Tesco has agreed to pay a £129m fine for false accounting, rather than face prosecution.
The retailer has reached a Deferred Prosecution Agreement (DPA) with the UK Serious Fraud Office (SFO) regarding its historic accounting practices in 2014, when it overstated its expected profit.
Under the DPA – which relates to false accounting by Tesco Stores Limited between February 2014 and September 2014 – Tesco will not be prosecuted as long as it fulfils requirements including paying a £129m financial penalty.
The proposed DPA was the subject of a preliminary court ruling yesterday (28 March), with the SFO and Tesco seeking final judicial approval to the DPA from the court next month.
Tesco said it has fully cooperated with the SFO investigation and undertaken an “extensive programme of change”. This includes changes to leadership, structures, financial controls, partnerships with suppliers, and the way the business buys and sells.
“Over the last two-and-a-half years, we have fully cooperated with this investigation into historic accounting practices, while at the same time fundamentally transforming our business,” said Tesco Group CEO Dave Lewis. “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.”
Tesco PLC also announced it has agreed with the UK Financial Conduct Authority (FCA) to a finding of market abuse in relation to its trading statement on 29 August 2014 that overstated it expected profits.
The FCA stated it was not suggesting that the Tesco PLC board of directors knew, or could reasonably be expected to have known, that the information contained in that trading statement was false or misleading.
Tesco PLC has agreed with the FCA to compensate certain purchasers of Tesco ordinary shares and listed bonds who purchased those securities for cash between 29 August 2014 and 19 September 2014.
There is no penalty being levied by the FCA on Tesco.