The Serious Fraud Office is likely to confirm a formal inquiry into the chain's accounting crisis within days, Sky News learns.
The Serious Fraud Office (SFO) is poised to launch a formal criminal probe into the accounting crisis at Tesco that led the UK’s biggest retailer to overstate profits by £263m.
Sky News has learnt that the agency could confirm as soon as this week that it is opening an inquiry, adding to separate investigations by the City regulator and the accounting watchdog.
The SFO is understood to have notified Tesco of its intention to formally investigate the issue in recent days, and is expected to trigger a stock exchange announcement by the supermarket giant.
The move is not entirely unexpected, but the news that the SFO is to undertake a formal probe will add to the sense of crisis at Tesco.
The company, which has lost more than half its value during the last year, has been hit by unprecedented boardroom turmoil, with the chairman, Sir Richard Broadbent, planning to quit next year.
Eight executives, including the UK managing director Chris Bush, have been asked to stand aside pending the outcome of the investigations into the accounting mis-statement, which relates to payments from major suppliers.
Deloitte, the accountancy firm, and Freshfields, Tesco’s legal adviser, undertook a preliminary probe, which was handed to the retailer’s board last week.
That report has been handed to the Financial Conduct Authority (FCA), with which Tesco said earlier this month it is co-operating.
Dave Lewis, the new Tesco chief executive, last week unveiled a fall in half-year profits of more than 90% as the company battles to recapture market share lost to discounters such as Aldi and Lidl.
Tesco has also been deserted by some of its leading shareholders, including the US-based Harris Associates and Warren Buffett’s Berkshire Hathaway, amid concern over its strategy and the state of its balance sheet.
The turmoil has forced Tesco to shore up its financial position by turning to five banks to lend the company £1bn each in order to head off the prospect of lenders calling in existing loans.
The Daily Telegraph reported on Wednesday that major consumer goods companies which supply Tesco have asked auditors to scrutinise their dealings with the retailer.
The SFO, which has powers to prosecute companies as well as individuals, has been pursuing high-profile cases against Barclays, GlaxoSmithKline and Rolls Royce, among others.
The SFO and Tesco both refused to comment.
By Mark Kleinman, City Editor: Sky News
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