calling of witnesses would come after the outcome of Tesco's own investigation into the overstatement is announced.   Continued...

Pedestrians walk past a Tesco store in Bow, east London August 29, 2014. REUTERS/Paul Hackett