TescoGate: Tesco and Serious Fraud Office confirm criminal investigation

By Erin Smith

Published: 29 October, 2014

The Serious Fraud Office has launched a criminal investigation into Tesco's accounting irregularities after the retailer confimed it had mis-stated profits by £263 million.

The SFO's probe intensifies the Tesco crisis - the agency has the power to bring criminal charges against both the retailer and individuals if evidence of wrongdoing is found.

A statement on the SFO's website said: "The SFO confirmed today that the director has opened a criminal investigation into accounting practices at Tesco plc." As the investigation is underway the SFO cannot provide further details.

Tesco announced to its shareholders on its investor website: "Tesco confirms that it has been notified by the Serious Fraud Office that it has commenced an investigation into accounting practices at the company. Tesco has been cooperating fully with the SFO and will continue to do so."

The new investigation headed by the SFO's investigation means that the Financial Conduct Authority's investigation has ended.

According to the statement released by Tesco: "Tesco has been notified by the Financial Conduct Authority that, in light of the SFO investigation, its investigation will be discontinued."

In September Tesco announced to investors that it overstated profits by an estimated £250 million "due to accelerated income recognition and delayed accrual costs." Following the announcement in September four executives were suspended.

Tesco's new chief executive officer, Dave Lewis, tapped accounting firm Deloitte to conduct an independent review. Following the start of the independent review by Deloitte, four more employees were suspend include Dan Jago, the head of beer, wines and spirits.

Following the completed independent review and working concurrently with FCA investigators, last week the supermarket giant confirmed that the profits dropped 92%, resulting a shortfall of £263million.

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