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Mar 30, 2017 10:12 AM EDT
Large supermarket group Tesco is set to pay £129 million in settlement for overstating the company's profits in 2014. This is part of a deferred prosecution agreement (DPA) with the Serious Fraud Office, in addition to an agreement with the Financial Conduct Authority to pay £85 million damages to the investors affected by the trading statement released on August 29, 2014, which overstated its profits.
Overall, the charges will amount to £235 million and Tesco has agreed to pay all legal costs associated with the agreements. Tesco chief executive David Lewis admits that the accounting scandal has affected the Tesco brand. He vows that the company commits itself to do everything to restore trust in their business and brand.
"I want to apologize to all those affected. What happened is a huge source of regret to us all at Tesco, but we are a different business now," he said, regretfully, in a statement as reported by the Guardian.
Lewis said it has been a difficult time for Tesco but, at the same time, notes that he is proud the company faced the scandal. Accordingly, Tesco will implement a comprehensive program of change with a small team set to resolve the accounting scandal and cooperate with the investigations.
This is a first for the FCA to impose compensation but it said, together with SFO, that Tesco is cooperating with the investigation. The DPA entered into by Tesco will still need the approval of the High Court. It only covers Tesco stores and does not apply to the larger Tesco group or any of its employees, according to BBC. The High Court will render a decision on the Tesco accounting scandal on April 10.
The agreements entered into between Tesco, SFO and FCA doesn't mean that the company or its employees committed an offense. This has been clarified in a ruling set forth by FCA. Meanwhile, Tesco shares were not heavily affected following reports of the settlement with analysts saying that the accounting error is rare in the UK stock market.