Tesco bosses face jail after £263 million "hole" in profits

[David Guyatt]

The hypocrisy of it. £260 million losses and a criminal investigation is under way at Tesco. Trillions were lost in the biggest banking scam ever and not even one banker was arrested.

The moral here seems to be that if you fuck with corporate profits, you'll end up in prison, but if you're a corporate and fuck with ordinary people's money, you're home free?

Tesco to face criminal probe after £263 million hole found in profits



The investigation comes after it was found that the supermarket had been overstating its earnings for some years

RUSSELL LYNCH

Wednesday 29 October 2014

Tesco's senior bosses face the potential threat of jail after the Serious Fraud Office launched a criminal investigation into the ailing supermarket's £263m accounting scandal.

[B][B]The SFO confirmed that its director, David Green, has opened a probe into "accounting practices" at Tesco following the huge black hole in the profits of the UK's biggest retailer which was first revealed a month ago.[/B][/B]
[B][B]Accountants Deloitte and law firm Freshfields appointed by Tesco found the accounting error was worse than first thought and that the supermarket had been overstating its earnings for some years.[/B][/B]
[B][B]The accounting scandal, which shocked the City, centres on the company booking deals such as rebates from suppliers too early, and deferring costs to inflate profits.[/B][/B]
[B][B]Eight senior members of staff have been suspended, representing a serious blow to a retailer gearing up for the Christmas trading period.[/B][/B]
[B][B]Tesco said it "has been co-operating fully with the SFO and will continue to do so".[/B][/B]

[B][B]The SFO's decision to launch a full criminal investigation which can take years in some cases means it is satisfied that there are reasonable grounds to suspect serious or complex fraud or bribery. The agency is likely to take months sifting through vast quantities of digital data and other evidence, while seeking to identify and trace witnesses.[/B][/B]
[B][B]Tesco's new chief executive, Dave Lewis, unveiled the overstatement just three weeks after he began the huge task of turning around the company's fortunes.[/B][/B]
[B][B]The figure is bigger than the £250m first feared, although Mr Lewis insisted last week at the firm's half-year results that there was no evidence of fraud or personal gain from the accounting manipulation.[/B][/B]
[B][B]The City regulator, the Financial Conduct Authority, is dropping its own investigation in light of the SFO's decision, although Britain's accounting watchdog, the Financial Reporting Council (FRC), is "giving careful consideration" to whether it should take action.[/B][/B]
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[B][B] The role of accountancy firm PwC Tesco's auditor since 1983 is also likely to face fierce examination, while the supermarket's suppliers have also called in their own auditors to examine whether their accounts are affected.
Tesco's shares have halved in the past year as the accounting shock comes against the backdrop of a bitter price war.
The once-mighty Tesco which sacked former chief executive Phil Clarke earlier this year has been losing ground to discounters Aldi and Lidl. It has also struggled to attract shoppers to larger, out-of-town stores as consumers trend towards shopping online and "top-up" visits to convenience shops. Tesco's overseas empire has meanwhile been struggling and seen by analysts as ripe for a sell-off to shore up the UK business.
Warwick Business School Professor Crawford Spence said: "Now that Tesco are being investigated for fraud, the FRC have yet greater reason to start an investigation into the auditors' role with regard to these irregularities.
"Tesco have been losing market share to their competitors steadily in recent years and losing value quite dramatically in their share price in recent months. Rather than fix the underlying problems, they have been playing around with their numbers to try and make things look better."
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[Magda Hassan]

Horse meat must be profitable.