On 28 March, the Serious Fraud Office (SFO) announced that it had reached an agreement with Tesco Stores which, if approved by a Crown Court on 10 April 2017, would result in a Deferred Prosecution Agreement (DPA) becoming effective. The DPA involves a fine for Tesco Stores £128,992,500, as well as the SFO’s full costs in prosecuting the case, which relates to a misstatement of the retailer’s profits in 2014 based on false accounting by the Tesco subsidiary. The SFO’s costs are not disclosed anywhere, though the Tesco Group expects to take a total exceptional charge of £235 million booked as an “adjusting post balance sheet event” for fiscal 2016/17.
The DPA addresses only the potential criminal liability of Tesco’s Stores. It does not address whether any liability attaches to Tesco in regards to the misstatement. The DPA is a voluntary agreement under which Tesco will not be prosecuted, provided it “fulfils certain requirements.” In cooperating with the investigation, Tesco has undertaken an extensive change programme, that includes changes to “leadership, structures, financial controls, partnerships with suppliers, and the way the business buys and sells.”
