Tesco payout over profits black hole ‘a drop in ocean’

TESCO’S offer of compensation to investors who claim they lost out in its £326m accounting scandal is just a ‘drop in the ocean’, according to lawyers.

Southwark Crown Court yesterday approved a £129m fine imposed by the Serious Fraud Office, under a deferred prosecution agreement (DPA), following an investigation into a black hole in its accounts in 2014. But while the SFO’s probe into the company has ended, Tesco still faces a civil lawsuit for hundreds of millions of pounds from investors.

The supermarket will pay £85m to thousands of shareholders who were misled about the company’s profits. But this covers only those investors who bought Tesco shares in 2014 between August 29 and September 19.

Lawyers acting for shareholders say the over-statements in Tesco’s accounts stretched over a much longer period – which Tesco has admitted. They want Tesco to address the wider period of admitted overstatement in the civil proceedings. Sean Upson, a partner at Stewarts Law, is leading a case involving 117 investors who want £170m in compensation from the grocer.

‘ The compensation being offered is a drop in the ocean,’ sad Upson.

‘One of our claims is for £3m, but the investor only stands to receive £10,000 from this payout. Most people are just getting peanuts.’

The deal reached between Tesco and the SFO enables the firm to avoid a criminal conviction provided it meets certain conditions and pays the fine.

But the DPA relates only the potential criminal liability of subsidiary Tesco Stores Limited and does not address whether Tesco PLC or any employees of the companies are liable.

Separately, three former Tesco executives face charges of fraud, which they deny, at a trial to be held later this year.

Tesco declined to comment.