Tesco is to pay a penalty of £129m after reaching a deferred prosecution agreement with the UK’s Serious Fraud Office.
The agreement relates to false accounting committed by Tesco’s subsidiary Tesco Stores from February to September 2014. The agreement is a voluntary arrangement and means Tesco will not face prosecution, subject to final judicial approval on 10 April.
In an unusual move, Tesco has also agreed compensation for shareholders of 24.5p per share plus interest, an arrangement reached with the Financial Conduct Authority after agreeing a finding of market abuse in relation to a company statement made on 29 August 2014.
Dave Lewis, Tesco Group chief executive, said: “Over the last two and a half years, we have fully cooperated with this investigation into historic accounting practices, while at the same time fundamentally transforming our business. We sincerely regret the issues which occurred in 2014 and we are committed to doing everything we can to continue to restore trust in our business and brand.”
Accounting problems at Tesco surfaced in October 2014 when the company announced that profits had been overstated by £250m. It also suspended eight executives. The scandal resulted in Tesco’s market capitalisation reducing by around £2bn.
In the same month the Serious Fraud Office said that it was investigating the company.
Dave Lewis took over at the helm of Tesco after leaving Unilever in September 2014. Chairman John Allan took over the board in March 2015.