UK financial watchdog to investigate Tesco accounting scandal

Reuters London | Updated on November 25, 2017 Published on October 01, 2014

Britain's financial watchdog has launched a full investigation into the accounting scandal at Tesco, which wiped £3 billion ($4.9 billion) from the troubled British grocer's stock market value last month.

"Tesco will continue to co-operate fully with the Financial Conduct Authority and other relevant authorities considering this matter," the company said in a statement on Wednesday.

Tesco, the country's biggest grocer and the world's third biggest retailer, announced on September 22 that it had overstated first-half profit by £250 million - effectively its third profit warning in two months.

It suspended four senior executives and launched its own investigation, calling in forensic accountants and lawyers.

The profit overstatement, which related to the mis-booking of rebate payments from suppliers, added to Tesco's existing woes.

Industry data shows that Tesco is the worst performer of Britain's so called "big four" grocers, which also includes Wal-Mart's Asda, Sainsbury's and Morrisons , with its market share falling to 28.8 per cent from 30.2 per cent at the same time last year.

The company said in its statement that the FCA's investigation will be in addition to the independent review already underway by accountants Deloitte.

Further scrutiny of the grocer could also come from British lawmakers. The chairman of a parliamentary committee said last week he might want to grill Tesco's top executives about the accounting scandal.

Separately on Wednesday rival supermarket Sainsbury's cut its full-year sales forecast after trading fell sharply in the second quarter.

(1 US dollar = 0.6174 British pound)

Published on October 01, 2014
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