PwC Probe Over Tesco Scandal Dropped by Accounting Regulator

(Bloomberg) -- A regulatory probe into PricewaterhouseCoopers LLP related to Tesco Plc's accounting scandal was dropped as the Financial Reporting Council said there was little chance of an adverse finding in the case.

The FRC said in a statement Monday, however, that it would continue investigating other Tesco auditors. The decision is the latest twist in a nearly three-year-old saga at Tesco that has already spawned sweeping management changes, fines and criminal charges.

Tesco announced in September 2014 that it had overstated profits by 263 million pounds ($338 million), a figure that was increased to 326 million pounds following an independent audit. Earlier this year, the Serious Fraud Office and the Financial Conduct Authority reached deals with the grocer that led to a combined 214 million pounds in fines.

PwC said in a statement that it had cooperated with the FRC's investigation and is pleased with the result.

Last year, the FRC closed an investigation into Tesco's former Chief Financial Officer, Laurie McIlwee, saying there wasn't a "realistic prospect" that misconduct would be found in the case. Three other former company executives were charged by the SFO in a criminal probe related to the scandal.

Philip Clarke, the former chief executive officer of Tesco, and former group commercial director Kevin Grace both escaped prosecution over the debacle. The grocer has also faced at least two shareholder lawsuits over the matter.

After the scandal, Tesco moved to reduce the number of suppliers it works with, saying that would allow it to give remaining providers better deals. Dave Lewis, who took over as CEO just before the accounting problems emerged, has put restoring the retailer's reputation at the heart of his turnaround plans.

To contact the reporter on this story: Suzi Ring in London at sring5@bloomberg.net.

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Eric Pfanner