TescoGate Live: Serious Fraud Squad watching profits black hole inquiry with "interest"

By Richard Siddle

Published: 23 October, 2014

The Serious Fraud Squad has said today it is "following developments at Tesco with interest" on the back of news that the profits black hole at the UK's biggest supermarket is higher than first thought.

In today's highly anticipated half year results Tesco has revealed the overstatement of profits, that has already resulted in the suspension of eight of its senior executives, including Dan Jago, head of beers, wines and spirits, was actually £263 million and goes back much further than Tesco first reported.

Initially it was thought the profits blackhole stood at £250 million, but by writing off £75m in profits from before 2013 and 2014, Tesco has admitted the practices that led to the accounting scandal have been going on for longer than the last six months. This has already alerted the City and could result in previous results being restated.

In today's financial statement, Tesco said it has now passed the findings from the accounting investigation, conducted by Deloitte and law firm Freshfields, to the Financial Conduct Authority.

Tesco said in a statement: "The nature of the FCA investigation precludes Deloitte from continuing their work into the causes of the overstatement. The Deloitte independent review is therefore now complete. This issue raises many questions which will now be examined in the context of the FCA investigation. We will continue to cooperate fully with the FCA and any other regulatory authorities."

Talk of a criminal investigation by the Serious Fraud Squad will not help the financial uncertainty surrounding Tesco or public confidence in the overall brand.

It has also been revealed this morning that bonuses will be withheld for former chief executive Phil Clarke and former finance director Laurie McIlwee while the investigation continues.

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