Menu

Tesco Scandal – Allegations of Fraud and False Accounting

Back in 2014, the Serious Fraud Office (SFO) commenced a criminal investigation into accounting practices at Tesco in respect of an estimated £326 million missing from the supermarket group’s accounts. Although the investigation is still underway, the SFO has decided to prosecute three former executives in respect of their roles in the scandal. Last week, their trial date was set for next September, when they will each face charges of fraud by abuse of position and false accounting.

In this blog post, I take a look at these two offences and my approach to defending against allegations of serious financial misconduct. As a barrister, I have been successfully defending clients against allegations of fraud and other financial crimes for many years. I am particularly well-known and respected for helping individuals and companies deal with regulatory and criminal business investigations, such as those conducted by the SFO. I aim to take action early on, pursuing every line of enquiry to help mitigate the consequences.

Fraud by abuse of position

The offence of fraud by abuse of position is one of three classes found in the Fraud Act 2006 (the other two offences being fraud by failing to disclose information (section 3) and fraud by false representation (section 2)). Although it shares some elements with the other two offences, such as the need for dishonesty and an intention to make a gain or inflict a loss, it is a distinct offence that is committed where someone:

  • occupies a position in which they’re expected to safeguard another’s financial interests, or at least not act against those interests, such as a director in respect of a company or a trustee in respect of a beneficiary;
  • dishonestly abuses that position, either by act or omission, by failing to safeguard another’s financial interests; and,
  • intends, by means of that abuse, to: make a gain for themselves or another; or, cause loss or expose another to a risk of loss. This final element, i.e. there being no need for actual loss or gain and the risk being sufficient, is common across all fraud offences.

Because ‘abuse’ is not legally defined in the act, it can cover a wide range of acts or omissions. Further, there is no need for an individual to know that they are in a position where they’re expected to safeguard another’s financial interests – a conviction is highly likely to follow if the prosecution can prove that abuse was dishonest and there was an intention to make a personal gain or cause another loss. If an accused is convicted of fraud by abuse of position, the maximum penalty is imprisonment not exceeding ten years, an unlimited fine or both.

False accounting

The offence of false accounting is found in section 17 of the Theft Act 1968. It is committed where someone:

  • dishonestly, coupled with a view to gain or with intent to cause another loss;
  • destroys, defaces, conceals or falsifies any account, record or document made or required for an accounting purpose; or,
  • furnishes information that produces or makes use of any account, record or document which, to their knowledge, is or may be misleading, false or deceptive.

This offence also covers a wide range of scenarios, including both the act of making a false entry and the omission of material particulars (where the omission may have the effect of significantly misleading), as well as covering someone who does not actually make a false entry or material omission but only concurs with the false entry or material omission. Further, a company will be guilty of the offence if it is committed by an officer of the company whose conduct can be attributed to the company.

Although the act doesn’t shed any light on the required degree of knowledge an accused must have in order to be guilty of the offence, the courts have clarified that the accused must have acted deliberately in making or concurring with a false account, i.e. they knew the account to be false or capable of being misleading. As such, the prosecution does not need to prove that there was an intention for any specific person to be misled. If an accused is convicted of false accounting, the maximum penalty is imprisonment not exceeding seven years.

What could the consequences be for the Tesco bosses?

The SFO began in the investigation into the Tesco scandal in 2014 and has stated that it will conclude the enquiry by the end of this year, with the trial of the three bosses taking place in September next year.

Although a great number of SFO prosecutions have failed, they are increasingly investigating and prosecuting with real intent and any prosecution should not be taken lightly. The consequences of the director’s actions were not insignificant, pushing Tesco into the biggest crisis in the company’s history and wiping £1.6 billion from its share price. It is likely the SFO will continue to deter others from taking part in such behaviour by seeking to impose the full force of the law. The case may also be succeeded by confiscation proceedings, which is common in cases of this sort.

Mark Kelly – Specialist Fraud Barrister

I have excellent experience in successfully defending clients against fraud prosecutions. I pride myself on my unique approach to fraud defence, frontloading the work involved in your case to build a strong defence, and secure the best outcome for my clients.

My professional experience, approachability and considerable expertise are highly regarded by my clients, and my excellent track record speaks for itself. I consistently obtain favourable results for clients accused of a variety of fraud offences, and so I am well placed to support, advise and represent you in respect of your case.

If you wish to discuss a fraud or other related matter, please do not hesitate to  get in touch  with one of my clerks.

 

The Ched Evans Case
Welcome to my new website

Contact me now

Need down-to-earth, straight-forward free initial advice? Talk direct to me today.

Invalid Name
Invalid Email
Invalid Telephone
Invalid Message

Why Choose KC Crime Lawyer?

  • Highly Successful Defence Barrister
  • Defend Your Hard Earned Reputation
  • Protect Your Good Character, Your Family and Your Profession
  • Strategic, Tactical & Collaborative Approach
  • Successful Outcomes
  • Robust Defence
  • Professional Representation
  • Maximise Opportunity
"A good, analytical lawyer. He worked incredibly hard and devised legal submissions which won the case."

Chambers & Partners - Rated as Band 2

250+ Calls
1000+ Minutes of Free Consultations
We have provided 250+ Calls and 1000+ minutes of Free Consultations through our website last year, with people talking direct to King’s Counsel, helping to defend and protect their reputation.

Latest news

15 August 2023

We examine what might be the biggest change to corporate criminal law in a century as the Economic Crime and Corporate Transparency Bill (referred to as "the Bill") approaches the end of its course through the UK Parliament.There are provisions in th.

Read More...