The high court has approved a settlement between Tesco and the Serious Fraud Office that involves Britain’s biggest retailer paying a £129m fine over an accounting scandal, The Guardian reports.
Sir Brian Leveson approved the so-called deferred prosecution agreement (DPA) at a hearing on Monday.
Reporting restrictions mean the reason for Leveson’s judgment and details about the SFO’s investigation cannot be published.
The DPA was announced by Tesco and the SFO last month, pending approval by the high court. DPAs, which were introduced in the UK in February 2014, allow a company to suspend a prosecution in return for meeting specified conditions, such as paying a fine and demonstrating that its culture has changed. Entering into a DPA does not require an admission of wrongdoing.
The DPA relates to allegations of false accounting between February and September 2014 against Tesco Stores Limited, a subsidiary of the retailer.
Tesco admitted in 2014 that it had overstated profits by £326m, sparking a crisis at the company. This overstatement was linked to how it booked payments from suppliers. The ruling means that Tesco will pay out £235m to settle investigations into the 2014 accounting scandal.
As well as the £129m, it has separately agreed with the Financial Conduct Authority to pay about £85m in compensation to investors affected by a trading statement on 29 August 2014 that overstated profits. Tesco will also pay legal costs associated with the agreements.
Dave Lewis, the chief executive of Tesco, said last month that the settlement allowed the company to move on. “I want to apologise to all those affected. What happened is a huge source of regret to us all at Tesco, but we are a different business now,” he said.
He admitted the Tesco brand had been damaged by the disclosure of the accounting scandal, but said the company was “committed to doing everything we can to continue to restore trust in our business and brand”.
The DPA is the fourth to be completed by the SFO after settlements with Standard Bank, Rolls-Royce and another company that cannot be named for legal reasons.
Rolls-Royce agreed to pay £671m over allegations that it bribed middlemen around the world between 1989 and 2013.
The SFO said it would not comment on the Tesco DPA until reporting restrictions were lifted.
Earlier this month, David Green, the director of the SFO, warned that British businesses should not consider DPAs the “new normal” if they were caught misbehaving.
Speaking about DPAs in general, Green said: “We are an investigating and prosecuting organisation, that is what we do. But having been given this new power, which comes from a US model, and has been adapted for this jurisdiction, we will use it only in very specific circumstances.
“Absolutely crucial to those circumstances is that the company has been fully cooperative with us. If a company is totally uncooperative and sort of leads us a merry dance for four or five years by not cooperating with our investigation, I am sure you would agree that it would be almost impossible for us to represent to the judge that the DPA was in the interests of justice. Companies that don’t cooperate will be prosecuted.”