A new investigation just made Tesco's crisis even worse

TescoREUTERS/Toby MelvilleA shopper enters a branch of Tesco supermarket, reflected in a puddle, at dusk in an ‘art deco’ style building at Perivale in west London, January 6, 2015.

Tesco, the world’s second largest retailer, is under investigation by Britain’s grocery industry watchdog over suspicion that it delayed payments to suppliers, which breaches the groceries supply code of practice.

Christine Tacon, the groceries code adjudicator (GCA), launched the probe after considering information related to a massive accounting scandal.

Last September, Tesco announced that it overstated profits in the first half of the year by more than £250 million ($US403 million). Tesco’s accounts between 2012 and 2014 are currently under investigation by the Financial Reporting Council.

The GCA investigation, expected to take place over the next 6-9 months, will consider practises associated with delays in payments, including short deliveries, consumer complaints where the amounts were not agreed, invoicing discrepancies, and deductions for un-agreed items.

“I have applied the GCA published prioritisation principles to each of the practises under consideration and have evidence that they were not isolated incidents, each involving a number of suppliers and significant sums of money,” Tacon said in a statement.

Tacon “has discussed the practises with Tesco and now needs more information from direct suppliers and others to determine what further action to take.”

The investigation is the latest in a string of troubles for Britain’s biggest supermarket, which is facing increasing competition from discount retailers like Aldi and Lidl. JPMorgan issued a damaging note against the retailer in December. In January, the supermarket announced it was closing 43 stores in the UK to cut costs.

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