Risk & Economy » Audit » Small group of Tesco staff to ‘blame’ for £250m black hole

THE BLAME GAME being played out at Tesco over who was responsible for its misstated half-yearly accounts appears to be narrowing, as the shamed grocer is tipped to accuse a small clutch of staff for intentionally misleading its auditors.

Chief executive Dave Lewis will update investors on Thursday about the initial findings of the probe by Deloitte and Freshfields into the £250m profits black hole, as well as report its delayed half year results from 1 October.

Evidence of profit manipulation by a “small group” of staff going back more than a year appears to be emerging, rather than an accounting error. Eight senior heads, including managing director Chris Bush, have already have been suspended over the issue.

Reports over the weekend claim the profit overstatement is derived from the incorrect booking of commercial income from suppliers – conditional on hitting certain sales targets – even if those targets were not met.

Since Tesco revealed that its commercial department had booked huge payments from suppliers into the wrong accounting period, it has seen £20bn wiped off its value and its credit rating been battered.

Revered Berkshire Hathaway investor and billionaire Warren Buffett publicly declared that his investment in Tesco was a “huge mistake”, a sentiment backed up by the sale of 75 million of his 322 million shares, taking his holding down by 0.98% to 3%.

The Financial Conduct Authority has already launched a probe into the affair, while the FRC – Britain’s audit and accounting watchdog – is “closely monitoring the situation” – as is the Serious Fraud Office.

Further afield, Tesco is also under fire with the news that Homeplus, its Korean arm, is under investigation after it allegedly sold “personal information” of more than five million customers to insurance companies.

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