Tesco fined £129m for overstating profits

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The supermarket giant has reached a deferred prosecution agreement (DPA) with the Serious Fraud Office (SFO) after a two-year investigation, reports the BBC.

The SFO said Tesco had co-operated with the investigation and had undergone an “extensive” period of change.

The Financial Conduct Authority (FCA) has told Tesco to compensate investors. The move will cost the company £85m.

The money will go to those who bought shares or bonds between 29 August and 19 September that year.

The order is a first for the FCA, although it has not imposed its own penalty, and Tesco has accepted its finding of “market abuse”.

‘Regret’

Between February and September 2014, Tesco gave a false account of its performance, leading to a trading statement on 29 August 2014 that gave a rosier view of its profits than was the case.

Tesco originally estimated it had overstated profits by about £250m, but this was subsequently revised up to £326m.

Tesco’s current chief executive, Dave Lewis, said: “Over the last two-and-a-half years, we have fully co-operated with this investigation into historic accounting practices, while at the same time fundamentally transforming our business.

“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 expects to take an exceptional charge of £235m to cover the penalty, compensation scheme and related costs.

The charge will be taken in its results for the 2016-17 financial year, which are due to be published on 12 April.

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