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TESCO TO PAY COMPENSATION OVER MISREPORTING OF PROFITS

1 September 2017

Tesco has opened its £85m compensation scheme for shareholders who lost money after being misled by the company's overstatement of profits three years ago.

Around 10,000 retail investors are expected to qualify for an average pay-out of around £400 each. The scheme was announced six months ago as part of the settlement it reached with the Serious Fraud Office (SFO) and the Financial Conduct Authority (FCA).

Tesco admitted in September 2014 that it had overstated its profits by £263m. The admission, which followed an investigation into its accounting practices prompted by a whistle-blower, saw its shares drop by 20%.

It went on to reach a deferred prosecution agreement with the Serious Fraud Office in which it agreed to pay a £129m fine. The compensation scheme was part of its settlement with the FCA.

Tesco will obviously be pleased that it has avoided a criminal prosecution. But the price it has paid is a high one. And that price would not have had to be paid if it had taken serious and appropriate action to prevent wrongdoing being carried out in its name.

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