Tesco hit with £100m legal claim over accounting scandal


The legal action, filed on Monday, will seek to prove that the grocer made “misleading statements to the stock market”, which investors relied upon by flattering its earnings, the Telegraph reports.

The class action is being represented by Stewarts Law and is being bankrolled by Bentham Europe, a firm that specialises in funding litigation.

The lawsuit is a setback to Tesco chief executive Dave Lewis’s attempts to put the darkest days of its accounting scandal behind the company.

Around £2bn was wiped off Tesco’s stock market value in September 2014 after the company warned that it had uncovered “serious issues” in its accounts. The company was plunged into its worst ever crisis and its market value tumbled by a further £1bn one month later when Tesco reported a 92 per cent drop in interim profits and admitted that the accounting hole had grown to £263m, greater than expected.

“The misstatement of profits leading to a dramatic collapse in the Tesco share price caused substantial damage to many shareholders who manage money for thousands of investors”, said Jeremy Marshall, chief investment officer of Bentham Europe.

“Tesco has misstated its accounts, and in particular its treatment of payments from suppliers, to give the appearance of static trading margins”, Sean Upson, partner at Stewarts Law. “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.”

Tesco was found to have booked the income it made from suppliers – as a result of agreements to put certain products on promotion and boost sales – earlier than the money was due and was found by the Groceries Code Adjudicator in January to have billed some suppliers twice in order to meet its own financial targets.

Three former Tesco directors are also facing charges of fraud brought against them by the Serious Fraud Office in relation to the accounting scandal. If convicted the three could face up to 10 years in jail.

Chris Bush, 50, Carl Rogberg, 49, and John Scouler, 48, will stand trial in Crown Court next September and have been accused of acting dishonestly for personal gain and abusing their positions by falsely inflating Tesco’s supplier income. All three men pleaded not guilty at a preliminary hearing earlier this month.

Mr Bush was Tesco’s UK managing director until the scandal emerged two years ago, while Mr Rogberg was UK finance director and Mr Scouler was food commercial director.

Tesco declined to comment on the lawsuit filed yesterday.