Deferred Prosecution Agreement between Serious Fraud Office and Tesco Stores Ltd published

The Serious Fraud Office (SFO) is now able to share in full the terms of a Deferred Prosecution Agreement reached with Tesco Stores Limited after reporting restrictions were lifted. Between February and September 2014, instead of working to safeguard the financial interests of the company and its shareholders, a culture existed at Tesco that encouraged illegal practices to meet accounting targets, including improperly recognised income in the UK accounts, by ‘pulling forward’ income from subsequent reporting periods.

Speaking about the case, Lisa Osofsky (director of the SFO) said: “Tesco Stores Limited dishonestly created a false account of its financial position by overstating its profits. The Deferred Prosecution Agreement clearly outlines the extent of this criminal conduct for which the company has accepted full responsibility.”

Under the Deferred Prosecution Agreement, Tesco agreed to pay a £129 million fine and £3 million to cover investigation costs. The company will also undertake and implement an ongoing compliance programme during the three-year term of the Deferred Prosecution Agreement.

After discovering issues in its financial statements, Tesco referred itself to the enforcement authorities after revealing that revenues had been incorrectly recorded as profit and made an announcement to the market.

Lisa Osofsky

Lisa Osofsky

The SFO first began investigating this case back in October 2014. Carl Rogberg, John Scouler and Christopher Bush, former Tesco employees who held senior management roles in the Tesco UK business, were charged over allegations of fraud and false accounting on 9 September 2016.

Scouler and Bush were subsequently acquitted of all charges after Sir John Royce ruled that they had no case to answer at trial. This decision was upheld in the Court of Appeal on 5 December last year. Rogberg was severed from the trial. The SFO offered no evidence at a hearing on 23 January this year and Rogberg was acquitted of all charges.

Tesco Stores Limited’s Deferred Prosecution Agreement with the SFO was approved by the President of the Queen’s Bench Division, the Right Honourable Sir Brian Leveson, at Southwark Crown Court on 10 April 2017. Interestingly, the Deferred Prosecution Agreement with Tesco Stores Limited was the fourth ever agreed in the UK.

Tesco plc has agreed to a separate £85 million statutory compensation scheme for shareholders and bondholders with the Financial Conduct Authority under the Market Abuse Regulations.

About the Author
Brian Sims BA (Hons) Hon FSyI, Editor, Risk UK (Pro-Activ Publications) Beginning his career in professional journalism at The Builder Group in March 1992, Brian was appointed Editor of Security Management Today in November 2000 having spent eight years in engineering journalism across two titles: Building Services Journal and Light & Lighting. In 2005, Brian received the BSIA Chairman’s Award for Promoting The Security Industry and, a year later, the Skills for Security Special Award for an Outstanding Contribution to the Security Business Sector. In 2008, Brian was The Security Institute’s nomination for the Association of Security Consultants’ highly prestigious Imbert Prize and, in 2013, was a nominated finalist for the Institute's George van Schalkwyk Award. An Honorary Fellow of The Security Institute, Brian serves as a Judge for the BSIA’s Security Personnel of the Year Awards and the Securitas Good Customer Award. Between 2008 and 2014, Brian pioneered the use of digital media across the security sector, including webinars and Audio Shows. Brian’s actively involved in 50-plus security groups on LinkedIn and hosts the popular Risk UK Twitter site. Brian is a frequent speaker on the conference circuit. He has organised and chaired conference programmes for both IFSEC International and ASIS International and has been published in the national media. Brian was appointed Editor of Risk UK at Pro-Activ Publications in July 2014 and as Editor of The Paper (Pro-Activ Publications' dedicated business newspaper for security professionals) in September 2015. Brian was appointed Editor of Risk Xtra at Pro-Activ Publications in May 2018.

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