Tesco to pay $12m to settle US overstatement class action lawsuit

25 November 2015 (Last Updated November 25th, 2015 18:30)

Tesco has agreed to pay $12m to settle one of two US class action lawsuits over commercial income overstatement.

The settlement agreement with holders of Tesco’s American Depositary Receipts (ADRs), equivalent to about 2% of the company’s total sharebase, is subject to confirmation by a federal court in New York.

The class action, which was against Tesco and several of its former directors, alleged breaches of certain US federal securities laws with respect to the overstatement of commercial income that was announced in September last year.

The Guardian reported that the company’s former directors Philip Clarke and Laurie McIlwee collected payoffs of £1.2m and £970,880 respectively for loss of office.

However, Tesco unveiled provisions to recover their bonuses if either of them was identified to have been involved in the illegal activity..

Tesco replaced Clarke with Dave Lewis in July last yearafter a series of profit warnings.

The UK’s Serious Fraud Office is questioning Clarke and initiated criminal proceedings into the accounting scam. .

Tesco’s other claim was brought in Ohio by the remaining ADR holders.