Tesco backtracks on plan to withhold £2.1m from former chiefs

3rd February 2015

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Tesco  has had to u-turn on plans to withhold £2.1m owed to its ex chief executive and chief financial officer after admitting it has no legal grounds to keep back the money.

The supermarket said at its half-year results in October that it would not pay the money that it was suspending the payments due to Philip Clarke and Laurie McIlwee, as a result of the scandal surrounding its £263m over-estimate of profits, The Telegraph reports.

However in a statement this morning the retailer said it has agreed to pay the £1.22m liquidated damages contractually due to Mr Clarke, and the £970,800 due to Mr McIlwee.

“The company is contractually committed to make the relevant payment to each former director unless it can legally establish a case of gross misconduct against him,” Tesco said in a statement.

It continued: “The company has taken legal advice and has concluded that it does not have the basis for continuing to withhold the payments. Accordingly, the board considers that defending costly claims for the payments would not be in the company’s best interests.”

Tesco added that the  Serious Fraud Office is in the middle of an investigation into the accounting errors and that “if new information were to come to light which would change this assessment, the company will pursue recovery of the payments and damages”.

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