Investigations and decisions
UK: SFO opens investigation into accounting practices at Tesco plc
The SFO confirmed in a press release issued on 23 October 2014 that it had commenced a criminal investigation into accounting practices at Tesco plc. The investigation stems from allegations by a whistleblower that its half year profits had been overstated by £263 million. Eight senior managers have been suspended and the chairman, Sir Richard Broadbent, has resigned. It is possible that the supermarket’s profits have been overstated for some years.
An investigation begun by the Financial Conduct Authority has been halted following the SFO’s decision. However, it is likely that the investigation will take many months, if not years, to complete, with a vast amount of accounting and other electronic information to be reviewed.
Tesco said it that had been "co-operating fully" with the SFO and would continue to do so.
UK: First SFO trial under the Bribery Act begins
The trial of four defendants, the first involving charges brought by the SFO under the Bribery Act 2010, began at Southwark Crown Court on 8 October 2014. The allegations concern the use of a biofuel investment company, Sustainable AgroEnergy which, it is alleged, operated as Ponzi scheme. The SFO alleges that the defendants took money out of the company to fund a lavish lifestyle, using new investors' money to pay existing investors' returns.
The previous prosecutions under the Bribery Act have all been brought by the Director of Public Prosecutions and concerned minor offences under the Bribery Act relating to driving penalties, licensing offences and the attempted bribery of a university tutor.
The background to the case is set out in the SFO's press release, here.
UK: 13th person charged in connection with Libor rigging allegations
A further individual has been charged by the SFO in connection with the Libor rigging scandal, bringing the total charged in the UK so far to 13. A former employee at the brokers Tullett Prebon, Noel Cryan, is alleged to have conspired to defraud in 2009. He is the first employee from the broking house to be charged over the scandal and will appear before Westminster magistrates' court on 11 November 2014 to face the charge formally. It is possible that his case may be joined to those of five other former brokers, scheduled for trial in September 2015.
This follows the guilty plea by an as yet unnamed former senior banker to a charge of conspiracy to defraud in the Libor matter, reported in the September 2014 edition of Financial Crime Update.
The SFO has published a press release setting out details of the latest charge.
UK: Weavering trial commences
The trial of Magnus Peterson, the founder of Weavering Capital UK, a Mayfair-based hedge fund, began at Southwark crown court on 13 October 2014. Peterson is accused by the SFO of 16 fraud-related charges after Weavering Capital collapsed in 2009, losing £380 million of investors' money. The SFO alleges that Peterson ran the fund dishonestly, hiding its losses from would-be investors and using money inputted by them to pay existing investors. He is also accused of forging documents to give clients a false impression of the fund's performance and of falsely claiming the fund operated a low-risk trading strategy.
Counsel for the SFO alleged that Peterson had artificially boosted the apparent success of Weavering Capital's flagship fund, the Cayman Island-registered Macro Fixed Income, by the use of fraudulent documents and false financial instruments. Peterson is alleged to have paid himself performance fees of over £7 million.
The losses at Weavering Capital were first investigated by the SFO under director Richard Alderman but the case was dropped in 2011. David Green, his successor, reopened the investigation in July 2012.
Peterson has pleaded not guilty on all counts. The trial is expected to last for 12 weeks.