Tesco hit with £100m lawsuit over accounting scandal
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Bentham Europe, the London-based litigation firm fronting the claim, said that institutional funds have filed the lawsuit in a bid to prove that Tesco “made misleading statements to the stock market that omitted material information and which were relied on by investors when making investment decisions”.
Tesco yesterday declined to comment on the submission of the legal claim. The supermarket giant had suspended eight directors and was investigated by the Financial Conduct Authority (FCA) and the Serious Fraud Office (SFO) after it was found to have inflated profits by £236 million in 2014.
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The figure was later revised up to £326m and former chairman Sir Richard Broadbent resigned from him post following the revelations.
Jeremy Marshall, chief investment officer of Bentham Europe, said: “The mis-statement of profits led to a dramatic collapse in the Tesco share price causing substantial damage to many shareholders who manage money for thousands of investors.
“Investors have a right to rely on statements made by companies to ensure that they correctly allocate capital. The claim will assert that Tesco’s mis-statements are in clear breach of its obligations under the Financial Services & Markets Act and investors must be compensated.”
The SFO has charged three former Tesco executives over the accounting scandal, alleging that Carl Rogberg, Chris Bush and John Scouler – the supermarket’s former finance chief, managing director and food commercial head – failed to correct inaccurately inflated income figures for the supermarket. The trio are expected to appear in court on 30 May next year for a plea hearing ahead of a trial at Southwark Crown Court set for September.
Sean Upson, the Stewarts Law partner handling the case, said: “Tesco has mis-stated its accounts, and in particular its treatment of payments from suppliers, to give the appearance of static trading margins. The reality was that those margins were falling.
“Institutional investors were therefore misled when making investment decisions in respect of Tesco. This is precisely the type of wrongdoing which the Financial Services and Markets Act was designed to redress and therefore to prevent.”