Ex-Tesco Director Grace Said to Avoid Charge in Accounting ProbeBy
U.K. Serious Fraud Office drops case against Kevin Grace
Three other former Tesco managers set to stand trial in 2017
The U.K. Serious Fraud Office dropped its case against former Tesco Plc group commercial director Kevin Grace without charges, a sign the prosecutor may be getting close to ending its probe into accounting practices that caused the grocer to overstate its profit by as much as 326 million pounds ($407 million).
The SFO told Grace this week it’s not pursuing charges against him, according to two people with knowledge of the situation, who didn’t want to be identified because the decision isn’t public. The news comes two weeks after former Chief Executive Officer Philip Clarke was also told he won’t be prosecuted. Three other ex-Tesco managers were charged in September and are set to stand trial next year.
The SFO opened an investigation into the U.K. supermarket chain in 2014 after Tesco told investors it had overstated profits by 263 million pounds, an amount which has since grown to as much as 326 million pounds. A number of senior managers were dismissed over the debacle and the accounting regulator and the Groceries Code Adjudicator also carried out investigations. Grace was one of the last senior managers awaiting a decision from the SFO.
A spokeswoman for the SFO said the "investigation into Tesco continues.” A lawyer for Grace declined to comment. A spokeswoman for Tesco didn’t immediately respond to a request for comment.
It is still unclear whether the company will face charges.
Tesco has long been considered a possible candidate for a deferred prosecution agreement. Under such a deal, prosecution would be suspended if the company agreed to conditions that can include paying a fine, repaying profits, and helping bring cases against individuals. In order for the company to be prosecutable under English law, though, the SFO must be able to show that someone senior enough -- the so-called "directing mind" -- at the company was involved in the alleged behavior.
In August, the Financial Reporting Council closed an investigation into Tesco’s former Chief Financial Officer Laurie McIlwee.