Tesco has agreed to pay £129m to avoid prosecution for overstating profits back in 2014.
Tesco’s subsidiary, Tesco Stores Ltd, reaches what’s known as a deferred prosecution agreement with the Serious Fraud Office, after a two-year investigation.
Tesco released a statement saying that there was ‘regret’ over the issues in 2014 and that they have been working hard to ‘restore trust’.
On top of the fine, Tesco also agreed to pay another £85m on compensation for investors which was ordered by the Financial Conduct Authority (FCA). This money will go to anyone who bought bonds or shares between 29 August and 19 September in 2014.
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Those who will be compensated would have had misleading information from a trading statement on 29th August, which could have influenced their decision to buy shares or bonds due to the rosier assessment of its performance than actually was the case.
Tesco issued a corrected statement before the markets opened on Monday 22 September, which estimated it had overstates its profits by a quarter of a billion pounds, this figure later went up to around £325 million, after two internal investigations were launched.
The compensation order from the FCA is the first of its kind, although it has not imposed its own penalty, and Tesco accepted the regulator’s finding of “market abuse”.
Dave Lewis, Tesco’s current CEO, 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.”
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