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26 Jan 2016 05:08pm

Tesco slammed over supplier payments

Tesco deliberately delayed payments to suppliers to improve its financial position

According to a report from industry watchdog, the Grocery Code Adjudicator (GCA), the supermarket giant "seriously" breached grocery code. Some of the breaches were “intentional.”

The report was heavily critical of Tesco’s conduct and said that it must introduce '"significant change”.

In one case, the GCA found that a supplier had to wait two years for its payment, which was almost £2m.

Adjudicator Christine Tacon said, “The length of the delays, their widespread nature and the range of Tesco’s unreasonable practices and behaviours towards suppliers concerned me. I was also troubled to see Tesco at times prioritising its own finances over treating suppliers fairly.

“My recommendations will deal with the weaknesses in Tesco’s practices during the period under investigation."

The Serious Fraud Office’s report on its criminal investigation into Tesco’s accounting scandal is expected in the coming weeks. The SFO said that, contrary to reports today, it was “highly unlikely” it would be published in the next few days.

The British supermarket giant was engulfed in scandal in October 2014 when it revealed it had overstated its profits by a quarter of a billion pounds. It suspended four senior members of staff and called in Deloitte to investigate.

The subsequent investigation found its accounting irregularities were worse than first feared. It revealed that Tesco had overstated its profits by £263m for at least two years, not six months as was previously thought, and by £13m more than the initial estimate.

The issue concerned when payments received from suppliers who pay to run in-store promotions on their behalf are booked.

The Financial Reporting Council launched a probe into the roles of PwC and various members of the accountancy profession involved in the preparation, approval and audit of Tesco’s accounts.

In April last year Tesco posted the biggest ever loss by a UK retailer - £6.38bn in the year to the end of February.

Raymond Doherty

 

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