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Date set for Tesco fraud trial

Member: Nifa

A date has been set for three former Tesco executives to appear in court to face charges of fraud and false accounting in relation to a scandal at the retail giant that left a ‘black hole’ of up to £326m in its accounts. All three men are charged with one count of fraud by abuse of position and one count of false accounting.

The prosecution alleges that, as senior employees at the supermarket, the men had abused their positions for personal gain. They were accused of dishonestly falsifying Tesco’s digital accounting records and its draft interim accounts by the “inputting of and/or reliance upon commercial income figures which gave a false account of the financial position of Tesco”.

The Serious Fraud Office (SFO) investigation into Tesco is ongoing and it is still possible that further individuals could face action. When the SFO announced it had charged the executives last month, Tesco said it continued to cooperate with the investigation but declined to give further information.

The SFO launched a criminal investigation into accounting practices at Tesco two years ago, after the company admitted it had overstated profits by £263m by incorrectly booking payments from suppliers. It later revised the overstatement up to £326m. The scandal was brought to the attention of new Chief Executive, Dave Lewis, by a whistleblower in September 2014, at which point a team of forensic accountants discovered that Tesco had artificially inflated an estimate of first-half profits given to the City the month before.

Once the forensic accountants were brought in, it was inevitable that the true picture would be established, as these investigative experts examine not only the accounts but also emails, notes and telephone records of alleged perpetrators. 

Author: Roger Isaacs, 21 October 2016

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