Blog: Serious Fraud Office launches Tesco probe
Katy Askew | 29 October 2014
The UK's Serious Fraud Office has launched an investigation into the GBP263m (US$424.6m) black hole in Tesco's accounts, the retailer confirmed today (29 October).
"Tesco confirms that it has been notified by the Serious Fraud Office (SFO) that it has commenced an investigation into accounting practices at the company. Tesco has been co-operating fully with the SFO and will continue to do so," the company said.
The news is not entirely unexpected. But it will add to the sense of crisis at the top of the country's largest retail chain.
Last month, Tesco admitted over-stating profits to the tune of GBP250m after bringing forward payments from suppliers and delaying its costs.
Eight executives, including the UK MD Chris Bush, have been suspended pending the outcome of the investigations into the affair.
New CEO Dave Lewis, a former Unilever executive, was last week left to report a drop in half-year profits of more than 90% - and admitting the retailer's investigation into accounting issue had shown the over-statement was to the value of GBP263m.
Of course, the accounting issue is only part of the picture - the retail giant is also facing declining market share as it continues to loose ground to the likes of Aldi and Lidl.
The fresh probe could result in further pressure on Tesco's stock - which has lost more than half its value this year. Although, a slight gain in trade today - with shares up a little over 2% - may suggest that investors believe the company has hit rock bottom.
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