In the UK, the Guardian reports that "Tesco is facing a new threat of legal action as a US law firm asks British shareholders to join a group seeking billions of pounds in compensation for losses relating to the supermarkets’ profits overstatement last year."
The argument is that when Tesco overstated its profits and understated its expenses, it created "a permanent destruction of value to shareholders."
The Guardian writes that "The potential legal battle comes after Tesco’s admission last September that first-half profits had been artificially inflated by £250m because income from suppliers had been mis-stated. The grocer later raised that figure to £263m and admitted the accountancy problems went back at least two years after an internal investigation led by accountancy firm Deloitte.
"The overstatement combined with poor performance in Tesco’s stores at home and abroad to prompt a sharp decline in the market value of Britain’s biggest retailer. Tesco’s share price dived to a 14-year low as the Serious Fraud Office and the Financial Reporting Council both launched investigations into the accounting scandal. The grocery industry watchdog, the Groceries Code Adjudicator, is also investigating the firm’s relations with its suppliers."
The argument is that when Tesco overstated its profits and understated its expenses, it created "a permanent destruction of value to shareholders."
The Guardian writes that "The potential legal battle comes after Tesco’s admission last September that first-half profits had been artificially inflated by £250m because income from suppliers had been mis-stated. The grocer later raised that figure to £263m and admitted the accountancy problems went back at least two years after an internal investigation led by accountancy firm Deloitte.
"The overstatement combined with poor performance in Tesco’s stores at home and abroad to prompt a sharp decline in the market value of Britain’s biggest retailer. Tesco’s share price dived to a 14-year low as the Serious Fraud Office and the Financial Reporting Council both launched investigations into the accounting scandal. The grocery industry watchdog, the Groceries Code Adjudicator, is also investigating the firm’s relations with its suppliers."
- KC's View:
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It seems like they're making real efforts to reform the toxic culture at Tesco. But one has to wonder what former CEOs Terry Leahy and Philip Clarke were thinking when they were heading up a company where the priorities seem clearly got screwed up.
