Tells engineers strange tales (7)
I believe the answer is:
relates
'tells' is the definition.
(relating is a kind of telling)
'engineers strange tales' is the wordplay.
'engineers' becomes 're' (Royal Engineers).
'strange' is an anagram indicator.
'tales' with letters rearranged gives 'lates'.
're'+'lates'='RELATES'
(Other definitions for relates that I've seen before include "Narrates" , "Describes" , "Tells (a tale)" , "couples" .)