The troubles at Tesco Plc have deepened after the Serious Fraud Office announced it was opening a criminal investigation.
Earlier today (29 October), the SFO issued a statement to confirm that Director David Green QC “has opened a criminal investigation into accounting practices at Tesco plc”.
It added that, as the investigation was under way, it could not provide further details at this time.
In the light of the SFO decision, and following consultation with the SFO, the FCA announced it has decided to discontinue its own investigation “with immediate effect”.
In September, Tesco issued a profits warning after it was revealed the company had presented an overstatement of income and an understatement of costs in its statement to the market, causing the share price to tumble.
A few days after the news broke, the Financial Reporting Council issued a statement that it would be “monitoring” the situation following Tesco’s announcement closely.
The statement read: “The FRC has disciplinary powers in relation to misconduct by accountants and, through the Financial Reporting Review Panel, can also require a company to restate its financial statements.
“The FRC does not have powers to monitor or require restatement of unaudited trading statements. It will consider the outcome of the investigation announced by the company and determine whether it should take regulatory action.”
Some City investors have been shielded from the full brunt of the woes at Tesco; in August, Job Curtis, Henderson Global Investor’s manager of the City of London Investment Trust, sold half the trust’s holdings in Tesco and started to take profits on the remainder before the news broke.
Veteran fund manager Warren Buffett is the global supermarket store’s most renowned investor; according to reports in September the founder of US firm Berkshire Hathaway admitted he had made a rare mistake after he suffered losses of $750m on the news of Tesco’s accounting problems.
