Tesco set for big fine from prosecutors to settle accounting fraud scandal

 
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The accounting fraud at Tesco emerged in 2014 (Source: Getty)

Tesco could pay a fine of “well in excess” of £100m to prosecutors for the failings leading to its 2014 accounting scandal, according to sources cited by Sky News.

Lawyers are close to finalising a deal for a deferred prosecution arrangement with the Serious Fraud Office (SFO), according to Sky News.

The British supermarket giant would be atoning for a profit overstatement of more than £320m in 2014 which saw three former executives charged with fraud by the SFO in September.

Read more: Tesco faces £100m damages claim from investors

While this is not the first time Tesco has come close to a deal, a fine could finally remove one of the legacies of the scandal.

However, it still faces a battle with investors who are bringing legal action to recover what they say are lost profits. Tesco’s share price dived after the revelations first emerged.

A deferred prosecution allows firms to escape prosecution if it can make full reparation of damages. A prosecutor charges the company but then proceedings are suspended, under the supervision of an approving judge.

Read more: The SFO's investigation into Tesco is set to conclude

The arrangements were only introduced in 2014, in an attempt to emulate the US model of punishing companies for corporate wrongdoing without risking a trial.

While Tesco’s former finance chief was cleared of wrongdoing, the scandal has continued to hang over the efforts of chief executive Dave Lewis to turn the company around.

Lewis was introduced after the scandal to lead a revamp of the supermarket, which included selling off non-core assets and reducing prices to boost market share.

Tesco ended last week with its share price at 191p, still almost 17 per cent below the level before the scandal erupted in September 2014.

Tesco declined to comment on the reports. The SFO could not be reached for comment.

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